Yan Feng Wei Shitong: Do auto parts business must have module-level JIT
Author: Zhu Qiong
Module-level Just-in-Time (JIT) delivery is like a well-trained horse — it needs to be precise, fast, and perfectly synchronized with the rhythm of the assembly line.
For companies like Shanghai GM and Shanghai Volkswagen, Yanfeng Visteon is no longer just a supplier of dashboard components. Starting from 2003 and 2004, these two automakers began outsourcing their dashboard assembly lines to Yanfeng Visteon. However, this shift came with strict requirements: the entire production process had to ensure that the right product arrived at the instrument panel assembly station exactly when needed. This might sound straightforward, but in reality, it’s extremely demanding. The dashboard is one of the most complex and rapidly changing parts of a car. When market demand shifts, the configuration of the dashboard can change within minutes on the assembly line.
Before outsourcing, the dashboard was assembled internally by the automaker and then delivered to the main assembly line. Each time a vehicle was built, the automaker would send an instruction to the dashboard assembly line to ensure the correct part arrived at the right moment. Now, Yanfeng Visteon must match this pace outside the automaker’s system, without any excess inventory. If the dashboard isn’t available on time, Shanghai Volkswagen would fine Yanfeng Visteon $500 per minute. Despite the risks, Yanfeng Visteon embraced module-level JIT delivery with its key customers.
Synchronous Production
At first glance, module-level JIT seems similar to traditional JIT — delivering the right product to the right place at the right time. Normally, suppliers would set up warehouses near the factory to supply parts in batches or specific quantities. But for Yanfeng Visteon, this approach didn’t work. The dashboard has a complex structure, with up to 100 components and multiple configurations. Even if the OEM didn’t offer customization, there could be as many as 20 different dashboard setups. With a shelf life of only three days, holding inventory was not feasible.
To avoid waste, production had to align precisely with demand. OEMs often shortened their planning lead times, sometimes even releasing orders directly on the assembly line. As a result, Yanfeng Visteon had to synchronize closely with the final assembly, either slightly ahead or in real-time. Every two minutes, the automaker’s assembly line would start a new vehicle, and Yanfeng Visteon’s dashboard line would receive the corresponding specification. A visual list was printed for workers, guiding them through the assembly based on the current configuration.
From the moment an order was received, Yanfeng Visteon had about 50–60 minutes to deliver the product to the assembly line. This meant that parts preparation, assembly, testing, and shipping all had to be completed within that window. For Shanghai Volkswagen, products were shipped directly after inspection. For other models, they were produced off-site and transported in batches. To ensure accuracy, Yanfeng Visteon arranged products in reverse order during loading, matching the sequence of the delivery.
Throughout the process, error prevention was crucial. Every step required scanning — from the initial visual list to the installed parts and the final shipment. These measures ensured that the right product reached the right place every time.
Modular "Risk"
While modular supply helps reduce labor and management costs, some OEMs are hesitant. They worry about losing control over quality and cost, especially for complex assemblies like dashboards. Some believe the best outsourcing model is to hand over packaging and logistics to suppliers while maintaining quality control. In theory, only those responsible for the module should have full authority over its design and cost. This requires OEMs to control supplier selection and pricing, which is difficult without direct involvement in the design.
However, the conditions for such ideal outsourcing are still not mature. Few suppliers can participate in vehicle design, and giving up control of downstream suppliers is hard for automakers. Once modules are outsourced, first-tier suppliers like air conditioning or audio systems may now deal directly with the module supplier, weakening the OEM’s control over the supply chain. There’s also the risk of profit margin compression, where module suppliers might squeeze their own suppliers, leading to quality issues.
But Shanghai Volkswagen and Shanghai GM took steps to mitigate these risks. They allowed Yanfeng Visteon to assemble dashboards using its own designs while retaining control over lower-tier suppliers. In 2003, Shanghai GM proposed the idea, and in 2004, Shanghai Volkswagen launched the second major outsourcing initiative in China.
To balance interests, Shanghai GM adopted the “customer supply†model. Suppliers of dashboard components were centralized in RDCs controlled by the automaker. Yanfeng Visteon had to pick parts from the RDC and paid a fee per unit. Meanwhile, Shanghai Volkswagen gave more autonomy to Yanfeng Visteon, allowing it to manage the supplier base and collect profit from logistics optimization.
IT Control
For Yanfeng Visteon, regardless of the cooperation model, IT systems were essential to ensure seamless production and delivery. In 2004, the company implemented a production management system based on QAD ERP, enabling precise control over assembly, logistics, traceability, and financial integration. The system was deployed in just three months and later expanded to both North and South Lines of Shanghai General.
This system helped Yanfeng Visteon maintain low inventory levels by monitoring shelf life and rotating stock every three days. It also used a digital kanban system to track material consumption and automatically trigger replenishment. By integrating with suppliers and using efficient logistics methods like DD, ED, and SD, Yanfeng Visteon reduced inventory costs significantly.
Looking ahead, Li Deqing, IT manager at Yanfeng Visteon, believes that while JIT has limits due to short lead times, it remains a strong option for complex, high-configuration parts. Modular JIT is particularly effective for components that require fast response and minimal lead time.
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