An Exclusive Interview with David Li by Chief Executive：CIMC Vehicles: A Smart “Chariot” Driven by Outstanding Persons
Photo taken by Gan Yingxin, guest photographer of Chief Executive, at the headquarters of CIMC
In the digital era, China is shifting from “Made in China” to “Intelligent Manufacturing.” With great opportunities, Chinese companies are also facing various challenges. They not only need to build a strong barrier regarding hardware but also have to create sophisticated software expert teams as well as nurture high-end personnel who excel in both technologies and corporate management at the operational level. CIMC Vehicles (Group) Co., Ltd. (hereinafter referred to as CIMC Vehicles), as a leader in the global semi-trailer industry, has embarked on the journey to explore the road towards automated production as early as 2014 and made brilliant achievements within just a few years.
“Without challenges and opportunities, companies would find no momentum for transformation. Everyone faces the same challenges but has different solutions. However, there are different opportunities for growth in the future. With the general trend towards ‘Made in China 2025,’ many Chinese companies, including CIMC Vehicles, are mostly facing two challenges, namely outdated production lines and obsolete organizational structures. Therefore, what we should do is to upgrade our production lines and reshape our organization,” David Li, CEO and President of CIMC Vehicles, told Chief Executive.
“Light tower plant” shows its effect
At the end of 2014, CIMC Vehicles proactively proposed the “light tower plant” program with the aim to upgrade its conventional plants into automated and digital ones which use information technologies. It is understood that the company has been working on the intelligent upgrade of production lines, the products, and the ecosystem to create a modern “lighthouse plant.”
The company completes the intelligent upgrade of its production lines largely by introducing advanced equipment for processes such as automated cutting, loading and unloading of materials, and welding which can be interconnected. The equipment can receive information and commands, run a number of movements of production, and timely give feedbacks about the status.
The information notification system is important for the connection between the design and production equipment. This system is mainly composed of PLM (Product Lifecycle Management System), MES (Manufacturing Execution System), WEMS (Warehouse Management System), and ERP (Enterprise Resource Planning System).
David Li argues that the sequence for developing these sub-systems is very important and cannot be messed up. “Many companies think they should develop ERP first since they have outdated organizational structures and believe that, by this way, they could centralize the management but actually, the production lines are not connected and the data is not available. The ERP does not work.”
After two years of planning and construction, mass production eventually started at the first lighthouse plant in Dongguan City of Guangdong Province in the middle of 2016. Currently, four plants under CIMC Vehicles are about to be upgraded as lighthouse plants with the automated IoT equipment in the final phase of debugging and optimization. Meanwhile, another five plants are under planning.
It is understood that, with the lighthouse plant, 45% of manpower can be replaced with productivity lifted by 66% and efficiency of logistics enhanced by 90%. The average return on investment is more than 25% and the investment will be recovered within four years. “With the general trend towards ‘Made in China 2025,’ the 25 subsidiaries of CIMC Vehicles will transform into lighthouse plants within the next three to five years based on the schedule,” said Li Guiping.
Furthermore, CIMC Vehicles is ahead of peers regarding the development of smart technologies. For example, the company has equipped its semi-trailers with multiple sensors at critical locations to transmit the collected data to a terminal so that the client can monitor the entire process. When a semi-trailer is transporting food which can be eroded by the heat, it is necessary to install sensors that are capable of measuring the temperature and sending data once in five minutes so as to realize effective control and whole-process monitoring.
Besides smart production lines and products, companies must do something more to have the dominance on the market. For example, a smart business ecosystem must be realized, which is extremely important to a company. Li Guiping said that the ecosystem of CIMC Vehicles largely consisted of the relationship between the company and its customers. To provide the customers with digital solutions, the company has optimized the application of the Big Data collected by the sensors. “This is the most important commercial value of installing the sensors. CIMC Vehicles has just made the first step for this and there is still a long way to go. However, it is always our goal to create value for the customers and offer them premium services,” Li added.
Innovation and transformation of organizational structure
With the upgrade to lighthouse plants on track, CIMC Vehicles must transform its organizational structure and management under the force of various digital application technologies and automated manufacturing technologies since the original organization model is no longer suitable or the current situation. Therefore, the company rolled out a comprehensive organizational transformation to build a new organization that matches with the digital production processes.
In terms of the organizational structure and management, the company established a dedicated technical team for digital manufacturing. A technical director office was created at the company’s headquarters and three centers, namely digital model design center, automated production technology center, and digital management technology center, were built under the umbrella of the office.
The “one office with three centers” structure has been a norm in the organization of the lighthouse plant and an integral part of the digital plant that CIMC Vehicles will build in the future. “Many companies fail to make classification and segmentation during their digital transformation, thus there are many generalizing experts in the company but no experts specifically on certain areas. In this way, the result will be problematic with the lack of certain functions,” Li Guiping said.
CIMC Vehicles has created a dedicated “coach regiment” to execute the “lighthouse plant” program. According to Li Guiping, there are about three to five members in the coach regiment with the commander designated by the headquarters. The commander, as the person in charge, must be an interdisciplinary person with excellent leadership. Then, the commander will choose members of the “regimental cabinet” and battalions will be created under the regiment with outstanding persons in the areas of digital model design, automated production lines, and digital management recruited.
CIMC Vehicles has created a dedicated “coach regiment” to execute the “lighthouse plant” program.
“Similar to the ‘one office with three centers’ structure of the lighthouse plant, this is a ‘one regiment with three battalions’ structure,” Li added, “Take the lighthouse plant in Yangzhou City as an example. The coach regiment of this plant consists of one commander and one assistant commander, both having doctorates, and another three technical personnel in certain areas from the headquarters. They have been sent to Yangzhou to establish the digital design team, the automated manufacturing team, and the digital management team for the plant.”
It is understood that, in October 2016, this coach regiment, starting from scratch, has built the production line and developed the system and the applications for designing digital models step by step. By the middle of 2017, the primary plan for the lighthouse plant was made by the team under this coach regiment. In 2018, trial production has started in this plant. “The name ‘coach regiment’ sounds quite military since developing a lighthouse plant is just like fighting a dubious battle,” said Li Guiping.
Creating a team on digital technology
With a severe shortage of persons on digital technologies, it is imperative for the company to turn its employees into someone it actually needs and seek for technical persons aligned with the corporate development. To this end, CIMC Vehicles has adopted an approach with “internal training” and “external recruitment” running side by side.
David Li commented, “We will first choose among our employees and encourage them to compete for related positions. If there is still any position left after internal selection, the external recruitment will be executed. Whether it is for technical personnel or the management, anyone who has the qualification and a strong desire for the position can be a candidate. However, if an employee is not suitable for any position in the new organization, he/she will be assigned to a position for services such as the after-sales service, customer services, and repair. We will make such reposition more frequently. In fact, we have employees who have been working as service personnel for several decades. Therefore, they are perfectly suitable and enjoy certain advantages for such positions.”
Li Guiping believes that the greatest difficulty in transforming employees into management personnel lies in not the skills but the perspectives.
For a digital plant, the employees have to shift from the recurrence thinking to recursive thinking and from direct thinking to reverse thinking. “For this, CIMC Vehicles has adopted a course training method to accelerate the transformation of our people’s way of thinking,” added Li Guiping.
Moreover, once a new project is rolled out, the company will choose specialists to build the “coach regiment.” Team members under the regiment will try to reach different goals surrounding certain tasks. For example, the team for automated production must complete the detailed renovation and upgrade of the engineering regarding the production line, including the graphic design, core equipment, etc.
Before such renovation and upgrade, the boundary of the production line has to be defined by the team on digital models, i.e. which products can be made and which cannot. Then a digital system will be developed for the production line.
“An automated production line is not as flexible as the manpower. The larger the product mix is, the more complicated the equipment must be and the investment cost will be greater accordingly,” said Li.
It is also understood that the company has signed cooperation agreements with Antai College of Economics and Management (ACEM), Shanghai Jiao Tong University, and MIT (USA) to recruit suitable persons externally. It has officially become a partner in the MBA program of the “China Leaders for Global Operations (CLGO)” initiative.
This program is initiated jointly by Antai College of Economics and Management (ACEM), Shanghai Jiao Tong University, and MIT (USA) with the aim of nurturing interdisciplinary persons in an era of intelligent manufacturing. As a partner in this program, CIMC Vehicles, as the assessor, can interview MBA students who have great potential, address its shortage of related personnel by attracting the students to the company for internships, and recruit outstanding students.
“I hope that all plants of CIMC Vehicles would be transformed to lighthouse plants and the number of dedicated teams on digital manufacturing would increase from four currently to 14 by 2025. Technical personnel in certain areas will increase to 400 to 500 as scheduled to lend support to our 25 manufacturers across the globe,” said Li Guiping.