波士顿汇源发展战略运营组织结构改善计划其他全部报告一阶段

CONTENTContextandexecutivesummaryGrowthstrategyGo-to-marketSupplychainProcurementManufacturingOrganization/KPIPriorityareasforphaseIIandIIISUMMARYOFPROCUREMENTProcurementisapossiblesourceofpotentialsavingsDrivesalargepercentage(xx%)ofoverallCOGSHuiYuanhasbeenbargaininggoodpricesonmanykeyitemswhichmayalreadybe“lockedin”throughexistingcontractswithsuppliersButcurrently,thereareafewkeyissuesinprocurementconsolidationofweeklyrequestfromBeijingplantsLackofcentrallycoordinatedprocurementLackofinformationsystemstosupportandmonitortheprocessesOpportunitiesforvaluecreationbyimprovingseveralkeypriorityareasSystemcostsHandlingcostsQualitycostsRiskpremiumPROCUREMENTINCLUDESMORETHANQUOTEDPRICESANDHANDLINGCOSTSVisiblecostInvisiblecostQuotedpriceHandlingcostFreightTariffsTaxesTransactioncostSupplier

selectionContractingTravel

expensesQualitycostReworkYieldlossReturnsRiskpremiumDelaysplete

lotsLiability

claims++++UptimeThroughputDirectcostsIndirectcostsKeyvaluedriverimpactsUnnecessaryCostsDuplicationofeffort

+$$$$$$$OpportunityForHY$PROCUREMENTACCOUNTSFORXX%OFTOTALPRODUCTCOSTSRMBmillionComments/ReasoningxxxHuiYuan2000TotalProductCostsFurtherbreakdownsofcostbucketsifpossibleTotalprocurementxxx%GREATESTPOTENTIALFORCOSTSAVINGSINXXXFORPROCUREMENTRMBmillionComments/ReasoningxxxHuiYuan2000ProcurementCostsFurtherbreakdownsofcostbucketsifpossibleTHEPROCESSTOIDENTIFYANDTESTTHEOPPORTUNITIESDevelopthetreeandopportunitiesDevelophypothesesandprioritiesInitialinterviewsscreenReprioritizeanddrilldownIdentifyvalue/savingsCosttreeOpportunites____________________________Opportunity____________________________Hypotheses____________________________Priority____________________________Input________________________________________________________________________________________________BackupSIMPLIFIEDPROCUREMENTCOSTDRIVERTREEProcurementCostsProductPackageUnitcostsTransportationQuantityCostsperKMShipmentPackageDistanceFruitsourcesPackagesizeTechnologyProductPackagesize

TechnologyFruitsourcesImportcostsUnitcostsofpurchasesShipmentPackageOtheringredientsDistanceTransportcostFrequencyofdistributionOtherIngredientsLeversImportcostsFrequencyofdistributionINITIALPRIORITIZATIONOFPROCUREMENTVALUELEVERSProcurementValueLeversPackage1.Volumediscountfromlargerordersize2.Productpackagesize3.ShipmentpackageSources1.Purchasesprice2.Importcosts3.SupplyQuantity4.TransportationcostsinrawmaterialOurhypothesisPackage1.Discountisnotmaximized2.Shipmentpackagecoststoohigh3.PackagesizecostsnotproportionaltosizeSources&Quality1.Paytoohightheprice2.Importcoststoohigh3.Quantityboughttoolow/toohigh4.TransportcosttoohighPriorityLowHighHighLowLowMid-HighMid-HighSUMMARY:KEYOPPORTUNITIESFOREXPLORATION/DRILLDOWN-PROCUREMENTPackagingSourcesplannedtests/reviewDatasourcesStatusDiscountisnotmaximizePackagesizecostsnotproportionaltosizeShipmentpackcoststoohighHypothesisReviewcontracts&benchmarkPrice/SizeanalysisCostbreakdown&benchmarkInternaldata&benchmarkInternationalBusinessDeptInternaldata&benchmarkDatanotreceivedDatanotyetgivenDonePurchasepricetoohighImportcoststoohighQuantityboughttoolow/toohighTransportcostofrawmaterialtoohighBenchmarktopitemsBenchmarktopitemsHistoricaldataanalysisonstock-outandinventoryRoutinganalysis&benchmarkInprogressDoneDatanotyetgivenInprogressBenchmarkInternationalbenchmarkInternaldatainternaldata&benchmarkHUIYUANAPPEARSTONEGOTIATEGOODPRICESFORPACKAGINGUnitcostinRMBComparisonOf250mlTetraPakCostsVsBenchmarks...hasproventhatHuiyuanhasbargainedforaverypriceforpackagePackagepricesforCombibloclockedinatpurchaseofequipment,noimmediateopportunityforrenegotiationGuangMingMilkhasaboutthesamenumberofTetraPaklinesandvolumeasHuiyuan,butiscurrentlypayingmore.HuiYuanseemshavingnegotiatedareasonablegoodpricesagainstTetraPakandCombiblocbyitsgrowthpotentialandmulti-vendorenvironment.PACKAGINGH1Furtherbenchmarkingplanned(needtocheckthisforTetra)ArealternativesupplierstoTetracheaper?%ChangeincostsPackageSizeJuiceContentPaperBUTDEAVERAGEDPACKAGECOSTSSHOW

LARGERSIZESCOSTLESSPACKAGINGH2Paperpackagechangeslesswhenjuicecontentchange...asshownintheincreasingproportionofpackagecostswhensizedecreasesOrangeJuiceProductPackOtherMaterialsExternalPackProductioncosts28%34%39%51%Allvendorschargeahighpremiumon2LHOWEVER,VENDORSCHARGEPROPORTIONALLYMOREFORLARGERSIZESPACKAGINGH2...andiscrystallizedwhenshownin%changeRMBPackageSizeStandardCombiElopakTetra%ChangePackageSizeMARGINSONSMALLSKUSISUNPROFITABLE

ExampleofAppleJuiceinTetraPakPACKAGINGH2RMBPackageSizeThereisdiseconomyofscaleforsmallsizeinthepackageandproductioncosts...reflectedinthemarginS&MProductionOthermaterialPackageJuicePriceMargininRMBMarginin%OPPORTUNITYTOSAVEINEXTERNALPACKAGINGMostoftheSKU’shavehighcoste.g.paperbox—1LTetrapackBigcostsavingalreadyrealizedinsomeSKUse.g.plasticshrinkwrap—750mlCombiblocAllpaperPaper+PlasticShrinkWrapCost:RMB1.5includingprintingCost:RMB0.6includingprintingPACKAGINGH3BUTOTHERISSUESNEEDTOBEEXPLOREDPACKAGINGH3ProsforthechangeCheaperanimmediatesavingoneachboxsaveprintingontheexternalboxFasterSavetimeinprintingonexteriorBetterweatherproofConsforthechangeAdditionalInvestmentneedtoinvestintheshrinkwrapmachineNeedtoadjustmentmanufacturingsettingsNewconfigurationofstationsNewproceduresTrainingforoperatorsMaynotsuitableforallSKUsomemayrequirestrongerexternalpackageBENCHMARKSHOWSTHATHYEXTRACTSGOODPRICEFROMFRUITVENDORSThoughpurchasingpriceofHYseemstobehigherthanbenchmark......itgetsproductswithsuperiorqualityatamuchlowermarginforvendors Meetingstandardqualityistheprimaryconsideration forrawfruitprocurement“ThepeachesHYpurchasedisofmuchbetterqualitythanothers,theirstandardissorigorouslysetthatwesellthebestpeachesboughtfromfarmerstoHYandtheresttootherjuicemanufacturers.”FruitvendorRigorouspurchasingpricesettingthroughunderstandingthecostbucketsofvendorsenableHYtosetverylowmarginforsuppliers“HYisthebestnegotiatorIhaveevermet.Theyknoweverydetailofmycoststructureandsetsaverylowprice.However,theirprocurementquantityissolargethatIjustcan’tloosethiscustomer.FruitvendorPrice(yuan/kg)Purchasingpricebenchmarke.g.Peach6%16%Vendor’smarginFarmer’spriceSOURCESH1Whereisthebenchmarkcomingfrom?Thevendor?SOURCESH1HYWORKSCLOSELYWITHVENDORSTHROUGHOUTTHEWHOLEPROCUREMENTPROCESSMarketsurveytogleaneverypieceofsourcinginformationMarketdeepdivetoestimateharvestquantityCollectpurchasingpricebysendingpeopleinselectiveregionsIntelligencegatheringtoobtaincompetitorquotationsBenchmarkingtochooseoptimalsourcingregionSharefindingswithvendorstohelplowerpurchasingpriceHYsetmaximumprocuringpricethroughunderstandingeverycomponentofvendor’srootcostsSetvendor’spurchasingpricethroughmarketsurveyControlvendor’sothercostbucketsthroughexternalbenchmark(transportation,packaging,overhead,labor)MinimizeprocurementcostbysettingtightmarginOngoingmarketreviewandpriceadjustmenttosustainvendorincentiveStringentqualitycontrolprocessupfronttominimizemfg.wastageBothquantitativeandqualitativemeasuresinplaceSufficientnumberofsamplechecktoensurebatchqualityFlexibleprocuringquantitytoallowroomforrejectionofnon-qualityVendorreviewandevaluationRecordvendorperformancetopromoteBICsupplyingmodelQualitycontrolScreeningNegotiationSOURCESH1FRUITDISTRIBUTORSCONFIRMEDTHATHYPROCUREMENTISDOINGAGOODJOB“HYprocurementpeoplereallyknowalotaboutthemarket,theyareevenmoreknowledgeablethanusbecausetheygleaninfofromdozensofvendors.Andmostofthetimetheywilltelluswheretobuygoodandcheapfruit.”--KeyvendorofHY“HYisthetoughestnegotiatorIhaveevermet.Theyknoweverydetailofmycoststructureandsetsaverylowprice.However,theirprocurementquantityissolargethatIjustcan’tloosethiscustomer.”FruitvendorofHY“ThepeachesHYpurchasedisofmuchbetterqualitythanothers,theirstandardissorigorouslysetthatwesellthebestpeachesboughtfromfarmerstoHYandtheresttootherjuicemanufacturers.”-FruitvendorofHYQualitycontrolScreeningNegotiationCOSTSOFIMPORTEDORANGEJUICEAPPEARREASONABLEProcurementprocesswellorganizedtotomeetgrowthtargetGlobalsourcingManysuppliersreviewedinabout10countriesDedicatedmarketsurveytogetbestpricequotationNegotiation&orderingProcurementfrom2keyvendorsinBrazilaccountsfor95%oftotal,thusbestleveragingbargainingpowerFlexibleorderingquantitybymonthatayearlysetpriceSafeinventorylevelsethightominimizestockoutriskSupplierevaluationComprehensiverecordandreviewonsupplierperformanceinalldimensionsSOURCESH2...itgetsverycompetitivepricefromvendors

Importingprice($perton)SinceHYisthebiggestdomesticbuyerofimportedorangejuice...

Importvolume(ton)50%100%UNPLANNEDFRUITPURCHASINGCOSTINGHY(I)SOURCESH3Apremiumof130%onthefirstpurchasesCostinRMB/0.5Kg130%higherAbetterplanningwouldsavetheextracostsHYboughtthefirstbatchoffruitof200tonsinSeptemberatRMB0.1perhalfKG.Butlateritneededtopurchase150tonsmoreinNovember.AsitdidnotforeseetherequirementandthusHYhadtopayamuchhigherpriceinthemarketwheretherewaslittlestock.UNPLANNEDFRUITPURCHASINGCOSTINGHY(II)SOURCESH3Purchasesofsqueezedfruitsjuicefor2000TonsPutinthetonsfromProcurementdepartmentlistoftotalpurchasesAbetterplanningwouldsavetheextracostsHYhasbeenbuyingthefruitpastefromthemarket.Themainreasonbeingitsunderestimationoffruitrequirement.ShouldHYhadhadgoodPACKAGINGSUPPLIERSARESAYINGTHESAMETHING,BUTITDOESN’TRAISEUNITCOSTSBUTDOESCREATEOTHERPROBLEMS“OrderingofHYischaotic.TheyneverletusknowhowmuchtheywillbuyinadvanceandalwaysurgesustoprovidewhatevertheywantASAP.Formanytimes,wejustcannotmeettheirsuddenbulkybuyingdemand.”“AlthoughthepriceisseteveryyearsothatHYwon’tgetpenaltyforitsabnormalordering,wedothinkthatwillincurlotsofstockoutonthemfg.side.Thatwillbedeadlyforitsbusinessinpeakseasons.”“SinceHYisourbiggestcustomer,weproposedintegratingtheirprocurementplanwiththemanufacturingplanofus,whichisawin-winsolution.Buttheplanmetwithsomeobstacles.Actually,weareconsideringofferHYsomerewardsiftheycanoperate.”PackagingvendorFruitCostbreakdownoffruitvendorbyHYStack2RawfruitOtherfixedcostTransportation%oftotalcostTRANSPORTATIONCOSTSOFRAWFRUITSIGNIFICANT

And%VaryWidelyBecauseofDifferentLocationandDifferentFruitPriceSOURCESH4%oftotalcostSourcingplaceCoststructurecomparisonofapple44%17%Price(RMBperkg)FruitPurchasingpriceyear2001ApplePearPeachKiwiStrawberryHighAvg.Low16%oftotalcostputvolumeandconveytoMMchartKEYELEMENTSFORBUILDINGACROSS-FUNCTIONALPROCUREMENTSYSTEMMarketdemandforecastMarketingIntelligencedeptcoordinatingwithmarketingdeptandmanufacturingdeptinputSalesmanforecastsIndustrydemandanalysisHistoricaldataanalysisMarketsurveyOverallplanforprocurementstrategyCentrallycoordinatedplanningMfg.dept&procurementdeptofallplantsCompareeconomicsofoutsourceandin-sourceSetsafetyinventorylevelSketchoutlong-termvolumeevolutionFindsupplierwithconstantquantityandreasonablepriceSupplierevaluationonquality,quantity,timeandpriceProcurementdeptConsolidateordertoleveragebargainingpowerBiddingsystemtofindkeyvendorsManagekeysuppliercompetitivedynamicsOrderplacementandshipmentcontrolCaptureenoughdatatobeanalyzedwithstrongmodelProcurementdept,Mfg.dept,M&SdeptIntegrateordersfromindividualplants,ifviableBuildinongoingadjustmentmechanismJPIwithsuppliertominimizecostandachievestabilityInternalreviewofprocurementprocessProcurementdept,Mfg.dept,M&SdeptSupplierperformancegradingIntegratedcheckingoforderingrecordandinventorylevelInvestigaterootcauseofmajorstockoutorexcessinventoryWhatWhoHowBackupDemandForecastingProcurementplanningSupplieridentificationandnegotiationOrderingandshipmentMonitorandreviewprocessSupportsystemMarketintelligence&Recruiting/trainingKPIandincentivesystemLinkkeyvaluedriverstoKPI&LinkcompensationtoKPIAFEWISSUESIDENTIFIEDALONGTHEPROCUREMENTMANAGEMENTSYSTEMForecasting!Procurementplanning!Supplieridentificationandnegotiation3Orderingandshipment3Monitorandreviewprocess3SupportsystemMarketintelligence&Recruiting/trainingKPIandincentivesystemLinkkeyvaluedriverstoKPI&LinkcompensationtoKPIIssuesLackofinteractivecommunicationbetweenS&Mandprocurementandmfg.ImpactofpromotionsnotcapturedRapidproductproliferationPoorhistoricalmfgandsalesdatarecordsforfutureforecastVeryshorttermplanninghorizonSafetyinventorylevelforpackagingsettoohighasresultofpoorforecastingHowever,safetyinventorylevelforpartssettoolowLackofcentralco-ordinationacrossplantsHYhasbeenactivelymanagingthebuyingprocessthroughbiddingtolookforthebestpriceproducersGoodatkeepingcompetitivedynamicsamongpackagingvendorsNeedproactivesearchingfornewvendorsascompanygrowsIrregularorderingresultsinhighstockoutsandexcessinventoryNegativevendorfeedbackasirregularHYorderingbringsvendormfg.disorderUnpredictablebulkyordersresultinexcessivelongleadtimeConsistentlyreviewingperformanceofkeysuppliersLackofefficientITanddatabasesystemINTERVIEWSCONFIRMEDTHEIDENTIFIEDISSUESALONGTHEPROCUREMENTMANAGEMENTSYSTEMDemandForecasting!Procurementplanning!Supplieridentificationandnegotiation3Orderingandshipment3Monitorandreviewprocess3SupportsystemMarketintelligence&Recruiting/trainingKPIandincentivesystemLinkkeyvaluedriverstoKPI&LinkcompensationtoKPIQuotes“Thelinkagebetweensalescompaniesandmanufacturingplantsisnottightenough.”HYHQmafg.“Wehaveaweeklyprocurementplan,butnoyearlyormonthlyforecastingsystem.”HYprocurement“Wehavetriedtohelpthemtominimizestockout.Wereservedsomepaperrollsforthemtoorderinthesummer.Buttheydidnotorderasweexpected,thepaperisstillinourwarehouse.It’squiteweirdthatHY’sprocurementplanisnotinlinewithperceivedseasonality”Apackagingmaterialvendor“Wehaveabiddingsysteminplaceforbuyingbigitems.”HYprocurement“WeknowthatHYisplayingbothTetraandCombibloc.That’sthereasonwhyweareofferingthemmanybenefitswhichothercustomersdon’thave.”Apackagingmaterialvendor“HYdefinitelyneedtoimproveitsorderingmanagementsystem.Weevenproposedhelpthemestablishastate-of-artinventoryandorderingmanagementsystem.Someofourbigclientsareusingthemalready.”Apackagingmaterialvendor“WeneedtoactivelymanageourcostbasebecauseHYclearlyknowsanychangeinmarketpriceandkeepsadjustingitsprocurementpriceaccordingly.”Afruitvendor“Acomprehensivesupplierevaluationsystemisinplacetokeeptrackofthesupplierdynamics.”AfruitvendorDemandForecastingProcurementplanningOrderingandshipmentIMPROVEMENTONMANAGEMENTSYSTEMNEEDEDATALLLEVELSWeeklyprocurementforecastbasedoninventoryandconsignment.Veryshort-termplanninghorizonNointeractionwithsalescompanyatthislevelWeeklyprocurementforecastbasedoninventoryandconsignment.SafeinventorylevelsettoohighasresultofpoorforecastingPlaceordertoHQprocurement/Internationalbusinessdept.andwaitforapprovalLengthyapprovingprocessresultsinwastedtimeandeffortsIndividualmanufacturingplantsHQmafg.&procurement/InternationalbusinessdeptYearlyplanbasedonsalescompanyfiguresInteractionwithsalescompanynotfrequentenoughAddupplantprocurementdemandweeklyandplaceordertillreachingminimumamountDifferentorderingpatternofindividualplantsnotconsideredPlaceordertosupplierstillaggregateorderingsizereachingminimumamountDifferentorderingpatternofindividualplantsnotconsideredStockoutsorexcessinventoryowingtoinflexibleorderingschedulePracticeIssuesPracticeIssuesPracticeIssuesORGANIZATION/CAPABILITIESISSUESALSOIDENTIFIEDINPROCUREMENTAreaStructure/headcountOrganizationchartofProcurementHeadcountofProcurementResponsibilityofeachpositionQualificationofstaffsinProcurementEducationbackgroundYearsofexperienceCapabilitiesdevelopmentInternaltrainingprograminplaceExternaltrainingprograminplaceTalentturnoverTurnoverratebyyearReasonsforleavingKeyIssuesTightheadcountcontrolresultsinworkinginefficiencyandpotentialriskofloosingsuppliersOnly1personastheexclusivecontactpointwithseveralkeyvendorsNotenoughqualifiedhumanresourcePercentageofemployeesearningcollegedegreeaslowasXX%LackofknowledgeaccumulationbecauseofturnoverrateashighasXX%TrainingforemployeescannotcatchupwithgrowthLowASWELLASKPI/INCENTIVESISSUESAreaCurrentKPIrelatedtoProcurementSalesManufCurrentincentivessystemrelatedtoProcurementSalesManufKeyIssuesCurrentlythereisnoKPIinplaceforprocurementdeptCurrentlythereisnoincentivesystemlinktoKPIDatasource:Procurerment,HRquote&benchmarkKEYOPPORTUNITIESTOEXPLOREINPROCUREMENTImproveperformanceManagementsystemPlanningforgrowthOpportunitiesBig/small?JointprocessimprovementwithpackagingsuppliersMarketdemandforecastingfor12monthsInstalldemandforecastsystemLengthentheplanninghorizon

LongtermsupplyoffruitsSmallBigBigBigBigHOWEVER,HUIYUANMAYBEINCURRINGCOSTBYWORKINGWITHCOMBIBLOC“WhenwebuyfromCombiblocandElopack,weneedtoplaceorder2-3monthsbeforetheactualdemandaswehavetogothroughtheimportprocedures.Alsowhennewpackageisdesigned,ittakesusmonthstoletCombiblocandElopacktogetthesampledonebecauseofthelongtimeinmailingthesamplesforfurtherrevision.”-HuiYuenmanager“WehavesomeCombibloclinesbutwearegoingtophasethemout.Theyaretooinefficientandslowinservicingus.WewillswitchalllinestoTetraPak”-AfactoryGMofGuangMingPACKAGINGNeedtobenchmarkwithothervendors,notnecessarilyallprocurementissuesInventoryProductDesignHUIYUANHASTOWORKONSOMEFRUITSPURCHASESISSUESSOURCESKeyAreasKeyissueswastageinhandlingpoorforecastingSOURCESILLUSTRATIVETobeconfirmedwithinterviewsCONTENTContextandexecutivesummaryGrowthstrategyGo-to-marketSupplychainProcurementManufacturingOrganization/KPIPriorityareasforphaseIIandIIISUMMARYOFMANUFACTURINGManufacturingisagoodsourceofpotentialsavingsButcurrently,thereareafewkeyissuesinmanufacturingListofkeyissuesOpportunitiesforvaluecreationbyimprovingseveralkeypriorityareasListofpriorityopportunitiesGREATESTPOTENTIALFORCOSTSAVINGSINXXXRMBmillionComments/ReasoningxxxHuiYuan2001ManufacturingCostsFurtherbreakdownsofcostbucketsifpossibleSIMPLIFIEDMANUFACTURINGCOSTDRIVERTREECostsofgoodssoldDirectLaborDirectCostsOverheadDepreciation(?)DirectMaterialUtilizationCapacityIndirectLaborMaintenanceWastageTransportationLocationProductInventoryProductionlinenoDirectlaborLocationProductDowntimeUptimeWastageOrderQuantityReorderLevelIndirectlaborDistanceCostperKMFrequencyofDeliveryMaintenance

LeversProductionLineNoUptimeDowntimeOrderQuantityReorderLevelCostperKMDistanceFrequencyofDeliveryINITIALPRIORITIZATIONOFMANUFACTURINGVALUELEVERSManufacturingValueLeversProductProductAssetsProductivityNooflineUptimeDowntimeWastageDirectlaborIndirectlaborOurhypothesisProductToomanyproductstohandleAssetsProductivityToomanyLinesUptimecouldbeimprovedDowntimecouldbereducedWastagecouldbereducedProductivityofoperatorscouldbeimprovedProductivityofmanagementcouldbeimprovedHighHighHighHighHighMidMidPriorityInventoryOrderquantitiesReorderlevelWastageinhandling/storageInventoryOrdertoomuchReorderleveltoohighImprove/changewayofhandling/storageHighHighLowLogistic

DistanceFrequencyofdeliveryLogisticPlants’locationshouldbeoptimizedRoutingandloadplanningcouldsavecostsMid–HighMid–HighSUMMARY:KEYOPPORTUNITIESFOREXPLORATION/DRILLDOWN-MANUFACTURINGAssetProductivityplannedtests/reviewDatasourcesStatusInventoryHypothesisLogisticsPlants’locationshouldbeoptimizedRoutingandloadplanningcouldsavecostsRoutinganalysisRoutinganalysisandloadrebalancinganalysisRoutinganalysisRoutinganalysisandloadrebalancinganalysisDatanotyetgivenDatanotyetgivenToomanyLinesUptimecouldbeimprovedDowntimecouldbereducedWastagecouldbereducedProductivityofoperatorscouldbeimprovedUsage&UtilizationanalysisUtilizationanalysis&benchmarkDowntimeanalysis&benchmarkWastageanalysis&benchmarkProductivityanalysis&benchmarkInternaldataInternaldata&benchmarkInternaldata&benchmarkInternaldata&benchmarkInternaldata&benchmarkDataOK–analysisinprogressDataNA–inprogressDataNADatatobecollectedDataNAOrdertoomuchReorderleveltoohighImprove/changewayofhandling/storageUsage&orderanalysisUsage&orderanalysisWastageanalysisProduction&stockdataProduction&stockdataProduction&stockdataDatatobecollectedDatatobecollectedDatatobecollected顺义WT=层顶包(Elopacker)ZL=直立袋(Bossar/xxx)LL=利乐包(Tetrapack)KM=康美包工(Combibloc)PZ=瓶装(GlassBottle)PET=PET(Italy)LSJ=浓缩汁

ZZ=榨汁机(FBRItaly)石河子右玉应县巩义宜昌九江赣州东里莱芜延吉成都上海PRODUCTIONLINESALLTHROUGHCOUNTRIES,

YETUTILIZATIONCONCENTRATEDINBEIJINGDataneededoncapacityutilizationofallHYplantsShowbyvolumeASSETSPRODUCTIVITYH1WT1x1LZL1x600LL1x250LL2x250LL1x2501x330LL1x3301x7501x1LZL1x2001x600KM1X3301x1LKM1X250PET1x500LL2x2502x3302x1LKM1x2L2x1L1x7501x3301x2501x150ZL2x1251x6001x1LPZ2x290WT1x2L1x1L1x500PET1x500LSJx2PZ1x250LL1x1LZL2x200FBR1x5T沃尔派克1x250ZL1x600WT1x500WT1x500LL1x1LFBR1x5TFBR1x5TLL1x3301x1LFBR1x10TLL1x3301x1LZL1x600PET1x500WT1x1LASSETSPRODUCTIVITYH1PlantCapacity(ton)Stack2CombiblocTetrapackBossarElopackGlassBottle25.87.51.91.91.51.20.840.7THEBIGGEST3PLANTSCOMPRISES86%OFTOTALPRODUCTIONCAPACITY,BEIJINGACCOUNTSFOR63%Note: Productioncapacitycalculatedforyear2001,JantoOctSource: HYdata86%63%ASSETSPRODUCTIVITYH2MANYPLANTSHASBETTERUTILIZATIONTHAN

BENCHMARK,THOUGHSOMENEEDIMPROVEMENTPlantCapacityUtilizationNote: Capacityutilizationcalculatedforyear2001,JantoOctSource: HYdata,BCGinterviewsBreak-evenanalysistotalfixedcostsofeachplantsdividedbythecontributionmarginofeachproductwewillgetthevolumeofproductiontogetbacktheinvestmentoflineBenchmarkssaysitisabout50%(needtoverifywithdataanalysis)Downtimeoccursveryoften...duetothefollowingreasonsEVENWITHLOWUTILIZATION,PRODUCTION

LINEDOWNTIMEISSIGNIFICANTCHARTONCOSTANDTIMEOFDOWNTIMEandreasonsASSETSPRODUCTIVITYH3interviewwithCombibloctechniciansWeek4Week1Week2Week32days

JulyPRODUCTIONPLANNINGHORIZONONLYONE

WEEK,LEADINGTOSTOCKOUTSStockoutMaximumCapacityASSETSPRODUCTIVITYH1ReasonforstockoutLackofcapacity–mainlyduetopoorproductionplanningLackofparts–inadequateinventoryLackofproductpackage–mainlyduetoorderingsystemLackofrawfruit–mainlyduetounderestimationofdemandWecouldnotquantifytheimpactastherearenodataavailable.OurestimationofcostisaroundRMB3,600/hrto6,000/hourPRODUCTPACKWASTAGEHIGHERTHANBENCHMARKS

HIGHLIGHTEDEXAMPLEONTETRAPAKLINEQuotes/data?fromequipmentsuppliers,benchmarksandHYCommentsWastageforpackageisabout(needtocheckthis)HuiYuanhasnegotiatedareasonablegoodpricesagainstTetraPakandCombiblocbyitsgrowthpotentialandmulti-vendorenvironment.(callTetraPakguy)ASSETSPRODUCTIVITYH4PACKAGECOSTNOTSTABLEFORCOMBIBLOC

CanHuiYuanAlwaysPurchaseAtTheLowEndoftheRange?

VolumeRMBHighLowAverageRootCauseswastagepricechangefromtimetotime(hastocheckwithMr.LiofInternationalBusinessDeptfordetails)WhydifferenceActualPendingfordataandinfofromintlBusinessdeptASSETSPRODUCTIVITYH4WELLTRAINED&DISCIPLINEDFACTORYMANAGERS

ANDWORKERSCANREDUCEDOWNTIMESIGNIFICANTLY“Thesalarieslevelofoperatorsaretoolow.Peopleleftwhentheygetthetrainingandknowhowtooperatethemachines.Theoperatorsturnoveraretoohighcomparedtoourotherclients.”“Theplantsdohaverules,butwhethertheyabidebyitinhighdisciplineisanotherissue.”-aVendor’sTechnicalSupportEngineer“Oursuccessismainlyfromthein-depthexperienceoftheoperatorswhowetriedtokeepovertheyears.Wehavemanagedtotrainthemsowellthattheywillknowexactlywhattodoandwhatcouldbetheconsequencesofanysingleaction.Sotheyknownotonlyhowtofixthemachinebutmoreimportantly,whatshouldandshouldnotdodur