As a global company, Valeo aims to better serve the society, environment, safety and comfort through technology-driven. In recent years, Valeo has continued to increase its R&D investment in China.

　　On March 2-3, 2023, at the 4th 2023 New Automobile Supply Chain Conference hosted by Gesch Motors, Yan Wei, vice president of procurement of Valeo China, pointed out that China now has the basic capabilities of quality, technology and service, and the biggest remaining challenge is cost. The supply system needs to have some adaptability. First of all, it needs to ensure a flexible quantity to adapt to various changes and needs of the market. On the other hand, we must continue to strengthen innovation and achieve cost reduction through innovation. In supply chain maintenance, we also need to pay attention to cooperation. Cooperation with suppliers can make the supply chain system more secure.

　　Yan Wei | Vice President of Procurement of Valeo China

　　The following is the arrangement of the speech content:

　　This year marks the 100th anniversary of Valeo. As a global company, Valeo is committed to providing better value services for human travel. In order to realize the transformation from travel to value creation, Valeo further promotes electrification, accelerates high-speed intelligent driving, creates all-area lighting, and reshapes the in-cabin experience. At present, every three cars listed in the world have a Valeo solution.

　　Enhance R&D investment and create advantageous products

　　Valeo's advanced assistant driving system covers a very comprehensive range, including pure vision adaptive cruise, fusion, memory parking, laser radar, high computing power domain controller, etc. Among them, laser radar is the first to achieve mass production in the world, such as the latest assistant driving laser radar of Mercedes S series, and our products are used for the highest level of assistant driving.

　　At the same time, we are committed to reshaping the in-car experience. How to organically integrate technical changes and driving experience is the key point of current development. In the future, we will bring long-term comfortable driving experience to drivers. With regard to the interior lighting, we pursue the home-like warmth, so the full-area lighting of the vehicle lamps is a very important unit.

　　In order to achieve the above objectives, Valeo invested 1.7 billion euros in research and development in 2021, accounting for 10% of the sales. In addition, there are nearly 15000 R&D personnel in the global layout of Valeo, including 3500 R&D personnel in China. There will be gains if you pay. Since three years ago, more than 50% of new businesses have come from new technology investment. In 2021, the number of first patent applications reached 1448, the largest number of patents in France.

　　Source: Valeo

　　How to build a high tenacity supply chain

　　From the perspective of clients, local brands have accounted for a large proportion since last year; In addition, the growth rate of new energy vehicles is more than 100%, and the penetration rate is close to 30%. These data show the changes in the market. The rapid growth of local brands has accelerated the pace. New energy has brought changes in products, including purchased products, some aluminum products, electronic products, and functional products. The growth rate is very significant. However, the volume of other products is declining, and the whole supply chain market has many partners to choose from, and the competition is very large. At this time, how to meet the needs of the market? How to adjust procurement methods and strategies? When talking about the future sustainability and resilience of the supply chain, we should always review what has happened in the market.

　　Source: Valeo

　　If there are more and more domestic brands and more and more electric vehicles, in the past, internal combustion engine customers will be given a development cycle of 20 months, domestic brands can only be given a development cycle of 15 months, and emerging electric vehicles can only be given a development cycle of 8 months. With the increasing complexity of product performance requirements, how to meet the requirements of time has become a major challenge. If we can't keep up with this change, we may be eliminated.

　　For example, until today, green electricity is no longer a slogan, but an action, because the time node is getting closer. But there are two phenomena when we act. First, when we really do it, we have to pay for it. Who will pay? Second, green power needs technical support and innovation support. Can today's technical and innovation capabilities provide sufficient support? Compared with China's supply of goods and Europe's supply of goods, the proportion of green electricity in China seems to be far away. The proportion of green electricity in China's system is about 27% - 28%, but that in France is about 70%. So how to develop new technologies instead? How to reduce consumption? Is a huge challenge we are facing. In addition, we also need to pay attention to the cost and price pressure. Because of the internal volume and inflation, the profit has declined in the past few years. Customers are facing price pressure, and we are facing cost pressure.

　　At present, there are many partners who can meet our expectations and requirements in terms of technology and quality, but cost has become the main source of pressure.

　　Mission and responsibility of supply chain management

　　The supply chain is an important part of our operation and serves our operational objectives. What are the operational objectives? It is to make the company have better profit growth. Therefore, the supply chain must review the essence of the supply chain and bring positive value to the company's growth and profits, so as to be sustainable and resilient.

　　From this point, the company defines the basic mission and responsibilities of the supply chain in two directions: first, to continuously improve competitiveness; Second, ensure supply chain security.

　　In the past two or three years, trade war, COVID-19, inflation, core shortage, Russia Ukraine war and other factors have threatened the security of the supply chain, which are complex but can still be managed and maintained. The key point is to really trust and build partnerships. Take Valeo as an example. Today, all the electronic products of Valeo Group have ranked among the top five in the global procurement volume (automobile industry). In the past three years, no customer has ever stopped production because of Valeo.

　　Competitiveness is a more and more urgent problem we are facing. We really feel the pressure of customers on cost and inflation. Cost reduction and efficiency increase can be started from three aspects:

　　1. Cutting corners will indeed bring about cost reduction, but this method is not acceptable to us.

　　2. Increase the quantity, and the efficiency will improve after the quantity is available, but it is easy to return to the stage of dual and multiple sources of goods, and disperse energy. However, some special products can be considered to help suppliers and partners reduce costs, which requires a certain amount of support.

　　Today, we are looking for ways to help China's partner suppliers increase their volume. The growth in China is sustained and stable. Last year, the inflation rate in the United States was 8% - 10%, while our inflation rate was only 2%, which already has an 8% competitive advantage. What we need to do is to grasp this advantage and help foreign partners to share relevant costs in China.

　　3. Continuous innovation is particularly important. Don't think of innovation as a big thing. Innovation is to save one step. Promote the process optimization method in the production system to suppliers, and bring sustainable benefits from the perspective of innovation.

　　In general, the supply system needs to be adaptive, and the quantity should be flexible to adapt to various changes and needs of the market. On the other hand, we should continue to strengthen innovation. Only by reducing costs through innovation can we achieve sustainable costs. We should attach importance to cooperation in the maintenance of the supply chain. We need to find suppliers with cooperative relationships to make the supply chain system more secure. Finally, diversify appropriately, for example, gradually diversify electronic parts. At present, the proportion of procurement volume in Europe, America and Japan is still very high.

　　This is our pursuit. For suppliers and supply chain systems, we need to find friends, grow each other, maintain sufficient competitiveness, make the supply chain safer, and make everyone's business better and better.

　　(The above content is from Yan Wei, vice president of procurement of Valeo China, who delivered the keynote speech of "Creating High Resilience of Supply Chain, Changing the Strategy of Enterprise Production and Supply Chain Layout" at the 2023 Fourth Automobile New Supply Chain Conference hosted by Gesch Automobile on March 2-3, 2023.)