CHINA AUTOMOTIVE SUPPLIER

QUALITY MANAGEMENT BRIEFING

Vol. 4, No. 9, September 2020

1

2nd Party Audit & 3rd Party Audit (Ⅱ)

Qualification requirements for auditors

(Continued from the last issue)

2rd party auditors: undertake training in ISO9001 and IATF16949 and obtain passing certificate for the training and examination; understand the requirements of ISO9001 and IATF16949 applicable to the audit scope; understand the audit processes and methods for the automobile industry, including risk-based thinking,  customer specific requirements, requirements of core tools related to audit scope, audit plan compilation, audit implementation, audit report, and closing of audit finding.

3rd party auditors, also known as State Registered Auditors, who are engaged in the third-party audit in the name of the certification company and can directly go to each company for audit. The external auditor complies with the national registration system, participates in the national unified examination, and becomes a registered auditor only after passing the examination. In addition, there are clear requirements for the qualification of registered auditors to participate in the examination, including relevant professional and certain work experience.

Auditor's position

The position of a second-party auditor represents the buyer (customer) to audit the supplier, whereas a third-party auditor is undertaking an audit on behalf of an independent external audit body.

Audit process

As a party to be audited, the auditee will make the following preparations before the audit:

2rd party audit: Accept / convey the audit information → agree on the audit implementation schedule → decide to implement the audit → accept the customer's audit → distribute the audit checklist to each department → Internal audit and management review to be carried out in advance by the decision of management representative → make full preparation for the related matters of each department → start the customer audit.

3rd party audit: Organization decides to implement certification → consult relevant certification authority→ obtain advices from certification authority → apply to certification authority → application acceptance → organize and implement training on standards → organize and implement internal audit and management review → submit documents to certification organization for review → documentation audit → on-site formal audit by certification organization → recommendation for registration by certification organization → certification issued to organization → regular supervision audit  → update audit.

(To be continued)


By Felix SS YUAN

2

Vehicle Lambda (Oxygen) Sensor

Lambda Sensor, also known as gas concentration sensor, is an essential sensor in the engine electronic control system. Its function is to obtain the air-fuel ratio signal of the gas mixture by monitoring the content of oxygen ions in the exhaust, and then convert the air-fuel ratio signal into an electronic signal for the engine ECU. The ECU adjusts the injection time based on the signal of Lambda Sensor to achieve the feedback (closed-loop) control of air-fuel ratio. The air-fuel ratio is controlled at around 14.7 (the excess air coefficient is 0.98 ~ 1.02), so that the engine can get the best concentration of gas mixture in order to reduce harmful gas emissions and save fuel.

Primary failure mode

The failures of the Lambda Sensor are mainly caused by signal problems due to heavy metal poisoning, circuit failure, chip fracture, loose sealing, air leakage, etc.

● Heavy metal poisoning is mainly caused by fuel oil or due to service life. 

● Circuit failure is mainly due to the strength of welding, as well as open circuit and short circuit in installation and use.

● The main causes of chip fracture include materials used by the manufacturer, the production process and transportation.

● Air leakage caused by sealing problem needs to be controlled at the assembly line, including material, process, inspection and so on.

At present, most of the manufacturers have mature technology and sufficient experience in tubular Lambda Sensor. More attention should be focused on new type of Lambda Sensors such as chip type.


By Andy RS ZHANG

3

SCM C19: Cross-border Supply Chain Management in the aftermath of COVID-19 (IV) 

International buyers for aftermarket are almost always troubled by some long-standing issues when making purchases overseas, such as high MOQs required by suppliers, the trade-off between FCL and LCL orders, and the extended period from ordering to delivery.

In the face of COVID-19, international buyers are under more pressures to avoid the high MOQs, reduce the additional cost of LCL orders and improve the inventory turnover.

SCM C19 addresses these issues in overseas purchasing by encouraging the business communities to adopt more creative solutions to minimize the impact of the pandemic.

▍Group Purchasing

Factories set high MOQ for various reasons, sometimes factories would also hold low-volume orders for a long time until they have accumulated enough orders for the same parts so productions are more cost-effective.

With SCM C19, buyers can participate in online “Group Purchasing” sessions that are designed with discounted prices to be applied at target quantities within fixed durations.  

▍LCL Shipment Consolidation

More companies now prefer to purchase in smaller quantities, and many more are not able to always order in full container load (FCL) when it comes cross-border purchasing.

With SCM C19, international buyers could place LCL orders, and service providers would consolidate multiple LCL orders from different buyers for the same region into FCL shipments to a common port within the region and then coordinate each buyer’s orders from the port to the final destinations.

▍Express Shipping between China to Europe

Railway services such as China Railway Express from China to Europe have been in use for many years. While the costs are obviously higher than ocean freight, the shipping time from China to Europe is typically about 2 weeks. 

Within SCM C19, when market could change unexpectedly and shorter delivery time means more security and lower risks, the substantially shorter delivery time from China to Europe with the railway services could be justified especially for companies dealing with high-valued products.

▍Trade Financing Support

Financial risks are becoming even higher in the face of COVID-19 for all parties, including both the sellers and the buyers. 

Under SCM C19, financial institutions or other specialized service providers are encouraged to set up special trade financing program, for example, Special Export Credit Insurance for sellers, so that sellers are encouraged to extend credit facilities to buyers. 

In summary, the traditional management of cross-border supply chains has changed substantially in the aftermath of COVID-19. New solutions are needed to address the many challenges of the new norms of the business. SCM C19, the cross-border supply chain management post COVID-19, provides a general framework and practical solutions for the global automotive industry, especially the aftermarket communities, to effectively with the new norms of the new economy.  


4

Cost of raw materials:

Exchange rates:

USD/RMB: 1:6.8355



EUR/RMB: 1:8.0662



RUB/RMB: 1:0.0899




September 2020



The above information is for reference only


5

There are two major public holidays in October in China, the National Day and the Mid-Autumn Festival. While the National Holiday is always on the 1st of October, the Mid-Autumn Festival takes place annually on the 15th day of the eighth month in the Chinese calendar, and this year, it falls on October 1st.

With the two major national holidays coming together at the beginning of October, the official holiday period is from the 1st to the 8th of October, during which all offices will be closed during the entire period and factories would also be closed from the 1st but many would return to work in just a couple of days.

Happy Holidays!





SHENTOU SUPPLY CHAIN MANAGEMENT CO. LTD. is a Shenzhen, China, based company serving international automotive clients in the implementation of their China strategies and programs. CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING is a bi-monthly newsletter published by Shentou to address the specific and unique quality challenges and concerns international automotive companies face with suppliers in China. Comments are welcome at qms@shentou.com. Click here to subscribe.

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