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With the sword of Damocles hanging high, how can traditional manufacturing companies break the ceiling?

     China Industry News learned from the "Information Conference on the Economic Operation Situation of the Machinery Industry in the First Half of 2021" held by the China Machinery Industry Association not long ago. However, the impact of the sharp increase in raw material prices on the efficiency of machinery companies is beginning to appear. The continuous evolution of overseas epidemics has aggravated the complexity of the foreign trade situation. At the same time, the increase in the comparison base puts pressure on the indicator growth in the second half of this year. The problem of difficulty in recovering accounts is still continuing. Small and medium-sized machinery manufacturing enterprises that have been encountering financing difficulties and expensive financing problems generally have the problems of weak investment willingness, unclear direction, and insufficient funds, and lack of momentum for transformation and upgrading.
   With the sword of Damocles hanging high, how can small and medium-sized mechanical processing and manufacturing enterprises break the "dead loop"?
       Start the road to digital transformation
       China Industry News recently obtained such enterprise data from a research organization: The monthly order intake has increased from 3 million yuan to more than 20 million yuan; it is expected to grow from a small-scale supplier of a OEM to a high-quality supplier within 3 to 5 years. , The annual sales will increase from 10 million yuan to 300 million yuan...All this will be completed in only one year.
   On September 29, the China Industry News interviewed the person in charge of this company, Mr. Cai, the general manager of Chaoyang Heavy Machinery, and asked him to tell the secret of the company's perfect "jumping". This may provide some reference for traditional manufacturing companies to break the industry ceiling.

Source: Hengyang Chaoyang Heavy Machinery Co., Ltd.
   It is understood that Chaoyang Heavy Machinery is built by a professional team that has been deeply involved in the mechanical processing and manufacturing industry for decades. It mainly produces and sells mechanical products and parts, casting products, steel structural parts, mechanical welding parts, sand making machines, water pump motors, etc.
"Raw materials account for a high proportion of the company's operating costs. Fluctuations in the price of raw materials such as steel have a certain impact on the company's operations and production plans. We must find a suitable supply of raw materials to meet customer needs." Mr. Cai said that Chaoyang Heavy Machinery used to source raw materials by itself. In order to cope with the increasingly fierce competition in the industry, as an alternative procurement channel, in October last year, the company tried online procurement on the industrial products e-commerce platform-Yigong. . "In the past, we needed to contact the supplier ourselves, to inquire about the price, to contact the logistics and transportation, the delivery time of the raw materials could not be fully controlled, and it was difficult to control the cost. After implementing digital procurement through the Yigongpin e-commerce platform, we found this appliance The business platform is very professional, and the feedback to customers is very efficient."
   Mr. Cai said that in addition to a small amount of sporadic regular offline purchases, the company now purchases thousands of tons of steel raw materials every month basically through easy-to-work products. "It can be said that we unknowingly started the road of digital transformation. This road is more and more enjoyable, and the more we go, the more confident we are."
       The sword of Damocles has been cut
   What makes Chaoyang Heavy Machinery so confident?
   Mr. Cai said that March to May of this year is the company's peak production season, and the company is producing counterweights for its key customers' crane products at full capacity. At this time, the company received a call from a customer. The weight of another specification originally scheduled to be produced by another supplier was unable to be produced and delivered on time due to the price increase of special steel and the shortage of supply. Therefore, this additional order was temporarily dropped to Chaoyang Heavy Industry. On the nose, but the delivery cycle cannot be changed and must be completed within two weeks. "The increased raw materials exceeded expectations. The quantity of goods is thousands of tons, and they are all technically difficult special specifications. The number of light specifications is as many as 20. If you go to a supplier to purchase, it is estimated that it will take a month to arrive. , It will definitely not be able to complete the delivery deadline set by the customer."
Mr. Cai said that at the time the company tried to submit purchase requirements on the easy-to-work products, the system automatically analyzed and generated accurate "purchasing execution algorithm, raw material procurement plan, processing scheduling plan, transportation scheduling plan" plan, according to our production efficiency at the time, Warehousing carrying capacity, integrating the upstream and downstream resources of the supply chain such as domestic steel suppliers, steel warehousing, processing companies, and transportation companies, has mobilized several steel mills nationwide that meet the requirements of spot steel for us. During the transportation, the route of the goods to the factory is planned through GPS and Beidou system, and the arrival time is estimated. Finally, thousands of tons of steel are delivered to the company's production workshop quickly and in multiple batches within 10 days. "The order was completed on schedule, and the customer was not only satisfied, but also increased a lot of confidence in our production capacity."

Source: Guangzhou Yigongpin Technology Co., Ltd.
  Through this purchase, Chaoyang Heavy Machinery felt the basic ability of the supply chain of Yigong Products. In the subsequent two purchases, the expert service guidance provided by Yigong Products gave Chaoyang Heavy Machinery an extra "surprise".
       Mr. Cai said that this year, compared with previous years, the rapid changes in market conditions were unexpected. The price of raw materials fluctuates greatly. For example, for steel plates, the largest price increase in May this year was close to 50% compared to January this year. . Everyone is full of uncertainty about the market trend, but Yigongpin has given itself a surprise. In May, we purchased steel according to the original plan. The Yigong product expert team judged that the steel will rise sharply in the short term. It is recommended that we sign steel orders quickly and complete the raw material reserve at a low price before the rise; in September, we purchased steel again. Industrial product experts believe that the price will be lowered in the short term. It is recommended to delay or purchase a small amount of materials to ensure basic production. When the price drops to a lower level, normal purchase will be provided to the company in a timely manner.
      Mr. Cai said: “After several months of cooperation, we have fully understood that Yigong Products has a rich background in the manufacturing industry. The team members are mainly from the industrial industry, and most of them are first-line manufacturers in various vertical fields. Among them, there are hundreds of people. The product selection expert team has more than ten years of experience in specific industrial verticals. They have close contact with steel mills. Together with the unique "supply chain resource information database" of Yigongpin, they can compare the supplier's raw materials and prices. Information, unit status information of processing companies, and vehicle status information of transportation companies are collected in time, and information technology is integrated to establish an information database of steel supply chain resources. We are willing to trust the industry predictions made by experts in easy-to-work products. After adopting the suggestions, These two purchases have saved us nearly two million yuan in funds."
   Yi Gong products not only have the supply and bargaining power beyond traditional suppliers, it also has a stable and efficient financial support service system. With the financial support of Yigong Product, Chaoyang Heavy Machinery has relieved the pressure on cash flow and has truly embarked on the road of “leapfrogging”.
   Mr. Cai said that due to capital turnover and risk management and control, Chaoyang Heavy Machinery was able to take orders for only 3 million yuan per month in the initial contact with Yigong. After understanding this situation, the risk control department of Yigong Product adopted a digital method, relying on industry experience and intelligent algorithms, and conducted a credit line survey and evaluation of Chaoyang Heavy Machinery. The company's corporate strength, financial status, and industry reputation quickly became a sunrise. Zhongji applied for a fixed and large rolling account period credit, which greatly eased the company's financial pressure.

       "Good capital turnover has quickly revealed our operational strength. The company seized the opportunity to complete the upgrade of plant and equipment. The product quality has made a qualitative leap, and it also has a greater ability to undertake business. The number of orders received has increased to 2000-3000. 10,000 yuan, and have a solid foundation for the development of hundreds of millions of dollars. In this process, we have achieved strong competitiveness in the top enterprise supplier list, successfully ranked as a high-quality supplier, and the order amount is large. Growth, the company entered a rapid growth channel."


   There is no doubt that traditional manufacturing SMEs are facing challenges, how to seize the opportunities? Using digital transformation to enhance the core competitiveness of enterprises may be the right choice for enterprises to face the challenges.

   The tide of the times is constantly surging forward, conforming to the trend and moving forward courageously is the right direction that enterprises should pursue. The Industrial Internet can be said to be full of "magic". It has promoted the digital transformation of many traditional manufacturing companies like Chaoyang Heavy Machinery; it is also accelerating the cultivation of emerging industries, giving birth to intelligent production, networked collaboration, service-oriented extension, and individuality. Many new industries of customized customization. Under this torrent, the industrial product e-commerce platform represented by Yigong products has changed the conventional process of industrial procurement, deeply empowering the upstream and downstream of the industrial chain, and helping traditional manufacturing companies to achieve transformation and upgrading. It can be seen that China's industrial product e-commerce is responding to the strongest voice of this era with a trillion-level market space.

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