General Logistic Standard
FAW-Volkswagen Co. Ltd.
Logistics Department
Applies to all domestic first-tier suppliers supplying FAW-Volkswagen Co. Ltd. with manufacturing parts and materials
Version: Jan. 2006
Contents
Foreword
This “General Logistic Standard” was compiled based on the requirements of FAW-Volkswagen’s Logistics Department and actual and existing circumstances arising from day-to-day work, with the aim of clarifying logistic requirements before a new part is designated, enabling pre-selected suppliers to produce more accurate logistic quotations, and providing a
foundation and guarantee for the future implementation of logistic requirements during batch goods supply. When a new part is processed, the FAW-Volkswagen Logistics Department will carry out further confirmation and adjustments according to the logistic standard decided during part designation.
During day-to-day goods supply and operations, all suppliers must abide by the specific logistic requirements of the “General Logistic Standard” and any other of FAW-Volkswagen's written suggestions, and perform all the duties and obligations stipulated in the contract between the supplier and FAW-Volkswagen, avoiding all non-compliant behavior, and thus improve the operation efficiency and control capabilities of the whole logistic cycle.
FAW-Volkswagen reserves the right of final interpretation of the "Standard.” With the development of FAW-Volkswagen and the new requirements of relevant laws and regulations, the Company will update and promptly re-release this document.
1. General Principles
1.1. Pre-selected suppliers must organize and plan their logistic process based on FAW-Volkswagen's logistic requirements, and in turn complete the quotation according to this process, making sure that each logistic cost is made clear in FAW-Volkswagen’s quotation form.
1.2. During the goods supply process, the supplier must not only abide by the logistic requirements described in the “Standard”, but also abide by other logistic standards and requirements stipulated by FAW-Volkswagen not emphasized or mentioned by the “Standard.”
1.3. If, during the goods supply process, there are changes to the quotation and/or mode of operation, the supplier must obtain the approval and agreement of the FAW-Volkswagen Logistics Department before these become effective, otherwise the supplier must take the responsibility for any consequences that arise from these changes.
2. Goods Supply Methods
    In principle, parts supplied to FAW-Volkswagen's designated sites can reach their destination via three methods:
2.1. Kanban Goods Supply: The supplier delivers goods to FAW-Volkswagen's logistic entranceaccording to the goods demand sent by FAW-Volkswagen via electronic Kanban (or telephone).
2.2. Just In Time (JIT) Goods Supply: The supplier delivers goods to FAW-Volkswagen’s logistic entranceaccording to the car manufacturing sequence. Whenever necessary, internal JIT production must be carried out according to FAW-Volkswagen's requirements.
一汽大众公司2.3. Requirement Planning Goods Supply: The supplier (outside Changchun) supplies goods to a specified transit warehouse (the parts remain the property of the supplier) according to the goods arrival time and quantities required in the Part Requirement Plan, and are then sent from the transit warehouse to FAW-Volkswagen’s logistic entrancevia Kanban or JIT methods.
Pre-selected suppliers can obtain relevant information from FAW-Volkswagen’s Contracting-Out New Parts document.
3. Settlements
3.1. Parts Supplied Via Kanban: FAW-Volkswagen will make settlements according to the number of parts registered in its logistic entry system as having entered the warehouse.
3.2. Parts Supplied Via JIT: FAW-Volkswagen will make settlements according to the number of parts at point CP7 , after cars have come off the assembly line.
4. Geographical Location of Suppliers
In order to ensure that a supplier can dispatch goods to FAW-Volkswagen upon receipt of its goods demand within the controlled time, suppliers should be located near the Company (suppliers located near the transit warehouse would also fulfill this requirement).
4.1. Kanban Parts: After receiving FAW-Volkswagen’s goods demand notice, goods must be delivered to the Company’s logistic entrance within 2 hours.