Analysis Of Quanfeng Group's Product Platform Strategy

Benefit by demographic dividend and the industry transfer of developed countries,China’s manufacturing industry grew fast and became the engine of the China’s economy.China has the largest manufacturing industry on the world,the largest but not the strongest,the major business mode still make and export labour-intensive product and resource-intensive product,labour productivity and industry adding value still stay low level,which has blocked the sustainable development of economy.With the rapid development of China’s economy,the labour cost rise quickly,meanwhile,the market demand become more and more diversified,the mode of multi-product and small-batch production have been applied more and more widely,the low-cost competent advantage disappeared step by step which once labour-intensive industry lived on it.At the same time,due to the fierce competition and excess capacity,most enterprise can’t shift the increased cost to the customer,not better than shifting part of it,so the enterprise continue lose their profit.Under the situation,how to improve business management level,re-build the cost advantage is a big test of China manufacturing industry.What CHERVON group is fighting should be the typical trouble of China Labour-intensive industry.CHERVON group was founded in 1993,the major business is power tools,CHERVON group started from trading business,keep growing to the largest local power tools company of China with 4000 employees,CHERON group has core competence of R&D,manufacturing and global sales,90%of product sold to overseas market,most on European market and North American market.ODM business is the major business mode of CHERVON group,together with OEM and OBM business.The company has excellent capacity of product design,development and manufacturing,can offer individual service and multi-products,which is the favorite of large retailer on European market and North American market,so most of the top class retailer have important business with CHERVON group,including the top three of American market-The Home Depot,Lowe’s and Sears,the top three of European market-Kingfisher,ADEO and OBI.CHERVON kept making big profit by offering competitive customized products with low cost.However,CHERVON group didn’t achieve the expected scale economy with the growth of sale volume.ODM business mode has caused the complexity of product line increasing rapidly,R&D cost and components keeping increasing,with rapid growth of labour-cost,labour productivity even lower than before,so the cost advantage of CHERVON group was weakened,the glory of ODM business has disappeared.In the year of 2011-2013,the sales volume barely increased.CHERVON group dig deeply their successful factors in the past,the conclusion is the key of success is providing high cost-performance product to the market,keep the product at higher level design and manufacturing and re-build the cost advantage,then CHERVON group are guarantee the success in the long run.To achieve the goal,there must be a reform on the product planning,R&D,manufacturing and purchase,towards the direction of platformization,automation and professionalization.This paper analysis the product platformization strategy of CHERVON group,firstly,introducing the relative theory of platformization and modularization,secondly,brief China’s power tools industry and general situation CHERVON group,then analysis the detail difficulties and derive the necessity of platformization strategy.At last,this paper will discuss the detail planning and implementation of the strategy and a case study.Product platform bring some benefit,shorten the lead time of new products development,decrease R&D cost and increase the scale economy,improve the competency advantage at last.CHERVON is typical,such as private enterprise,engage labour-intensive manufacturing industry,export-oriented enterprise,so this valuable experience is a good reference to other company.