Mercedes-Benz Cars is expanding the international presence of its
procurement organization with extended responsibility for supplier quality.
The aim is to safeguard the company’s Mercedes-Benz
2020 growth strategy from the perspective of procurement.
"We need the most
innovative and capable suppliers worldwide. Our growth strategy offers them
outstanding prospects," stated Dr. Klaus Zehender, divisional board member
for procurement and supplier quality, Mercedes-Benz Cars. "Particularly in
growth regions, we will develop capable and competitive suppliers as new
partners. At the same time, our long-standing suppliers have the opportunity to
grow along with our global production and procurement network."
The department for procurement
and supplier quality at Mercedes-Benz Cars has some 1,400 employees worldwide and
is responsible for an annual purchasing volume in the range of €2 billion.
The first Mercedes-Benz
model benefiting from the increased international footprint is the new C Class;
Mercedes-Benz's highest-volume model which is produced on four continents for
the first time.
The production network
consists of the German lead plant in Bremen, the South African plant in East
London, the US plant in Tuscaloosa/Alabama and the Chinese production location
BBAC in Beijing. The international plants are supplied to a high degree with
parts from local suppliers.
"Procurement close to
production makes an important contribution to reaching the economic goals. With
the new C-Class, we have further increased localization in China and South
Africa compared to the previous model, and in the NAFTA region we have reached
a high localization ratio from the start," claims Zehender.
In China, the so-called
local content ratio of vehicle and engine production at the BBAC plant in
Beijing now stands at around 60 per cent. Until today, some 250 local suppliers
have been successfully developed, and among the 10 largest Mercedes-Benz
suppliers in China are three entirely Chinese companies.
The local content ratio at
the US plant in Tuscaloosa, where the new C-Class is the first sedan built
along with the traditional SUV production portfolio, currently stands at around
60 per cent, and local procurement in South Africa will further approach that
dimension - calculated comparably - as well.
In general, Mercedes-benz
claims there are no abstract target ratios for localization. Instead, the
optimum for each part - in terms of parts price, logistic cost and tooling cost
- needs to be achieved through local or global contract awarding.
The procurement locations in
China, the US and South Africa are playing an important role in increasing
localization. With further offices in Mexico and India the unit manage some
1,500 suppliers worldwide with regard to all commercial and quality-related
aspects.
Their tasks and
responsibilities were strengthened: as so-called hubs, their comprehensive
scope extends from the identification and development of new suppliers,
supplier management to the quality of purchased parts.
Zehender claims: "We
are deepening our understanding of the local markets with the procurement hubs,
and we are leveraging the expertise of our local partners - in China for
example in our joint venture BBAC. Altogether, we will even better be able to
utilize market potentials from components to raw materials."
The global sourcing strategy
is based on three pillars: Each production plant is supplied by specific local
suppliers (Local Source). Further parts are globally supplied from one central
supplier location (Global Source), or from a supplier with locations close to
Mercedes-Benz plants (Follow Source).
That way, the company
claims, numerous long-standing partners from Germany are on board with the
new C-Class as well. Examples include the high-end audio specialist Burmester
is responsible for the premium sound system. Switching system specialist
Marquardt produces all locking systems for the model. Mattes & Ammann is
the global second-tier supplier of all fabrics covering ceiling and pillars. The
exhaust system of the new C-Class, which can only be produced locally due to
its dimensions and needs to be provided exactly in sequence, is supplied by
Boysen. Boysen, based in the Black Forest, has built new locations to produce
the systems close to the four C-Class plants and thus enlarged its own
international presence.
Opportunities for
new partners
The Mercedes-Benz 2020 growth strategy and the
increasing complexity of the business have been key aspects in the department's
realignment including the integration of procurement and supplier quality
functions.
Not only will the absolute
unit figures on the basis of the existing product portfolio rise - by 2020
Mercedes-Benz will globally introduce more than 30 models, of which at least 11
without a direct predecessor – but further challenges include the diversity of
vehicle and powertrain variants and the increasingly global presence with
production capacities close to customers and markets around the world.
Zehender states: "In
line with our growth, procurement volume will continue to rise. In addition,
our architecture and module strategy unlocks higher scale effects on both our
and the suppliers' side. That provides best preconditions for our partners to
grow their business with us while we are systematically increasing the
procurement organization's contribution to the overall success of the
company."
Relevant factors in the
relationship with suppliers are the four value drivers: technology/innovation,
quality, reliability and cost.
"Our demands on
suppliers include four areas: we expect innovative contributions which help us
to safeguard our technology leadership,” further explained Zehender. “We
achieve our uncompromising quality standards in close collaboration. The
highest degree of reliability is needed for all parts supplies. And of course, a competitive cost position is always required as well - achieved
primarily through continuous intelligent technological improvement”.
All suppliers are managed in
a comprehensive manner - from tender, contract awarding, maturity validation during
the ramp-up to series supply.
"Managing each supplier
under just one roof gives us the utmost level of transparency so we can
coordinate the cooperation as quickly as efficiently: with the full commercial
and technological expertise of our team, for each part through the entire
vehicle lifecycle, claims Zehender."
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