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STR-90008-481-02-02-E.ppt
Management Summary
150 international supplier executives of the automotive industry were questioned regarding
future procurement market trends and to the usage of optimization levers within their companies.
73% of the suppliers assume tougher market conditions for the future, especially by a further
increase of raw material prices in combination with constantly high price pressure from the OEMs.
All executives suppose that the key levers in the procurement environment for additional supply
cost savings are not exhausted, eg. joint design-to cost approach with sub suppliers before SOP
Common experiences reveal that by the best possible combination of all procurement levers cost
savings of up to 20-25% are possible. Due to daily internal routines the average realizes 3-4%
Additional topics like low cost country sourcing or professional negotiation management get
higher priority and amend classic purchasing topics like standardization or make-or-buy analyses
In this context the suppliers have to redesign the department interplay of project and serial
purchasing in combination with R&D as well as the quality department to reveal the best results
The procurement departments face the necessity to align their organizational and process requirements a balancing act of organizational efficiency and realization of cost savings
STR-90008-481-02-02-E.ppt
Contents
Page
B. Status quo: The material cost saving potential of the procurement is not
exhausted many key levers are not fully implemented
12
21
37
Authors contacts
44
This document was created for the exclusive use of our clients. It is not complete unless supported by the underlying detailed analyses and oral presentation. It must not
be passed on to third parties except with the explicit prior consent of Roland Berger Strategy Consultants.
STR-90008-481-02-02-E.ppt
STR-90008-481-02-02-E.ppt
OEM
OEMs
SUPPLIERS
RAW MATERIAL
PROVIDERS
Source: Roland Berger/Rothschild
STR-90008-481-02-02-E.ppt
Cost saving
program
Targeted savings
[EUR bn]
CORE
-6%
p.a.
6% p
a
4
5
4.5
Efficiency
optimization
program
-4/-6% p.a.
6.0
For Motion/
For Motion Plus
OLYMPIA
Estimated price
pressure on suppliers
7.0
2.0
-6/-7% p.a.
OEMs require
yearly price
reductions of
4% to 7% p.a.
-6% p.a.
STR-90008-481-02-02-E.ppt
84%
73%
Competitor consolidation
68%
Part/product variety
68%
Harder
73%
Same
24%
Easier
3%
42%
37%
21%
STR-90008-481-02-02-E.ppt
[USD]
[USD]
+61%
100
+28%
3.000
2.000
50
1.000
0
Jan
2006
Dec Jan
Jan
Dec
2006
2007
US-Dollar [USD/EUR]
USD decrease
+57%
800
Dec Jan
Dec
2007
-20%
1,0
600
400
0,5
200
0
0,0
Jan
2006
Dec Jan
2007
Dec
Jan
2006
Dec Jan
Dec
2007
STR-90008-481-02-02-E.ppt
PROCUREMENT
REQUIREMENTS
Highest operational
efficiency
and
highest material
cost savings
EXTERNAL FACTORS
STR-90008-481-02-02-E.ppt
Material costs count for more than 50% of all costs in the supplier
industry Main optimization lever with an 1:1 profit impact
Cost breakdown example of automotive suppliers
Average supplier P/L breakdown 2006
100%
REMARKS
26%
54%
9%
5%
Total Personal Material
output
costs
costs
SG&A
D&A
1%
5%
Interest
EBT
STR-90008-481-02-02-E.ppt
10
Key objective of this study: Identify main market trends and levers
for automotive suppliers to optimize their procurement business
Summary of study objectives and approach
Study objectives
Provide an overview on the assessment of
future procurement market trends in the
automotive supplier industry
Identify main success levers for
automotive suppliers to optimize
their procurement business
APPROACH
Procurement survey with a questionnaire
at 150 international automotive
supplier executives
Analysis and benchmarking of
operational procurement data
Desk research
STR-90008-481-02-02-E.ppt
11
STR-90008-481-02-02-E.ppt
12
Optimization
priority
Saving range
of projects
69%
58%
Design-to-cost
53%
Negotiation management
47%
Sourcing strategy
42%
Supplier management
Organization/processes1)
28%
POSSIBLE OBSTACLES
5-10%
10-12%
3-6%
7-12%
2-5%
4-12%
13
Implementation
Saving impact1)
REMARKS
Clear definition/differentiation
of material groups
84%
63%
42%
32%
Indirect
Indirect
Direct
Direct
14
Implementation
Saving impact1)
REMARKS
Standardization internal/external
product benchmarking
Cooperation of purchasing and
engineering in development
53%
42%
Indirect
Indirect
37%
Direct
37%
Direct
15
Implementation
Saving impact1)
REMARKS
53%
47%
42%
5%
Indirect
Direct
Direct
Direct
16
Only the half of all suppliers use the cost cutting potential of main
sourcing levers like volume bundling or LCC sourcing
Sourcing strategy Survey results
Module levers
Implementation
Saving impact1)
REMARKS
58%
Direct
53%
Direct
53%
Indirect
47%
Indirect
17
Implementation
Saving impact1)
REMARKS
68%
58%
54%
32%
Indirect
Indirect
Indirect
Direct
18
Employees
procurement/total
employees
[%]
p y
[ ]
Procurement
volume/purchaser
[EUR
m]]
[
18.0
1.7%
92%
REMARKS
Benchmarking
g of operational
p
figures
g
has to be reflected to organizational
structures and purchased materials
Material cost depends mainly on the
company's degree of value added
51%
0.9%
42%
8.8
4.4
0.3%
Min.
Max.
Min.
Max.
Min.
Max.
STR-90008-481-02-02-E.ppt
19
Sourcing
S
i
strategy
Design-to-cost
7-12%
3-4%
Potential
cost
savings
Organization/
processes 4-12%
5-10%
3-6%
1-2%
Supplier 2-5%
management
Low
Weak
Material group
strategy
Average
Benchmark
Project
Product
phase
Negotiation
management
Series
20
STR-90008-481-02-02-E.ppt
21
1
Material group
strategy
structures
2 Optimization of the supplier portfolio
2
Sourcing
strategy
project/development phase
4 Improvement of supplier manage-
3
Design-tocost
4
Supplier
mgmt.
6
Organization/
processes
5
Negotiation
mgmt.
ment processes
5 Advanced negotiation management
22
Methodical approach/tools
Supply data/market analysis
Supplier and part catalogs
Risk assessment
Make-or-buy analysis
Standardization analysis
low
Documents
Modularization evaluation
Morphological raster
STR-90008-481-02-02-E.ppt
23
SOURCING STRATEGY
Methodical approach/tools
Supplier pyramids/categories
Supplier portfolio optimization
Volume bundling/reallocation
Low cost country sourcing
Scoring models for relocations
low
Documents
+ =
STR-90008-481-02-02-E.ppt
24
DESIGN-TO-COST
Methodical approach/tools
Life cycle assessment
Product benchmarking
Product disassembling
DFMA analysis
Cost driver analysis
low
Complexity analysis
ABC
ABC
ABC
Documents
STR-90008-481-02-02-E.ppt
25
SUPPLIER MANAGEMENT
Methodical approach/tools
Total cost evaluation
Quality assessment
Logistic assessment
Awarding risk assessment
PPAP/MPA analysis
low
Criteria
Red
Supplier workshops
KPI definition/monitoring
STR-90008-481-02-02-E.ppt
26
NEGOTIATION MANAGEMENT
Methodical approach/tools
A/B/C supplier initiative analysis
Negotiation preparation/planning
Cost structure
(BoM)1)
analysis
Negotiation performance
New payment conditions
low
231.423 231.423
231.423
231.423
231.423
231.423
056.156 056.156
056.156
056.156
056.156
056.156
812.685
812.685
812.685 812.685
812.685
812.685
231.423 231.423
231.423
231.423
231.423 231.423
January
1 2 3 4 5 6 7 8
M T W T F S S M T
Team Roland Berger
Henkel
Schmitt
Hagenmeyer
Hollmann
Kaiser Florian
Kohr
Renzow
Schnieper
Trenkwalder
Checklist
_______
_______
ABC
ABC
ABC
27
Methodical approach/tools
Top-down benchmarking
Process gap analysis
Best practice organization
Scoring model interface assessment
Basic manpower evaluation
low
Buyer workshops/trainings
___
______
___
______
28
PROJECT MODULES
Portfolio management/
sourcing strategy
Supplier management/
development
Value engineering/
design-to-cost
Quick wins
OPTIMIZATION LEVERS
PORTFOLIO MANAGEMENT
Definition of bundling strategies
Reorganization of the supplier portfolio
SOURCING STRATEGY
Optimization of sourcing strategies
Adaptation of sourcing instruments
SUPPLIER MANAGEMENT
Development of an sub supplier
assessment and improvement system
Optimization of management until and
after SOP
DESIGN-TO-COST
Integration of supplier innovations
Development of joint value engineering
QUICK-WINS
Material group related optimization
Optimization of supplier contracting
Improvement of discount conditions
Optimized
processes
and instruments
Additional
saving
potential of
EUR 75 m
(in 3 years)
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SUPPLIERS
SERVICE PROVIDERS
STR-90008-481-02-02-E.ppt
31
USA
USA
4 Partners
20 Consultants
WESTERN
EUROPE
8 Partners
50 Consultants
SOUTH AMERICA
1 Partner
5 Consultants
EASTERN
EUROPE
2 Partners
15 Consultants
CHINA
2 Partners
20 Consultants
32
With recent automotive studies we inject highly valuable knowhow from day one in each client project
Overview on recent automotive studies (selection)
REGIONS
TECHNOLOGIES
MARKET STRUCTURE
China study
(2006)
Powertrain
study (2007)
Assessment of automotive
technologies/ capability
Opportunities for sourcing from
China
Developments in Powertrain
technologies
Strategies how to meet the new
emission regulations
Russia study
(2005/2006)
Electronics
study
(2006/2007)
Automotive
supplier study
(2007/2008)
Supplier benchmarking
Identification of Top/low
performers
Success factors for suppliers
STR-90008-481-02-02-E.ppt
33
Marcus Berret
Partner
+49 89 9230-8737
marcus_berret@
de.rolandberger.com
6 years of international
consulting experience
+49 89 9230-8060
marcus_hoffmann@
de.rolandberger.com
STR-90008-481-02-02-E.ppt
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