Six key purchasing trends in the global automotive industry

2006

Increasing demands to cut costs to the bone and deliver one innovation after another is putting enormous pressure on Purchasing departments. OEMs have taken the lead in mastering this complex balancing act. A close analysis of their success stories has revealed key factors that may also help other industries.

Roland Berger Strategy Consultants carried out a detailed study of the Purchasing departments of nine global vehicle manufacturers. The study took a close look at current trends and developed six recommendations for Purchasing departments in the automotive industry:

• Source in low-cost countries – Manufacturers are increasingly realizing cost savings by purchasing in low-cost countries
• Create a global supplier footprint – More and more carmakers are defining a global supplier footprint strategy that provides the decision framework for Purchasing
• Ensure access to technological innovations – Manufacturers are taking considerable action to ensure continuous access to technological innovations
• Reduce costs together with suppliers – Manufacturers are accelerating continuous cost reduction efforts together with cross-functions and suppliers
• Standardize – OEMs are increasingly focusing on technical levers to reduce costs and improve the organizational prerequisites of Engineering
• Globalize structures and decision making – Manufacturers are globally aligning their organization and decision-making structures in Purchasing and improving alignment to Engineering

In addition, key success factors have been identified. Companies that are strategically well positioned are mindful of three factors that are decisive when it comes to optimizing Purchasing: Strategic fit, comprehensiveness and application.

To ensure strategic fit, business decisions in Purchasing must complement the strategy in other functional areas, follow the same aims and be mutually supportive. The steps taken must also be comprehensive enough to generate a substantial impact such as improving the cost situation over the long term. Finally, the actions taken must be stringently applied and constantly monitored to ensure success.

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