ZF is reorganising its production materials purchasing. In the next two years, the group wants to save EUR500m (US$640m) together with its suppliers. To achieve this, the number of suppliers is being reduced significantly, purchasing volumes bundled, and processes harmonised.
By 2015, the automotive supplier is aiming for sales of over EUR20bn, today it’s EUR15.5bn. “In order to be able to meet strong customer demand, we have to make substantial investments in new plants and production facilities”, said CEO Stefan Sommer, who is also in charge of corporate materials management. “These considerable advance payments put our results under more pressure – and this pressure has to be passed on moderately to our suppliers.”
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Lower prices for production materials are just one lever ZF wants to use. Standardised supplier and cash management is another. To this end, the previously decentralised negotiation of purchasing conditions will be standardised throughout ZF. As a result, purchasing at the ZF Group follows the company’s realignment: early in 2011, five divisions and several independent business units were merged into four divisions and the number of contacts for the customers was significantly reduced.
Instead of having several decentralised purchasing contacts, the suppliers now have standardised purchasing conditions and one central negotiation partner each. This also includes consistent payment terms that have varied considerably in the past.
For the globally operating ZF group, it is also becoming increasingly important that the suppliers are capable of delivering worldwide, ie production materials can be supplied in the same quality not only within Europe but also in Asia or North and South America.”When selecting our suppliers in future, we will pay more attention to their global approach,” said Sommer. “In the context of reorganising our supplier relations, we will also clearly reduce the number of our suppliers.
“Overall, we call for our suppliers to make tangible contributions to our growth which will orient itself more towards profitability in the future – sales growth itself is not a value.”
