AvtoVAZ Renault-Nissan Purchasing Organisation (ARNPO) says it has to be able to compete internationally as well as be efficient on the Russian domestic front as it looks to consolidate and increase its presence home and abroad.
The tri-partite alliance has a gigantic 33% vehicle sales share of the Russian market and is unsurprisingly a massive purchasing force in the country, with the Togliatti arm now completely embedded within its Franco-Japanese partner.
“We are the largest purchasing organisation in Russia [and] are fully integrated into the Renault-Nissan purchasing organisation,” ARNPO alliance localisation director, Denis Chirkov told the recent Russian Automotive Forum organised by Adam Smith Conferences in Moscow.
“We are developing the best Russian suppliers, providing them with an opportunity to export around the world. We try to make the product as cheap as possible – it has to be as simple as possible. A lot of suppliers who have never have worked with the Alliance ask a lot of questions about what are the criteria for a new supplier.
“We have to be competitive not only in Russia, but other countries as well. Efficiency for internal engineering, this is priority one for the supplier. If the OEM provided the drawings and details of the parts, now the trend is definitely the supplier has to be expert in the parts they are supplying and producing, so the supplier can change the design.
“We expect stable relations and support from all functions such as sales, engineering, logistics and quality. It is [also] logical to speak about what a supplier can expect from us [such as] increasing volumes and export possibilities. As of today we export 177 parts which involves 25 suppliers and we supply ten countries around the world. Main export technologies would include lighting, for instance head lighting [as well as] aluminium, stamping, plastics, spark plugs and casting parts.”
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The purchasing body emphasised exporting from Russia remained one of its “key priorities” as it looks to increase shipping components overseas from domestic suppliers, but also was at pains to stress to potential domestic component makers the multi-national would operate as a partnership.
“When we select suppliers we have to find a balance for the objective for the supplier and for cost,” added Chirkov. “If we speak about benefits we can share with the supplier, of course we have certain principles.
“I am not saying we ask the supplier to optimise the component and we take 100% of the benefits. We are always willing to cooperate with a supplier if the supplier is proactive in reduce [ing] costs, [but] we do not support the work with suppliers who are loss-making, whose margins are negative.
“We will not run the risk of working with a supplier who may run bankrupt in the short run. We are ready to share some gains through logistics and are aimed at ensuring sustainable profits.”