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April 18, 2019

SEAT spent EUR7.137bn on purchases in 2018

In a record year for Volkswagen Group Spanish unit SEAT, the purchasing operation spent EUR7.137bn (US$8.061bn) in 2018, up 5.6% year on year.

By Olly Wehring

In a record year for Volkswagen Group Spanish unit Seat , the purchasing operation spent EUR7.137bn (US$8.061bn) in 2018, up 5.6% year on year.

Almost 80% of all buys were production materials, spare parts and accessories for vehicle models made at the Martorell plant near Barcelona (Ibiza, Arona and Leon plus Audi's Q3 and A1) while the remainder was allocated to general goods and services.

Over 60% of the total purchase volume was from Spanish suppliers.

Seat said its purchasing function contributed to cost optimisation which, along with higher vehicle sales of more profitable models, led to record profit after tax of EUR294m, up 4.6%. In the last five years, purchase value has risen 23.2%.

"Quality, efficiency and cost optimisation are key factors for achieving objectives in the purchases area. This is done by maintaining a relationship of collaboration and trust with our supplier network, which enables us to promote strategic projects such as general procurement management in the Iberian peninsula and the development of North Africa," said purchasing chief Klaus Ziegler.

Though the model is made in Wolfsburg, Germany, the Spanish purchasing department contributed to the launch of the Tarraco, leading the project and managing supplier selection, pre-production testing and parts control.

Also in 2018, Seat achieved progressive reduction in total per vehicle cost by establishing a production model that is more efficient and sustainable.

A multi-disciplinary team launched the Full Cost Optimisation (FCO) project in conjunction with R&D, production, finance and purchases.

Last year saw the implementation of employee-suggested improvements saving EUR141m.

A globalisation strategy, which includes heading North Africa operations and the assembly plant in Algeria, extended purchases' responsibilities.

Since last year, a new team manages supplier relations in the region and has contacted potential local and international suppliers interested in manufacturing parts in Algeria.

Morocco (where Renault has an assembly plant) has a highly developed automotive sector that, Seat said, "offers new opportunities for collaboration with locally established suppliers, which has resulted in new project assignments".

Since 2017 Seat has managed coordination of the VW Group's general purchasing on the Iberian Peninsula for all procurements that are not directly related to vehicles to identify synergies and contribute to cost optimisation.

Total volume of regional general purchases the automaker managed last year was worth almost EUR2bn.

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