GERMANY: Bosch looks to triple purchases from China by 2007

By SupplierBusiness.com | 14 October 2003

Robert Bosch aims to buy close to €1 billion in automotive components in China by 2007, says purchasing boss Ulrich Eichler, reports SupplierBusiness.com. This year, Bosch will buy about €300 million in goods from China, out of a total purchasing budget of about €20 billion.

"We want to increase our purchasing volume drastically," says Eichler. Bosch has launched a Purchasing Initiative China. "We will see purchasing volume from China more than triple by 2007," he says.

Bosch will source from Chinese suppliers both for local production and for export from the country. "Our local production will only be successful and competitive if it can use a local supply base," says Eichler.

He says Bosch is looking for local suppliers who can meet the company's global standards. "Our Chinese suppliers will fulfil the same requirements as suppliers from Europe," Eichler says.

Bosch has already sourced printed circuit boards from China for its automotive operations worldwide, and electromechanica l components for its car multimedia division. The company say it has also found good suppliers of ball bearings and rubber parts. "One of the tasks for our Purchasing Initiative China will be to find and develop suppliers for mechanical parts and components," says Eichler.

Global purchasing is emerging as a major tool for leading first tier suppliers looking to reduce costs and trim the supplier base. The pressure cut costs is more intense than ever, says Eichler.

"There is very high price pressure in the market place," he says. "It is unprecedented, especially in the USA".

Bosch, like other suppliers sees major opportunities for cost reduction from bundling its purchasing across several divisions to leverage purchasing power and find the best second tiers. "These activities make sure that we purchase each part family from the most competitive suppliers," says Eichler. "Bosch will significantly reduce the number of suppliers and strengthen the remaining supplier base." This will lead to better quality and service at lower costs, he says. "Our experiences so far are very good."

Bosch launched the concept in 2002, with Global Purchasing management teams focused on cross-group commodities such as plastic, aluminium and rubber parts. Bosch expects its 15 Global Purchasing Management Teams to manage € 5 billion of production part purchases in 2003 - just over 40 percent of the total purchasing budget. This volume will rise to €6.5 billion - 60 percent of production parts - by 2006.