Purchasing has seen some key developments since the 1990s, moving away from a purely procurement-related function towards value creation and cost optimisation. The challenges faced mean that the same standards have to be applied worldwide, and our employees need to be aligned globally. This has led to English terms increasingly dominating our world of work.
Group Purchasing’s main task is to contribute to MANN+HUMMEL’s value creation, which we do by optimising procurement costs globally, buying the same quality worldwide, providing standardised systems and tools across locations and getting our more than 250 Purchasing employees in 28 locations to commit to the same strategies, processes and methods. Just a few figures can give us a good picture of the scale of our tasks today: MANN+HUMMEL has an annual purchasing volume of almost two billion euros. Approximately half of our turnover is spent on production materials. We serve 60 locations and order goods and services from around 15,000 different suppliers. Around 40 percent of the volume purchased comes from outside Europe.
Global material groups
One of Group Purchasing’s focus areas is global material group management, a task shared by purchasing managers with global responsibility. These global material group managers (MGM) are often responsible for budgets in excess of 100 million euros and have the power to act on behalf of all locations. Employees in the International Purchasing Offices (IPO) have the task of procuring high-quality materials under favourable terms and at best cost. India, China, Eastern Europe and Mexico are important markets in this area.
Despite further development in terms of technology and quality in the majority of cases, all materials and components that MANN+HUMMEL purchases essentially remain assigned to the same categories (material groups) that my predecessor Guenter Goeckeritz introduced back in the day. Achieving synergies and the effect of pooling resources across locations worldwide forms an essential part of MANN+HUMMEL’s competitiveness. The more we standardise materials, the better we get at pooling resources and the more likely it will be that we produce the same level of quality everywhere. Purchasing does not do this in isolation of course, but rather in close alignment with development and production. One challenge that MANN+HUMMEL faces is having to optimise its number of suppliers, including new suppliers and requirements, e.g. as a result of acquisitions. Regarded as a whole, purchasing used to be more local. Today, the world is our ‘supermarket’.
Project purchasing and strategic supplier management
Also responsible for important global coordination is Project Purchasing, which involves development projects for filters, systems and modules for the future, or for new customer projects. In parallel with the development of new products and for customer projects, we establish which materials and components will be used. Similar to our customers, we also place increasing demands on our suppliers to provide the same parts with the same quality, at competitive prices, globally.
Strategic supplier management is required to ensure that this happens. Suppliers must be approved before they can be used for procurement purposes. We assess our suppliers on an ongoing basis and rate them ‘approved’, ‘preferred’, ‘development’ or ‘phase-out’. Our supplier portal (= eCONN) is largely used to register suppliers and to request price offers.
We are working on reducing our total number of suppliers further. At the same time we always need to have alternatives available to be able to maintain a strong negotiation position. Supplier quality and development is also part of this evaluation process. Our ‘Vendor Rating System’ tells us how our suppliers perform in terms of quality and logistics, and also transmits this information to them.
Purchasing team alignment
Communication within the purchasing team around the world is carried out using cross-location workflows, which themselves are used to approve procurement decisions, and with technologies such as Skype. We also use internet conferences to ensure coordination between the different committees. A global ‘Purchasing Summit’ takes place once a year, which gives employees an idea of our strategy, targets, methods and tools. Networking and motivation are also important areas of course. We also have the ‘Purchasing Academy’ to help here, which gives staff access to both web-based and more traditional classroom-based training sessions and tutorials: For instance, negotiation and project management training.
Networking, openness, participation and standardisation are not just fine words in our worldwide purchasing organisation – they are critical factors in the success of our team and as such have a major bearing on the success of MANN+HUMMEL as a company.