Purchasing as strategic driver for long term business profitability. Miguel AREGO

Transcription

1 Purchasing as strategic driver for long term business profitability Miguel AREGO Amorebieta June 9th, 2011

2 FAURECIA - 4 BUSINESS GROUPS Complete exhaust systems Manifolds Headrest Cover Padding Catalytic converters Particulate filters Mufflers Instrument panels Cockpits Frames Mechanis ms Door panels Front end carrier Door modules Acoustic modules Aluminum decorative components V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN Front end modules Bumpers Engine Cooling System 2

3 2010 revenues by Business Group n 2 worldwide 1.3 bn n 1 worldwide 3.1 bn 22% 10% Group revenues 13.8 bn 33% 35% n 1 worldwide 4.8 bn n 1 worldwide in mechanisms 4.6 bn V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 3

4 6 strategic priorities Focus on four key Business Groups Ensure continuous improvement in operating performance Support OEMs & programs worldwide Extend Faurecia's technology leadership Accelerate Asian development Seize consolidation opportunities V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 4

5 The Faurecia Excellence System A drive to promote continuous improvement across the company based on best practices inside and outside the Faurecia Group, both in development and production, to cement Faurecia's position on the leading edge of the global automotive industry. V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 5

6 AGENDA I Industry Context and Purchasing Priorities II Purchasing leverage on P&L bottom line III Purchasing as key success factor IV - Conclusions V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 6

7 AGENDA I Industry Context and Purchasing Priorities II Purchasing leverage on P&L bottom line III Purchasing as key success factor IV - Conclusions V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 7

8 Purchasing is a key contributor to the margin A minor % reduction in purchase cost can result in a major % increase in EBIT EBIT Manufacturing, R&D, SG&A +% EBIT increase Purchasing - % Purchase cost decrease V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 8

9 Purchasing leverage on P&L bottom line Month "M" (1.746) -3% 54 (58,2)% (450) (15,0)% (25) (0,8)% 779 Typical P&L account Material costs are weighting 60% of product sales +26,0% (100) (3,3)% (200) (6,7)% (180) Reducing by -3% the Material costs +10,0% Will make the +9,9% (30) Margin grow up (1,0)% (100) to +47% (3,3)% % 54 V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN +5,6% 9

10 Purchasing leverage on P&L bottom line Month "M" (1.800) (60,0)% (396) -12% 54 (13,2)% (25) (0,8)% Trying with other levers To make our Margin grow up to 47% we might reduce +26,0% (46) -54% 54 (1,5)% (146) -27% (4,9)% 54 DL (MOD) by 12% or (126) -30% 54 5 MFG costs by 27% or ,4% Depreciat. by 30% or IL (MOI) by 54% or +9,9% (30) (1,0)% (100) (3,3)% ALL together by 7.5% % 54 V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN +5,6% 10

11 AGENDA I Industry Context and Purchasing Priorities II Purchasing leverage on P&L bottom line III Purchasing as key success factor IV - Conclusions V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 11

12 Example of Vii Workshops in North America Product: Airvents supplied to Faurecia Puebla(MX) by a local supplier Situation: OEM threat to direct source to alternative supplier located in Asia Preparation : Cost breakdowns updated Cross functional Team nomination Specifications and Process sheets collection Manufacturing and logistics KPI Workshop organized on the GEMBA over 2-3 days looking at potential improvement of the ENTIRE value chain. GOAL: Reduce total manufacturing & acquisition cost keeping the MARGIN V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 12

13 Example of Vii Workshops in North America Results of the workshop Process Savings: line rebalancing one operator removed. Molding : cycle time improvement with tolerances relief Material substitution identified on 2/3 of the components Supplier resourcing savings by using Faurecia purchasing panel Renegotiation of all raw material using Faurecia leverage Material usage reduction such as paint optimization. Packaging density optimization. Transportation cost renegotiated and trucking optimization OEM Target achieved and business secured for both companies V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 13

14 Example of Vii Workshops in North America Key factors for success Transparency (cost breakdown, cycle time.) No bad idea Right attitude GEMBA MUDA elimination Speaks with facts and data Workshop Preparation Team spirit with representation of each function Try to implement ideas by end of workshops Follow up with specific targeted workshops (SMED, HOSHIN, ) TRUE PARTNERSHIP + SUPPLIER INTIMACY COST MODEL AGREEMENT with sustainable long term business V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 14

15 Worldwide Car market evolution millions cars % + 27% 11 NAO % 4 6 SAO WESTERN EUROPE 2 3 CENTRAL EUROPE + 100% 2 2 MIDDLE EAST AFRICA 2 4 EASTERN EUROPE Growth will come from 70% Asia alone will account for 45% V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN ASIA JAPAN

16 Sourcing in New Markets Our experience Enablers Inhibitors Strong global Faurecia network Faurecia is worldwide leader Human fear to change Communication difficulties Increased experience mature Cultural difference learning curve Still in learning curve High reactivity Remaining standard difference Flexibility Distance & time difference Eager to learn from market leader Higher rigor in Development Important resources Transportation time & cost Cost advantage (after all ) Currency handling V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 16

17 Sourcing in new markets Sourcing will continue to increase in New Markets Minimizing GAP to BLC: Strategic competitiveness axis Despite difficulties, Faurecia is moving forward Be aware of the inhibitors and address them! World is changing continuous adaptation is required V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 17

18 AGENDA I Industry Context and Purchasing Priorities II Purchasing leverage on P&L bottom line III Purchasing as key success factor IV - Conclusions V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 18

19 Take away messages Buyers profile is more demanding now than ever before In the current context of low demand and rising material prices purchasing job has become more and more complex Purchasing is «key» to deliver financial results Purchasing is a key driver for business profitability, and purchasing lever can improve company margin spending less energy than others Purchasing must contribute to Corporate Strategy definition Do not think to align purchasing strategy with the corporate strategy. Instead, think of the purchasing contribution to the definition and implementation of the corporate strategy V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 19

20 FAURECIA 6 strategic priorities Focus on four key Business Groups Ensure continuous improvement in operating performance Support OEMs & programs worldwide Extend Faurecia's technology leadership Accelerate Asian development Seize consolidation opportunities V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 20

21 V JORNADA DE COMPRAS EN EL SECTOR DE AUTOMOCIÓN 21