- AVR today - Switch from own production to outsourcing - Procurement strategy - Wrap Up

Transcription

1 Procurement strategy at a mid size assembly company engaged in agricultural mechanization Peter Vanderhaeghe, Purchase Mgr Switch from own production to outsourcing - Procurement strategy - Wrap Up p.1

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3 Facts & Figures Sales in 40 countries +/- 185 harvesters +/- 160 cultivators +/- 40 Speedridgers/Ecoridgers +/- 60 haulm toppers +/- 80 planters +/- 100 in store equipment Turnover: 45 M EUR (Belgium + the Netherlands) 115 employees + 20 temporary employees 105 dealers Production in Belgium, the Netherlands and Russia Export today Turnover per Country ( ) 16% 2% 6% 9% 17% 23% 27% BE NL FR RU DE PL RE p.3

4 Growth Millions Turn Over Turnover Linear (Turnover) (B) AVR as Full Liner: a wide range of products p.4

5 1. Soil preparation Cultivators and ridgers 2. Planters p.5

6 3. Haulmtoppers Rafale 4. Trailed Harvesters p.6

7 5. Self propelled Harvesters Puma + 6. In store equipment p.7

8 Our values Reliable [correct, respect of customer, solid machinery etc.] Steadfastness [innovating, trendsetter, not me-too manufacturer, with passion for the potato cultivation] Committed [think along with the farmer, thorough knowledge about his processes] Our mission AVR s mission is to help its customers store a higher percentage of sellable crops with less input. p.8

9 Decrease vertical integration Switch from Own production to Outsourcing Own production to outsourcing In 2001 AVR decides to decrease its vertical integration and to stop the own production of custom made components and focus on the assembly process only. Why did we do that? p.9

10 Own production to outsourcing AVR s seasonality and its size where resulting in a lower occupation rate of the production machines. Higher Cost Difficult to keep investing in state-of-the-art technology Difficult to find technical skilled people Own production to outsourcing By outsourcing we are able to : Design components which are not limited by our own production technologies & possibilities Co-operate with suppliers that have more specific & specialized knowledge of component manufacturing with state of the art machinery Concentrate our investments towards our main activities p.10

11 Own production to outsourcing Positive results : Major impact on reproducibility and quality. Better control on costing Same turnover with less people Higher gross margin Less depreciation Ability to spread some of our seasonal workload with our suppliers Own production to outsourcing Dow side : Lower flexibility Higher efforts necessary to prepare our files More difficult to solve problems on a short term p.11

12 Procurement strategy Procurement strategy Typical for agriculture Seasonality impacts the occupancy rate at the suppliers Evolution Open and Critical orders Different economics than other industries Weather conditions are impacting spare parts sale : Fast reaction needed from suppliers during season p.12

13 Procurement strategy Some figures Purchase budget : 25,- mio eur Number of suppliers : 350 Number of purchased items : 7702 Number of orders : 5732 Number of order lines : Procurement strategy Procurement Budget by type of products (value) Services 0,5% Off the schelf 17,9% Technical products 28,7% Custommade 52,9% Custommade Technical products Off the schelf Services p.13

14 Procurement strategy Off the shelf/products with a low value : Partners whit a logistic added value! 2 Bin systems Vending machines... Automation of the order process Roll out off a EDI system Lower the impact of the order process and the internal logistic costs Keep focus on what really matters Procurement strategy Technical products: Products from which the quality and spec s have a considerable impact on the functioning of our products Partners needs to give added value in Delivery performance Technical support/advice : Co-engineering understanding the needs from AVR and our customers! Buffer stock in warehouse supplier Assembly p.14

15 Procurement strategy Custom made parts : Parts produced according to design spec s from AVR and typical related to our products Partners need to give added value in Delivery performance Technical support/advice Ensuring Quality Controlling TCO Yearly quantities : from 5 to Lot sizes : from 5 to 1000 Volume from 10cm³ to 135m³ Procurement strategy Custom made products by technology(value) p.15

16 Procurement strategy Custom made products : Welding assemblies and mechanical assemblies : Depending on size and labour cost Local sourcing Sourcing in LCC Reduce TCO : Add assembly/add value for the supplier Partners need to give added value on Project management Suppliers with as well local as LCC production facilities are preferred sources for this type of products Procurement strategy Custom made products : Webs : Specific product Only few sources available Sheet metal parts : Local sourcing : high density of laser capacity in our region Wearing parts : specific products, specific sources Rubber parts : Central Europe p.16

17 Procurement strategy Custom made products : Hydraulic Parts : Local sourcing due to quality demands low quantities hydraulic tubes/hose pipes : fast service needed Machining parts : Combination of local sourcing and LCC Depending on complexity/lot sizes Plastic parts : Local sourcing and far east. Electrical boxes, electronic assemblies, harnesses : low volumes / high complexity: local sourcing Procurement strategy Custom made products by region(value) 0,3% 0,1% 7,5% 5,8% 4,2% 3,3% 2,6% 35,3% 7,9% 8,6% 24,4% BE NL PL RO SK DE IT CH UK CZ HU p.17

18 Way of working : Forecasting based on yearly production plan Capacity planning Material planning Call-off orders Procurement strategy Mid term commitment Long term agreements Critical suppliers : Weekly communication : Follow up open orders Order confirmations Regular meetings Procurement strategy Supplier selection : Need for skills in house : Avoid multiplication of margins Has impact on delivery performance. Quality : Evaluate functioning in process quality system Planning Capacity planning Evaluation of workshop documentation Is the work well prepared? Is all the needed information available p.18

19 Wrap Up Wrap Up How to be succesfull as an AVR supplier We need partners that deliver The right parts At the right date At the right TCO Making it possible for AVR to realise our mission p.19

20 Wrap Up Stay up-to-date! p.20