Audi 2015 Annual Report Download - page 156

ECONOMIC REPORT
PROCUREMENT
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PROCUREMENT
/PROCUREMENT STRATEGY
The core task of Audi Group Procurement is to identify high-
performing suppliers worldwide and to collaborate with them
in a spirit of partnership. Alongside general economic efficien-
cy, other criteria such as quality, innovativeness, reliability and
international value creation play a decisive role in the selection
of suppliers. Audi Procurement pursues four main strategic
goals: increasing the competitiveness of the Company, devel-
oping a global procurement network, sourcing innovations and
guaranteeing quality and sustainability in the value chain. The
attractiveness of the division is also a selling point for employ-
ees and applicants. To maximize synergy potential Group-wide,
we select suppliers in close consultation with Volkswagen
Group Procurement.
The cost of materials came to EUR 37,583 (36,024) million in
the year under review. This includes expenses for raw materials
and supplies, as well as purchased goods and services.
/GLOBALIZATION THROUGH LOCALIZATION
As a result of globalization, the strategic significance of pro-
curement continues to rise. Our international growth means
we need a worldwide procurement and production network
along with innovation management. On the one hand, we want
to develop capacity at existing suppliers. On the other hand,
we identify and develop new local suppliers at our locations.
As a fundamental principle, we are increasingly looking for
partners who already have a global footprint. Our new produc-
tion location in Mexico exemplifies our localization strategy.
When production of the new Audi Q5 starts there in 2016,
over 65 percent of bought-in parts will be sourced locally
within the North American Free Trade Agreement (NAFTA)
area. The localization strategy enables us to reduce risks from
exchange rate fluctuations, optimize our costs for parts and
logistics, and increase the reliability of supplies.
/QUALITY
Our ambition is to ensure premium quality at all locations
worldwide. We therefore only work with partners who are able
to meet our quality criteria. To this end, we regularly hold
workshops and training courses at our suppliers. In San José
Chiapa (Mexico), for instance, we have set up an intensive and
individual supplier development program. On top of the usual
basic training content, our partners cover additional develop-
ment modules on such topics as quality, logistics and tools.
We will have qualified around 170 suppliers in Mexico by the
time production starts.
/STRATEGIC INTEGRATION OF SUPPLIERS
We launched the Group-wide suppliers program FAST (Future
Automotive Supply Tracks) in spring 2015. Under the FAST
program, we hold strategic discussions with selected suppliers
in a very early phase. The goal is to increase the number of
product and process innovations, and to implement them even
more efficiently and effectively. We therefore integrate FAST
suppliers into our innovation processes starting in the pre-
development phase. Through this measure, we also pursue the
goal of working together with our partners at our international
locations, too. This gives our partners extra planning certainty
and protects their expertise. The FAST program secures us,
along with Volkswagen Group Procurement, exclusive access to
innovations on a global scale.
/OPTIMIZING COSTS THROUGH VALUE ANALYSIS
Continually optimizing costs is a central economic objective of
Audi Procurement. By conducting detailed bottom-up calcula-
tions, we can optimize the cost structures and concepts for our
components hand in hand with our suppliers. Through cross-
disciplinary collaboration between Procurement, Development,
Quality Assurance and Controlling, we can create innovations
and technologies that are also competitive from a cost viewpoint.
/SUSTAINABILITY
Sustainability in supplier relationships is also at the very heart
of our procurement philosophy. The Audi Group strives for
sustainability of all products and processes as a fundamental
goal. We therefore also expect our suppliers and business
partners to uphold defined governance, environmental and
social standards themselves and to require the same of their
own suppliers. This requirement has been a fixed part of our
contracts since 2013.
Back in 2013, the Audi Group joined the Aluminium Steward-
ship Initiative (ASI) – a non-profit initiative involving leading
manufacturers in the aluminum industry. The goal of the initi-
ative is to develop a global standard for sustainable aluminum.
This standard is to define environmental and social criteria
along the entire value chain, from raw material extraction to