BMW 2010 Annual Report Download - page 40

38
12 GROUP MANAGEMENT REPORT
12 A Review of the Financial Year
14 General Economic Environment
18 Review of Operations
41 BMW Group – Capital Market
Activities
44 Disclosures relevant for takeovers
and explanatory comments
47 Financial Analysis
47 Internal Management System
49 Earnings Performance
51 Financial Position
53 Net Assets Position
55 Subsequent Events Report
55 Value Added Statement
57 Key Performance Figures
58 Comments on BMW AG
62 Internal Control System and
explanatory comments
63 Risk Management
70 Outlook
Reorientation of purchasing and supplier network
functions
Increasing internationalisation and the growing com-
plexity prevailing on procurement markets as well as
within the production network prompted us to reor-
ganise the purchasing function in 2010 along the lines
oftechnological product groups. The main focuses of
thisstrategy are to concentrate responsibilities world-
wide and further improve our understanding of market
and technological developments.
Numerous model start-ups in 2010
The year 2010 saw a large number of model start-ups
within our worldwide production network. The BMW
Group again rose to the challenge of the various produc-
tion start-ups (the new BMW 5 Series, the new BMW6
Series in Germany, the 5 Series extended wheelbase ver-
sion in China and the new BMW X3 in the USA as well
asthe revised MINI in the UK) by involving the supplier
network at a very early stage. For the BMW 5 Series ex-
tended wheelbase version and the X3, local suppliers
were increasingly trained in advance in order to guaran-
tee the exacting quality requirements and standards de-
manded by the BMW Group right from the commence-
ment of production.
Activities on international procurement markets
Throughout 2010 we continued to expand our global
procurement activities for future vehicle projects. Apart
from Europe, our major sales markets in the NAFTA re-
gion and in Asia were the main areas of focus. As part of
the process of selecting suppliers, we have specifically
given priority to increasingly obtaining supplies for fu-
ture models (BMW X Series, MINI, BMW 1 Series) from
locally based suppliers in each of the production markets.
This strategy allows us to make better use of the inno-
vation potential, but also to generate cost benefits. At the
same time, purchasing in the relevant foreign currency
reduces the currency risk for both the BMW Group and
the supplier. The application of multi-currency ordering
across all regions is also helpful. This is a new approach
in the car industry, with ordering and invoicing of pro-
duction material executed in various currencies depend-
ing on the percentage of added value in each case.
Leader in productivity and technology in
CFRP production
The closer coordination of production and purchasing
activities for the plastic outer skin of the Megacity
Vehicle has enabled us to generate significant synergies
within the process chain. This enables us to decide,
quickly and competently, whether components should
be produced in-house or externally ordered. Expertise in
the areas of production, quality management and pur-
chasing are bundled appropriately, enabling us to achieve
better coordination with our suppliers.
The expansion of the CFRP production at the BMW
Landshut plant and the simultaneous commissioning of
facilities to produce carbon fibre layers marked the
beginning of preparations for the series production of
the Megacity Vehicle, scheduled for launch in 2013. The
Wackersdorf plant also supplies the textile carbon fibre
layers which are processed to make lightweight CFRP
body components at the Landshut plant. The vehicle will
be produced at the BMW Group’s Leipzig plant.
Cooperation arrangements expanded
The cooperation talks between BMW AG and DaimlerAG
concerning the joint purchasing of components are
making good progress. We have identified a double-digit
number of components that could be jointly purchased.
The cooperation arrangements only involve components
that do not contribute towards differentiating between
the two brands and which therefore have no impact on
competition. Plans are underway to extend the coopera-
tion arrangements step by step to cover a larger number
of parts and components.
Joint purchasing in China also presents excellent oppor-
tunities. The two companies intend to work together in
evaluating audit results and checking the qualifications
of suppliers.
Regional mix of BMW Group purchase volumes 2010
in %, basis: production material
Germany 47 NAFTA 12
Rest of Western Europe 20 Asia / Australia 5
Central and Eastern Europe 13 Africa 3
Germany
Central and
Eastern Europe
Rest of Western Europe
NAFTA
Asia / Australia Africa