Mercedes 1999 Annual Report Download - page 63

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GLOBAL PROCUREMENT & SUPPLY
57
DaimlerChrysler’s Global Procurement & Supply function is charged with creating the world’s most
effective supply chain. During the first year of the merger, DaimlerChrysler’s automotive purchasing
volume reached €84.5 billion. With extensive procurement and supply activities supporting a variety
of manufacturing and distribution operations worldwide, we decided to create a new structure that
would make them part of a single global organization. In 1999, the synergy targets announced for
Global Procurement & Supply were significantly overachieved.
MAJOR ADVANTAGES OF A GLOBAL APPROACH:
■A global organization is better able to identify best
practices, implement standardized processes, and rapidly
introduce improvements within the company and across
its global supply base.
■One global organization means more consistent supplier
management and one interface between the company
and its suppliers.
■By leveraging the combined output of all DaimlerChrysler
business units, the new global organization is in a stronger
position to select and utilize the services of the world’s best
suppliers — and to acquire the most innovative technology.
■A global organization can offer significant career and
personal development opportunities, place talented people
in challenging positions and apply their skills to emerging
opportunities worldwide.
THE NEW EXTENDED ENTERPRISE PROGRAM. Prior to the
merger, both Daimler-Benz and Chrysler Corporation
benefited from strong supplier relationships supported by
distinctive communications programs. The former Daimler-
Benz program, called TANDEM, provided a platform for
enhanced communication and cooperation, while the Chrysler
Extended Enterprise® program promoted shared benefits
between the automaker and its suppliers. As part of the
creation of the new DaimlerChrysler Global Procurement &
Supply organization, the best elements of the Daimler-Benz
and Chrysler Corporation purchasing programs were blended
into a new Extended Enterprise system, which aims to foster
seamless global cooperation between DaimlerChrysler and its
suppliers in all product creation, volume production and
customer satisfaction activities.
The expanded Extended Enterprise Program focuses on four
key areas:
■Technical Management, which establishes common
quality standards worldwide and virtual research and
development systems that blend DaimlerChrysler
research initiatives with those of suppliers;
■Supply Management, which encompasses new processes
for improving material flows and work schedules,
reduction of inventories, improving logistics and
reducing order-to-delivery times throughout the system;
■Commercial Management, which blends the best of
existing cost reduction and communications programs to
increase revenues while reducing costs and improving
profitability for DaimlerChrysler and each of its Extended
Enterprise supplier partners, and
■Program Management, which establishes a new Balanced
Scorecard supplier ratings system and rewards suppliers
that actively participate in the Extended Enterprise Pro-
gram and perform well.
We presented the basic principles of our new Extended
Enterprise Program to supplier partners from 25 countries in
September 1999 at the first-ever DaimlerChrysler Global
Supplier Plenum.
CREATING A NEW COST MANAGEMENT PROCESS. Another
major GP&S initiative in 1999 was called the Fusion Project,
a major program designed to identify the total cost of ownership
of each process element and to create a new cost manage-
ment process worldwide based on the success of the former
Chrysler SCORE cost reduction program and previous Daim-
ler-Benz cost reduction campaigns. As a result of the Fusion
Project, new cost management pilot projects will be introduced
throughout the Extended Enterprise Program.
SYNERGY TARGETS OVERACHIEVED. By taking advantage of
synergy effects, we were able to substantially reduce costs
in Global Procurement & Supply in our first year of
operations after the merger. The synergy targets announced
in the merger report were significantly overachieved. This
excellent result demonstrates the great earnings potential
that a strong procurement organization brings to our
company. Close and fair cooperation on a long-term basis
with our excellent supplier partners will remain the key
factor of success for our global procurement activities in the
future.