Porsche 2004 Annual Report Download - page 73

During the review year a situation similar to that prevailing on the
steel market also arose for petroleum and the products for which it is
needed. However, on the basis of long-term contracts with suppliers,
Porsche was able to keep purchasing costs for plastics and products
made from them at a stable level. By intensifying its cooperation with
suppliers still further, Porsche was able to reduce the cost of materials
for its vehicles once again in the review year.
Supplies of Semiconductor Elements Guaranteed
Short innovation cycles in the semiconductor industry represent a
special challenge to automobile manufacturers in terms of stable
supplies and product quality, since in this business sector the inno-
vation cycles are not geared primarily to the automobile market but
to markets such as entertainment electronics, which have an even
higher proportion of end-users. This can have the effect of causing
supply bottlenecks in vehicle production and higher development
and validation costs.
In view of this situation, Porsche established what is known as Critical
Part Management in the electrical/electronic area during the review
year. The task of this special team is to ensure, in accordance with the
vehicles’ life-cycles, supplies of the electronic components that are
rated as critical in terms of their availability.
Optimization of All Purchasing Processes
Within the framework of “Porsche Process Optimization” (PPO), which
was begun in 2004, the main acquisition procedures in Purchasing
were subjected to thorough scrutiny and the weak points analyzed
and eliminated. One of the project’s priorities was to optimize co-
operation with other divisions of the company.
Purchasing also made considerable progress in the grouping of pur-
chase orders for indirect materials, process media and services. By
applying unified procedures and structures, purchasing work was
rendered distinctly more efficient and costs reduced accordingly. The
introduction of e-business methods in Purchasing also played a major
part in this.
Supplier management, which also commenced in the previous fiscal
year within the framework of the “Connecting Excellence” project, was
extended and integrated more intensively into corporate processes.
The aim was to assess partner-companies in every phase of the co-
operation, so that the results could be discussed with them and
changes introduced.
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Purchasing 2004 ⁄ 05
Materials for the production of Porsche vehicles are mainly obtained
from sources inside Germany. The “Made in Germany” mark of quality is
regarded as having an important role to play.
Cooperation with Suppliers Strengthened
Porsche operates at a relatively low production depth, which means
that there is high external added value. In view of this it is essential for
suppliers to be closely involved in vehicle development and production
work, and for existing partnerships with them to be systematically
maintained and extended. During the review year, special attention
was devoted to optimal support of sub-contractors as well, since it is
important for all the participants in the added-value chain to be taken
equally into consideration.
Porsche strives in all cases for loyal, fair long-term cooperation with
its suppliers; this proved successful once again with regard to the sup-
ply of parts for the start of the new generation of sports cars and in
other areas too, and is to be further extended in the current fiscal year.
High Proportion of German Suppliers
Porsche’s Purchasing division attaches very great importance to
careful selection of its suppliers, who are expected to satisfy all the
relevant standards of quality, technology, logistics and cost manage-
ment. In the review year as before, Porsche therefore defined clear
criteria within this selection process for cooperation with future part-
ner-suppliers.
The quality mark “Made in Germany” has an important part to play
when choosing suppliers. Although the manufacture of industrial goods
is being transferred increasingly to other countries, Porsche vehicles
were once again developed and produced to a very large extent in
Germany, and the necessary materials and services too were also
largely purchased on the domestic market. More than two-thirds of
the production materials were purchased from German suppliers,
and domestic sources also supplied the same proportion of materials
not intended for production purposes – clear evidence that Porsche
supports the domestic economy in this respect.
High World-market Prices for Steel and Petroleum
Like other motor-vehicle manufacturers, Porsche had to face higher
prices for raw materials in the past fiscal year. A particularly tense
situation arose on the market for steel, with a steep rise in interna-
tional demand from industry leading to rapidly increasing prices. This
in turn forced up purchase prices for the steel products needed in
automobile production, and also led to market supply bottlenecks.
None the less, Porsche was able to guarantee the supply of steel
products for the production of its vehicles at all times.