Porsche 2005 Annual Report Download - page 21

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remains high, and this reduces the risk of losing know-how
through workforce fluctuation.
Risks also ensue in relation to information technology. Un-
authorized attempts to access or misuse data could severely
disrupt operating procedures. The company protects itself
against this by issuing instructions to staff on compulsory pro-
cedures governing access to information and the handling of data,
as well as by the adoption of preventive measures such as virus
scanners and firewall systems. Porsche has an emergency and
disaster program in case its IT systems should fail. This pro-
gram is based on the duplication of data and hardware that are
vital to the operation of the company. The current emergency
program is regularly updated to take changes in operational
requirements into account. Production processes could, how-
ever, suffer serious and lasting disruption through unexpected
events that cannot be completely ruled out, such as a fire or
explosion at a Porsche plant or at one of its suppliers. This risk
is limited by extensive safeguards and continuous checks, which
also ensure that Porsche qualifies as a well-protected industrial
risk. In addition, Porsche has taken out extensive cover against
plant failure and disruption of its business as part of its inter-
national insurance program. Finally, for events representing a
potential threat to Porsche’s image, the company has developed
communication strategies that allow it to react immediately
and flexibly to a wide variety of crisis scenarios. This is of key
importance, as Porsche’s public image is chiefly governed by
the way it is communicated. As is the case with any other com-
pany, Porsche may become involved in court or arbitration pro-
ceedings. At present there are no proceedings which could have
a material impact on the economic position of the Group.
Extensive Quality Assurance Measures
Automobile manufacturers now work very closely with their
suppliers on product development and series production, so
that synergy benefits arise. However, despite the economic
advantages, this creates for the manufacturer a situation of
increased dependence on the supplier. Late deliveries, failure
to deliver, or quality deficiencies quickly Iead to disruption of
production at the car manufacturer’s plants, with a negative
effect on profits. Porsche has limited risks of this kind by
adopting comprehensive supplier selection, monitoring and
management procedures. An in-depth analysis and assessment
of the suppliers’ technical competence and financial viability
is undertaken before they are selected and classified. If a sup-
plier does not fully satisfy Porsche’s carefully compiled require-
ment profile, but a contract is nevertheless to be awarded, skill
development measures are implemented. As and when regular
deliveries start, a thorough check is made on the quality of the
parts and their punctual delivery. If there is any deterioration
in performance, the causes are analyzed, immediate remedial
measures are taken, and their effectiveness is continuously
monitored. To safeguard against supplier insolvencies and the
related interruptions in supply, Porsche records and monitors
its suppliers’ credit ratings. Suppliers threatened by insolvency
can thus be identified at an early state and appropriate counter-
measures can be taken. Vehicle manufacture is a complex pro-
cess in which product defects can occur that may eventually
Iead to claims being made under warranty or product Iiability
Iaw, and product recalls may even be necessary. Identifying
and analyzing product defects in the various sales markets
allows Porsche to detect any reduction in product quality, and
its causes, at an early stage. An interdisciplinary task force
has been set up and meets weekly to discuss product quality,
analyze the causes of product defects, and initiate appropriate
remedial action. This evaluation covers our entire production,
including the quality of parts and our suppliers’ manufacturing
processes. All product liability claims are dealt with centrally
by our legal department and are covered, as far as possible,
by our international insurance program. Financial provision is
also made for warranty claims.
As far as the development of new products is concerned, there
is a fundamental risk that customers will have no demand for the
new product. Porsche counters this risk with market surveys and
studies concerning trends. Furthermore there is always the dan-
ger that development targets will not be met, or at least not by
the deadlines specified. To reduce this risk, Porsche monitors
project progress on a constant basis, comparing progress with
the requirements originally defined. Last but not least, the in-
fringement of third parties’ rights can disrupt design and deve-
lopment work or production. Porsche takes preventive measu-