Porsche 2007 Annual Report Download - page 93

Risk management for suppliers
In view of the high proportion of value added by
external companies, one of the purchasing depart-
ment’s main concerns is ensuring that Porsche’s
suppliers remain stable and in a position to deliver.
As part of supplier management activities, nume-
rous optimization projects were implemented in
cooperation with suppliers during the year under
review. These dealt with ongoing series produc-
tion, safeguarding the start-ups of new vehicles
and ensuring smooth development.
The regular evaluation of suppliers throughout fiscal
2007/08 underscored the high level of coopera-
tion. Quality, punctuality and cost discipline were at
least on a par with the previous years’ levels as
regards current series. Moreover, there were signi-
ficant improvements with reference to the supply
of spare parts. The broad agreement between the
choice of partners under the selection process
and their actual performance confirms that the con-
tract award process is extremely effective.
Risk management to monitor the financial stability
of suppliers was extended further. For ongoing
series production, this constitutes an important
selection criterion alongside performance eva-
luation and has been fully integrated in the contract
award process. The income and liquidity risks of
individual suppliers and a series of insolvencies
were managed during the year under review without
impacting on supply.
The number of suppliers experiencing financial
difficulties continued to decline, which in turn im-
proved the reliability of the supply chain. Given ever
tougher competition among suppliers and a poten-
tial slowdown in the worldwide automotive industry,
reliability is likely to become an even more impor-
tant issue in the next few years.
Cost of materials per vehicle reduced
Fiscal 2007/08 saw renewed strong increases in
raw material prices. While steel prices remained
high and oil set new records, precious metals also
achieved new highs in the period under review.
Targeted risk hedging and additional cost reduc-
tions for other production materials limited the
impact of these effects, and overall material costs
per vehicle fell.
In the year under review, the Company purchased
the highest volume of material not destined for
production in its history. This was a consequence
of several major construction projects and invest-
ment in operating resources for production. Major
projects particularly worthy of note were the
construction of the Porsche Museum, the develop-
ment of the plant in Leipzig for the assembly of
the Panamera and the first construction phase of
the new central spare parts warehouse in Sachsen-
heim. At the same time, preparations began in
Stuttgart-Zuffenhausen for the construction of the
new paint shop.
Collaboration between group companies with
regard to the purchasing of materials not destined
for production was expanded further. This pooling
of purchasing requirements throughout the group
leads to considerable savings.
90 Purchasing
To our shareholders
The Company
The new Panamera
Financials