Porsche 2010 Annual Report Download - page 70

Group management report
Based on the globally applicable procurement strat-
egy, the focus of the Volkswagen group was on the
strategic orientation of the supplier portfolio. The
group closely integrated its local companies in China,
India, Russia and the United States in particular into
this process.
In addition, Volkswagen is working at high
speed on ways of reducing materials usage and
increasing the utilization rate – for example by sys-
tematically pursuing its lightweight construction
strategies or by substituting tools with materials that
were optimized for the specific applications.
Greater localization through expansion into new
markets by the Volkswagen group
The new production facilities in India, Russia
and the United States provide numerous opportuni-
ties for group procurement. Firstly, localization –
using local markets for local production – allows the
Volkswagen group to reduce costs. Secondly, the
local suppliers are a potential supply source for the
Volkswagen group’s production facilities in other
regions as well. Through what is known as radical
localization Volkswagen is increasing the share of
value added generated by locally procured compo-
nents by trying to find cost-effective supply sources
for raw materials in the relevant regions at an early
stage and in doing so optimize the cost of materials.
Here, Procurement works closely with the Technical
Engineering and Quality Assurance divisions, with
which it agrees on the proportion of locally procured
components.
The C3 Sourcing (Cost-Competitive Country
Sourcing) program introduced in 2008 builds on the
two above-mentioned strategies of localization and
radical localization. The objective of this program is
to harness cost advantages in competitive procure-
ment markets for European vehicle projects. Volks-
wagen has succeeded in leveraging and expanding
synergies from local production for the export of
components while adhering to Volkswagen’s quality
standards. Suppliers are supported by the group’s
own regional offices, both in radical localization in
the country in question and when exporting their
components to group production facilities in other
countries. The C3 Sourcing program is going a long
way to helping Volkswagen meet its cost targets for
new vehicle projects at the start of series production
and also to maintaining the company at a globally
competitive level of procurement.
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