Purchasing CAPEX: Partnering, alliancing the way to go? Speaker... · Purchasing CAPEX: Partnering,...

Purchasing CAPEX: Partnering, alliancing the way to go?

CIPS Zurich February 4th , 2015

Didier Van Impe – Director – Global Purchasing CAPEX – AGCO International

Electro-Mechanical Engineer

I STUDIED

Born in Belgium, Brussels

Father of 4 kids, and already 4 x grandfather

I AM

A Short Self Introduction

An Engineer with Commercial and Social Competencies, 3 pillars of my career

Commercial Engineer

Post- Graduate - Robotics

Positive Resolution of Interpersonal Conflicts

I worked

1985 1986 1987 1988 1989 1990 1991

Dow Corning

Pjt Eng.

Mft Engr

Maint Mngr

• 6 years at Dow Corning - Operations • Project Engineer, Manufacturing Engineer, Maintenance Manager

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

TMUK TMMF TMME

Launch CarinaE & Model chge Site Loc.

Manager Production Engineering

Construction Expansion and Model Chge

SOP

Strategic Planning

• 20 years at Toyota – Pioneered Production Engineering in Europe

• Manager Press & Weld

• Integrated in a Japanese Team to Launch TMUK – Carina E.

• General Project Manager – TMMF (Toyota Motor Manufacturing France) – Yaris

• Built and start-up the factory, further expand capacity to 284k u/y in 3 shifts

• Senior Manager Production Engineering Planning division – 6 factories in EU.

• Strategic and Cost planning

• 3 years at AGCO – (Schaffhausen)

• Director Global Purchasing - CAPEX

2012 2013 2014

DirectorGlobal PurchasingCAPEX

I experienced CAPEX Purchasing in Toyota and AGCO

My question today and we might share our experiences and thinking


Should we :

• build partnering / alliances with some key suppliers or

• play full competition with a limited number of suppliers?

Lets look how Toyota and AGCO :

expanded around the Globe

and involved CAPEX suppliers

Founded in 1935 in Toyota City

1935 – 1959 - 101K u/y + 2 fact. 1960 – 1969 1.471Ku/y + 8 fact. 1970 – 1979 - 3.075Ku/y + 8 fact

1980 - 1989 - 4.447Ku/y +11 fact

1990-1999 - 4.789Ku/Y +14 fact.

2000-2009 - 8.200Ku/y +17 fact

TOYOTA Expansion around the world

2010-2014 - 6.928Ku/y + 4 fact.

Not included - Toyota Hokkaido – 1 factory - Toyota Kyushu - 4 factories - Toyota Autobody - 5 factories - Toyota Motor east – 6 factories

27 Countries – 31 Plants in Japan – 50 Plants “overseas” – 338.875 employees

What made this possible?

Strong Unique Toyota culture Spread around the Toyota world

TPS (Toyota Production System) Toyota Way

- Jidoka – Visualization of Problems - Challenge (Innovation)

- Kaizen ( Continuous Improvement)

- Genchi Genbutsu

- Respect

- Teamwork

A Real Philosophy –

- JIT- Just in Time

Shared by each employee, in each division , in each factory around the world

• Sensei for each employee => Transmission of expert knowledge

• On the Job Training of future “Senseis” in “Mother” division

Key = Standardized work => Global Processes.

Facilities, Processes, Machines, Tools are developed to meet TPS and Toyota Way

• Global Training Program

Global Processes => "self-reliance in production engineering"

- to conceive, - plan, always improved processes at lower cost. - develop and implement Toyota also produces internally part of its production equipment, dies and tools.

A unique pool of highly trained professionals, collaborate with Styling, Design, Material Div., Manufacturing to:

Toyota builds collaborative networks with suppliers - Nihokai

relationships are based on :

• Mutual trust, and “mutual benefit”

• cooperation,

• educational support for suppliers. (Toyota Principles)

Kyoryokukai

Parts and Material Suppliers

219 Japan based companies

Eihokai

Facilities, Equipment, Tools

Equipment Vehicle Mftg – 34 Equipment Component Mftg – 36 Facilities - 33 Logistics - 24

=> STRONG INTER-RELATION OF TOYOTA WITH KEY SUPPLIERS

- Focus on final ‘customers’ demands, “Customer First”

- Continuous Improvement - find and correct errors.

- Always Shorter deadline!

- Always Reduced Cost!.

© 2014 AGCO Corporation

Harvesting

Hay Equipment

Storage &

handling

Seeding & Tillage

Tractors

Protein Production

Replacement Parts

Application

Best-in-Class Ag Equipment Solutions

10

AGCO - Industry Leading Solutions

© 2014 AGCO Corporation 11

1990 AGCO was formed in the management buyout of Deutz-Allis from KHD

Allis Gleaner Corporation

Through more than 30+ acquisitions

sales grew :

from $ 0.2 billion in 1990

to over $ 10.8 billion in 2013.

AGCO is #262 on FORTUNE 500 in 2013

First AGCO Greenfield, in China, started operation in 2014


Leading Core Brands

Legacy from Acquisitions :

• Strong Brands with own individual strong Industrial history:

Various Production Methods ( different Mtg engineering views , experiences)

Large number of existing different CAPEX suppliers


35 factories in the world


Purchasing Manufacturing

Transformation Transformation Transformation Transformation

Profitable growth through superior

customer service, innovation, quality and commitment

Quality Logistics Engineering

AGCO Core Values Accountability Transparency Team Spirit Respect Integrity

Global

Commodity

Strategies

AGCO

Production

System & Global

Foot Print

No 1 in

Customer

Perceived

Quality

Global Module

& Platform

Strategy

Global Materials

Management

14

Key Message AGCO House of Transformation – Purchasing leading the way


Moving Towards Common Platform

Common Platforms =>

• Common Processes

• Common Equipment

=> Common Suppliers Selected on Competitive Bids


CAPEX SOURCING PROCESS

=> FULL COMPETITION WITH A LIMITED NUMBER OF CORE SUPPLIERS

Logistics

Parts/ Material

In-house costs

Variable cost

Other fixed

Depreciation

AGCO Target Margin

Cost of sales

Dealer margin

Tractor / Combine /

Implement Max.

Target Cost

Impact Production

Cost

Long Term Effect

Market Demand

Invest only in items duly justified investments to allow for future product

developments (anticipate Market Needs) at reduced total cost of ownership! Invest only

at the minimum necessary and at Best purchase price

CAPEX impacts (long term)

Bundle know-how technology purchase volumes

Actions


Expectations for “Priviledged” Suppliers

Go the Extra Mile : Engage AGCO’s Global development – win with us!

We want few “partners” , looking to help us providing the best solution for professional farmers feeding the world

- Do not look to make money on us but with us!

- Offer us the best suited technology at the best cost (Beat the competition)

- Learn and meet current and future Market demands - Quality - Cost - Flexibility

- Great service even in remote locations



TOYOTA AGCO

- Organic “explosive” Growth - Project driven – Model change every

4-6 years Strong Internal culture Self reliance Strong partnering with key

suppliers growing with Toyota

Leader in Production Technology

- External Growth - Starts to integrate and rationalize

(Platform) Strong Internal cultureS Large base of Suppliers and

technologies => Strong internal benchmark

Upgrade production technologies


So Partnering the way to go???

What would you do???

My conclusions at this stage?:

Partnering needs Partners inside our Company and in the Supplier

Partner when :

We have common solution in our different factories => Bundling of technology, solutions.

We know the most suited technology and partner is committed to

development.


THANK YOU!

Purchasing CAPEX: Partnering, alliancing the way to go? Speaker... · Purchasing CAPEX: Partnering,...

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