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
Purchasing CAPEX: Partnering, alliancing the way to go?
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
© 2014 AGCO Corporation 12
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
© 2014 AGCO Corporation 13
35 factories in the world
© 2014 AGCO Corporation 14
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
© 2014 AGCO Corporation 15
Moving Towards Common Platform
Common Platforms =>
• Common Processes
• Common Equipment
=> Common Suppliers Selected on Competitive Bids
© 2014 AGCO Corporation 16
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
© 2014 AGCO Corporation 17
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
© 2014 AGCO Corporation 18
Purchasing CAPEX: Partnering, alliancing the way to go?
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
© 2014 AGCO Corporation 19
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.
© 2014 AGCO Corporation 20
THANK YOU!