Premium! Instead of normal
Any time in a Mercedes-Benz plant when a vehicle rolls off the line, when service or test vehicles are fueled up, engines are checked or buildings are heated, local purchasing comes into play. Why not bundle that know-how and engage fuel suppliers globally?
Experience is valuable – and it is still worth it to look outside the bounds of daily business. Purchaser Monika Lichtner of International Procurement Services (IPS) has followed this impulse. She felt the tailwind also from the Daimler initiative Leadership2020, which drives the transformation of the work culture for the future success of the company.
Local goes global
To date, fuel and heating oil has been purchased locally, i.e. by a team in the country. Currently, Daimler AG increasingly depends on Global Commodity Management. With this approach of global goods management, it was only consistent for the Stuttgart purchasing experts to carry out the new awarding process with their international purchasing colleagues – at first only partially. Advantages were thus expected in the process and costs.
Seven Mercedes-Benz locations participated in the global invitation to tender: Germany, France, Hungary, Spain, Japan, USA and Mexico. Under the direction of the Stuttgart IPS purchaser Monika Lichtner, they designed the innovative award process, which started in the Fall of 2016 and ended with “STERN light”. A supplier day, when all orders were finally awarded – with the same chances for everyone and rules specified in advance. The goal was an optimal supplier selection and the best possible purchasing results for all participants. And the project group aspired to this with their negotiation design over several stages.
Negotiation design and Award process
The global invitation to tender was followed by the supplier preselection. In classic face-to-face discussion, the oil companies and their offers were put under the microscope: technical and commercial specifications as well as the prices. The legal framework conditions also have to be 100% correct. To guarantee that happened, the legal department supported the complex negotiations.
Finally came the “STERN light”. Six oil companies came forward in the preselection and now the final partners have to be nominated for the remaining four countries, Germany, France, USA and Mexico. For that, the final round participants were invited to the Mercedes-Benz Arena in Stuttgart in October 2017. A spectacular way to decide the awards. This made it quick to identify the few fuel partners: “Total” for Germany and France and “APP/World Fuels” for the USA and Mexico.
The prerequisite for our selection process on the Supplier Day was complete transparency in advance. Since all relevant aspects were coordinated and finally agreed on by all those involved, we were able to focus on the price as the decisive criterion in the final round.
Sustainable success – also for suppliers
But after this first test run was concluded, were the expectations of mutual advantages fulfilled? This can be answered with a clear “Yes”. The STERN light award process demonstrated itself to be especially efficient. All four purchasing teams were also able to gain advantages for themselves. To profit from this in the future too, a local commodity has been made regional. This means that, in the future, fuel and heating oil will be tendered jointly in the Europe and America regions. And the oil companies will also benefit from this! Not only by receiving the contract for several Mercedes-Benz locations in the award, but also because the regional order quotas can be successively expanded. The suppliers also profit from efficiency with the central contact person in Purchasing as well as the regionally uniform processes for tenders, contracts and invoicing.