From Local Spare Parts Needs to the Global Contract

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The production capacities at Daimler are on the rise. This means, the company is using even more production equipment and consequently needs more spare parts. The buyers from International Procurement Services (IPS) are now globally networked to purchase these spare parts.

Mercedes-Benz builds the C-Class at four sites: in Bremen (Germany), East London (South Africa), the Chinese capital Beijing and Tuscaloosa, USA. The machines in the worldwide production operations often come from the same manufacturers. For example, the control unit in a robot used for C-Class production in South Africa is identical to the one in a robot in Germany. IPS Non-Production Material Procurement is responsible for purchasing spare parts – and this also includes the robot control unit. Based on the data of all production sites, the buyers proactively examine which spare parts will be needed. This allows IPS to optimally prepare for the globally arising needs and take them into account in the negotiations with suppliers.

Globally bundled spare parts procurement

In the past, Procurement negotiated local contracts for purchasing spare parts. The rule of thumb was: one country, one negotiation. This means that there were separate contract negotiations for the spare parts of the C-Class production equipment in Germany, South Africa, China and the USA. This has now changed. Because many suppliers have a global footprint, IPS has had the so-called ‘Global Contract’ since last year. A framework agreement with a globally operating partner is negotiated once and specifies the terms for all spare parts worldwide. This significantly reduces the purchasing expenditure. And the suppliers appreciate this as well:

„Thanks to IPS, the complexity of the international contracts has diminished considerably. There is now only one overarching contract at the core, which sets the terms across the entire globe. This creates transparency as well as fairness and reduces the workload for all parties involved. IPS has brought us and Daimler closer together on a global level.“

Karina Santjohanser, Director Parts, Repairs & Used, KUKA Roboter GmbH

Spare parts must be available at any time

A spare part may seem less important than a new machine. But when the control unit fails and the robot is consequently inoperable, production may come to a halt in the worst case. The collaboration with globally operating suppliers that provide us with optimal support is supposed to prevent this scenario. This also involves optimizing delivery routes and inventories. The Global Contract is a factor in spare parts being available when needed and getting to the production facilities promptly. This is made possible among other things by warehousing at the suppliers or 24-hour deliveries. Both can be regulated in the contract.

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Global spare parts team (f.l.t.r.): N. Adams (mandate NAFTA); D. Schwenger; R. Sievers; Z. Kerekes (mandate EU); M. Bonk; M. Goekce; J. Windvogel (mandate South Africa); U. Stohler; Z. Pencz; X. Youyou.

Our spare parts experts maintain a worldwide network

Until last year, the procurement of spare parts at IPS was of a local nature. As a result, an American buyer would talk to his local customer, the machine maintenance services in the USA, independently of his colleagues elsewhere. Today, we have a global spare parts team at work. The team is comprised of buyers from all over the world. In a monthly virtual meeting, the team members discuss local issues on a global level – 7 o’clock in the morning in the USA is 9 o’clock at night in China. Also new is the concept of the mandate holders: one buyer has the mandate for one region. For example, a colleague from Hungary is responsible for all European sites. He ensures efficient communication among all parties involved. What makes it truly special is that the experts from IPS all have the same understanding of spare parts procurement. Despite the most widely varying local requirements, complex systems and changing processes.

Added value of the Global Contract
Added value of the Global Contract for Daimler and its suppliers.

IPS is working with the suppliers on shaping the future of global spare parts procurement. The first move has been made with the initial ten negotiated Global Contracts, many more will follow.

Date:
Feb 23, 2016
Author:
Robin Sievers
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