Implementation of an “International Procurement Organization (IPO)” as part of the low-cost country sourcing strategy
Goal: Cost reduction by using a worldwide supplier network, especially from low-wage countries
Project
Duration: 8 months
Role in the project: Project Manager / Coordinator
Operational area, geographical:
- Germany
- Global
- Eastern Europe
Company
Type: Rail vehicle manufacturer
Turnover: 4.5 Bn. EUR
Number of employees: 22,000
Description
The introduction of IPOs was intended to exploit the cost advantages of low-wage countries for the contracting of labour-intensive prefabrication in order to reduce the overall costs of the company’s own product. In doing so, the IPOs were to serve as an extended arm of local project purchasing.
Measures
- Definition and implementation of an International Purchasing Organization (IPO) in Asia and Eastern Europe
- Definition of the LCCS processes
- Budget preparation for IPOs and LCCS organization
- Establishment of the organization in Eastern Europe
- Search, selection, certification and development of new suppliers
- Introduction of the new suppliers to the purchasing community
- Ensuring the first delivery to the plants in accordance with the requirements
Team
- Purchasing managers in the regions
- Engineering managers of the divisions
- Group Controlling Specialist
- Group Human Resources Specialist
- External consultants
Reporting
- Monthly update in the Procurement Steering Committee to CPO and CEO
Interfaces
- Divisional Purchasing Managers
- Head of Group Engineering
- Head of Group Finance
Success
- Development of IPOs in China and Eastern Europe
- Assignment to lead IPO development in Eastern Europe
- Placement of 20% of group-wide purchasing volume via the IPOs with total cost savings of 17%
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