3Disclosure or duplication without consent is prohibited
The Procurement Marketplace
• The marketplace is undeniably the most competitive ever –at all Tiers
• GeoPolitics, Catastrophic Supply Interruptions, Economic / Demand fluctuations exponentially result in supply chain volatility
• The ways of transacting business are radically different than just a couple years ago– Supply Risk– Cost Reduction– Customer Driven Expectations
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The Procurement Marketplace
• Yet, the basics of fundamental business practices are more important than ever– Quality– Cost/Value– Delivery– Service
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Looking at “Partnerships”
• Partnerships can work………but usually do not– There exists a real lack of understanding of what
customer/supplier partnerships are– Primary objective for each are in conflict -- maximizing profit– Only one common “stakeholder”– Individual trust may exist, but organizational trust usually does
not
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Looking at “Partnerships”
• If not “partnerships”……… then what?– “Old style” relationship (e.g. confrontational win-lose?)– Opportunist relationships (e.g. power based)– Collaborative relationships (e.g. recognizing interdependence
for success)
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Competitive Collaboration
• What Does “Competitive Collaboration” Mean?– Most importantly it recognizes that our relationships and
successes are interdependent– It accepts and embraces that we exist in an environment in
which we have competitors and competing objectives– It drives us to jointly define the best solution for our business
relationships
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Competitive Collaboration
• What is success in a competitive collaboration environment?– Value becomes the measure of success in both buy and sell– Business is evaluated across all products and services, not
part by part basis– All parties understand and are playing by the rules of the game
(both buy and sell rules)
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Magna Mirrors’ Collaborative Guidelines
• To Our Suppliers– Magna Mirrors will develop and reward suppliers for
performance and improvement (we will clearly articulate the expectations)
– Commitments made by our purchasing staff are made on behalf of our entire organization (we will build organizational trust)
– Procurement & supply chain technologies (i.e. web based tools) will be utilized when advantages exist to both parties
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Magna Mirrors' Collaborative Guidelines
• From our Suppliers– Monitoring and reacting to performance metrics provided by
Magna Mirrors will be each suppliers’ responsibility– Commitments made in choosing Magna Mirrors as a customer
come from executive commitment, Magna Mirrors is not a customer of convenience
– The best in market, technology, and process improvements will be brought to Magna Mirrors and Magna Mirrors products
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Purchasing Organization
* Matrix Reporting Direct Through Divisional General Managers
OPERATIONAL PURCHASING
Reports through Division General Manager
MONTERREY HOLLAND 128N & 128S
Jose HernandezBuyer
Mark MensonidesDirector
Commodity Mgr Inter-Co, Glass, Actuators,
Adv. Product Dev.
Cindi KooyersStaff Assistant
Asia Purchasing Office
Mirrors/Closures
Beverly Bekius*Commodity Mgr.
Inj. Molding, Paint, Resin, Foams, Gaskets
Dave Carlson*Commodity Mgr.
Wire Harnesses
Doug TeepleBuyer
Karen WoudstraBuyer
Roxanne RepaalAdministrative
Assistant
Bev BekiusBuyer
Tom MaycroftBuyer
Dick DeMaagdBuyer
Dave CarlsonBuyer
NORTON SHORES
Leigh ReboneBuyer
Tom MaycroftCommodity Mgr.
Die Casting
Aaron HarringtonCommodity Mgr.Packaging, Fasteners,
Springs & Stamping
Rob GauckPurchasing
Analyst
Doug Teeple*Commodity Mgr.
PCB, LCM
Jose Hernandez*Commodity Mgr.
E-Motors
KRAFT
Newaygo
LOWELL /SPARTANBURG
Aaron HarringtonBuyer
NEWAYGO
Rob GauckPurchasing Analyst
Dick DeMaagdCommodity Mgr.Lighting, Heater Pads
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Buyer Roles - Matrixed
• Strategic– Develop and Execute Commodity Strategy including
management of the Approved Supplier List– Negotiate productivity improvement agreements
• Tactical– Manage program RFQ activity– Source new programs– Manage day-to-day activities
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What does this mean to me?
Impact to the Supply Base
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QualityDelivery Commercial
Service
Supplier Performance Rating System
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Expectations of the Supply Base
• Quality– 10 PPM– PPAP inclusive of Run at Rate– 0 DCARs during Launch + 90 days– On-time response to DCARs– APQP– TS16949 Compliant
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Expectations of the Supply Base
• Delivery– 100% On-time shipments– Adherence to release quantities or min/max inventory levels– Accountability for supply continuity - while working to decrease
inventories in the pipeline– No paperwork defects
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Expectations of the Supply Base
• Commercial– Competitive market-based pricing at launch– Year-over-year pricing improvements that meet OEM program
expectations – Averaging 4% across the scope of spend– VA/VE implementation
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Why Annual LTAs & VA/VE Cost Reductions?
• Manufacturing improvements & supply cost reduction provide the greatest opportunity for profit improvement – for all Stakeholders
• For each dollar saved in supply cost reduction, approximately 70% flow through
• By contrast, for each dollar of incremental sales, only approximately 30% flow through
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The Facts - Cost of Business Must Decline
60
305 5
Cost Drivers
Material Cost Manufacturing Cost
SG&A Cost R&D, Corp. Alloc., etc.
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Expectations of the Supply Base
• Service– Proactive involvement– Responsiveness to Magna requests– Open Issues resolution– Participation in new initiatives– Development of competencies
• Manufacturing• Materials• Product and Process Technology• Speed/first to market• Creativity and flexibility
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Supplier Stratification
• Supply base is stratified by commodity• Stratification used in future sourcing decisions• Current sourcing reviewed for worst performers
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Supplier Stratification
• Weighted Average SPRS score less than 70• Supplier Stratification = Eliminate• Impact:
– Resource and/or Balance-Out
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Supplier Stratification
• Weighted average SPRS score 70-79• Supplier Stratification = Probationary• Impact:
– No new sourcing without Director approval– Resourcing options explored– Supplier improvement plans required
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Supplier Stratification
• Weighted average SPRS score 80-89• Supplier Stratification = Approved• Impact:
– Approved for new sourcing– Supplier improvement plans required
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Supplier Stratification
• Weighted average SPRS score 90-100• Supplier Stratification = Preferred• Impact:
– Preferred source for new programs
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Recommended Supplier Actions
• Review your SPRS information every month• Understand how you are performing and where you are
stratified• Develop improvement plans to address non-performance• Review your plans with your buyer• Roll plans into your BOS/CIP and monitor progress/results