2006 Richter Award Winners - Institute for Supply Management

Winner: Organization/
Structure
DaimlerChrysler Consolidates
Global Procurement
In 1999, DaimlerChrysler’s international procurement
services (IPS) department was on a mission to
become recognized as a
best-in-class global procurement
organization for non-production material
and services.
Belonging to DaimlerChrysler AG’s global procurement
and supply organization, IPS is responsible for
the procurement of non-production material and
services (NPM) in Germany, and for the Chrysler
Group in the United States and Canada.
IPS decided that creating a global procurement organization
would help bring its mission to fruition. To
achieve this goal, the current decentralized and fragmented
structure had to be transformed into one
consolidated organization. Therefore, a strategic
development of IPS from 1999-2005 focused on a
consolidation of the DaimlerChrysler global nonproduction
material procurement responsibility. The
goal was the sustainable increase of the added value,
especially to realize new global savings opportunities.
This initiative required major structural changes
and the alignment of the entire organization.
A Winner’s Snapshot
Company: DaimlerChrysler
Award category: Organization/Structure
Size: Revenues of EUR 149.8 billion ($177.4 billion
USD) in 2005; 382,724 employees worldwide
Web site: www.daimlerchrysler.com
Company description: Automobile manufacturer
of such brands as Chrysler, Dodge, Freightliner,
Jeep, Maybach, Mercedes-Benz, Mitsubishi Fuso,
Sterling and Western Star.
Project focus: The continuous consolidation of the
DaimlerChrysler global non-production material
procurement responsibility.
Key individuals: Heinrich Reidelbach, Ph.D., vice
president of IPS; Thomas W. Sidlik, DaimlerChrysler
board of management, global procurement and
supply.
10 2006 R. Gene Richter Awards for Leadership and Innovation in Supply Management
The added value of the new IPS strategy resulted in:
• An 80 percent increase in purchasing results
regarding spot buys in global or regional commodities.
• A 30 percent increase of the manufacturing facilities’
purchasing results.
• A 77 percent to 80 percent increase in internal customer
satisfaction.
• The implementation of global tools for supplier
evaluation and development.
• The implementation of one common global IT
solution in order to realize a common database as
well as a common workfl ow.
These savings are a result of global and regional
bundling, the implementation of innovative procurement
tools and increased collaboration between
plants and headquarters.
IPS’ initiative to consolidate its global procurement
organization has earned it the 2005 R. Gene Richter
Award for Leadership and Innovation in Supply Management
in the Organization/Structure category.
“It was only with the commitment, the support and
the active involvement of all employees that IPS was
able to become the successful global organization
that it is today,” says Heinrich Reidelbach, Ph.D., vice
president of IPS. “This transformation went smoothly
because so many employees were willing to try
something new.”
With a plan to integrate additional locations into IPS
and the Global NPM Network in 2006, Daimler
Chrysler will increase its span of control over 95 percent
of the worldwide NPM procurement volume.