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Purchasing<br />
A purchasing policy for tangible progress<br />
In <strong>2005</strong>, <strong>Renault</strong> pursued<br />
its drive to enhance<br />
purchasing efficiency<br />
with the active support<br />
of suppliers.<br />
In <strong>2005</strong>, a highly structured program to improve<br />
the quality of bought-out components, backed by a major<br />
commitment to communications targeting suppliers,<br />
more than halved the number of defects per million<br />
parts received at our factories. At the same time,<br />
the number of defects detected per thousand vehicles<br />
during the first three months on the road was divided by<br />
three. Delivery problems attributable to suppliers also<br />
fell sharply. Finally, efforts to cut the costs of bought-out<br />
components and services remained on track despite<br />
an unfavorable economic environment. In this area,<br />
<strong>Renault</strong> did all it could to encourage suppliers to raise<br />
productivity and in so doing limit the impact of higher<br />
raw-material prices.<br />
The Alliance with Nissan naturally continued to play<br />
a central role, with joint purchases through the <strong>Renault</strong>-<br />
Nissan Purchasing Organization now accounting for over<br />
70% of all orders. Nearly 60% of suppliers also now<br />
work with both partners, compared with only 50%<br />
in 2004. This reflects the growing use of common<br />
platforms and powertrains, opening the way for<br />
the development of a worldwide network of suppliers.<br />
In addition, more and more equipment makers are<br />
accompanying <strong>Renault</strong> as it begins production in other<br />
countries, saving time and money for startup.<br />
Development of local content<br />
Purchasing organization is increasingly international<br />
in scope and <strong>Renault</strong>'s Purchasing Department has a direct<br />
presence in all factories outside Western Europe, reflecting<br />
commitment to local content as a means of optimizing<br />
performances. Local purchasing teams thus make<br />
an essential contribution to the startup phase and ongoing<br />
production, ensuring compliance with the required<br />
standards of quality and maximum cost efficiency. Applying<br />
the most demanding international standards, they thus play<br />
an essential role in the development of reliable sourcing<br />
networks in new areas.<br />
To back up this decentralized approach, <strong>Renault</strong> has placed<br />
special emphasis on standardization of work processes<br />
and training to ensure that teams in all parts of the world<br />
share the same know-how. We achieve this through<br />
Purchasing School programs drawn up by the Purchasing<br />
Department and using the combined expertise of its specialized<br />
units. Similarly, deontological rules and principles have been<br />
unified. Finally, in <strong>2005</strong> the Group defined standard<br />
organizational structures reflecting key functions at Group<br />
level and all local units have either already adopted or will<br />
soon be adopting management structures centered on functions<br />
and projects.<br />
Progress achieved in <strong>2005</strong> included a fall of over 50% in the number<br />
of defective parts per million delivered to factories.<br />
42<br />
<strong>2005</strong> <strong>Renault</strong> Annual Report
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