The procurement and quality departments are the hidden champions of many companies. Often they lead a shadowy existence, because purchasing has its own place on the board at only about one in five companies. As for quality, this key cross-departmental function is virtually never represented in this way. As such, procurement and quality are considerably undervalued. Every euro that a company saves in purchasing goes directly into its profits. And companies that seek the highest possible quality early on in the product conceptualization stage save hard cash in the form of lower guarantee and warranty costs. These average five to seven percent of sales, depending on the sector.
Leading companies therefore strengthen the roles of procurement and quality. Porsche Consulting gives them practical tools to achieve cost and quality advantages even during times of rising customer demands and increasing complexity.
Key questions
- Rising product demands, internationalization, and increasing complexity: how should procurement and quality respond?
- How can procurement and quality contribute even more value in measurable form to the company?
- How can we manage to eliminate the conflict between greater quality and optimized costs?
- How can permanent transparency be generated for product and process maturity? And how can the results be used to raise the degree of product maturity?
- How can employee awareness for quality and costs be sharpened?
- What should the supplier management of the future look like?
Strategies and solutions
Our international team of “procurement and quality” experts provides concrete answers to strategic and operational questions. Its members bring long-term experience in purchasing, supplier management, quality management, and strategy consultancy. Their work has familiarized them with the relevant interfaces, bottlenecks, and risks in both fields.
Companies that want to not only satisfy but also delight their customers optimize product quality throughout their organization. This applies to all processes: for product creation, supplier selection, in-house production, and on-site customer service.
Preventive quality management: avoiding follow-up costs
Guarantee and warranty costs average around five to seven percent of sales, depending on the sector. Companies that use preventive quality planning early on can cut these costs in half. Porsche Consulting supports them with what is called a 360° Q Quick Check. This tool analyzes quality costs, product and process quality, as well as quality organization and systems to determine potential. After just a few days, clients know what fields of action to start focusing on. This also includes e.g. specific measures to raise the degree of maturity of products and processes.
Effectively changing the culture of quality
In order to change a company’s culture of quality, the Porsche consultants recommend comprehensive quality management to satisfy customers, improve cost effectiveness, and minimize risks. This system consists of a strict quality strategy as well as the products, processes, and structures derived from it. It registers quality performance on a continuous basis and provides incentives for employees to change their behavior and their work culture.
Ensuring quality: operational quality management
Porsche Consulting uses the “Q6” operational quality management system. With the help of quality gates and control loops, it analyzes causes and prevents or eliminates errors early on. It prioritizes and structures the search for solutions to quality problems. Additional major elements include key performance indicators, standards, employee qualification, and “shop floor” management of quality processes.
New technologies, markets, and suppliers; greater product complexity; same-part strategies – the framework conditions for procurement are constantly in flux. Within this context, procurement departments are expected to manage external added value and to ensure the best prices and availabilities. As a driving force behind innovation, procurement also makes a major contribution to competitiveness. In order to handle these many additional tasks, a new strategic orientation is needed. Together with the client, the Porsche consultants develop a company-specific departmental strategy with the help of a proven, four-stage procedural model. They then also derive specific measures to put this strategy into practice.
Profit lies in purchasing: procurement projects have a positive effect on EBIT, cash flow, and innovative power. The experience of Porsche Consulting shows that it is possible to achieve a three-percent increase in revenue by reducing purchasing prices by 1.5 percent. The company would otherwise have to increase its sales by 40 percent or reduce its personnel costs by 60 percent. In addition, intensive and structured adaptation of material groups generally enables savings of three to ten percent. By the way: active cost management in the product development process – which is comparatively quick and easy to do – yields above-average cost-reduction potential of more than 15 percent.
Companies are concentrating increasingly on their core areas of expertise and outsourcing parts of their value-adding activities to suppliers. This makes it all the more important for business partners to have a very good idea of customer demands. Insufficient supplier management can lead to anything from disruptions to failures in production, with the associated bottlenecks, customer complaints, and damage to the company’s reputation. The resulting costs are incalculable. But when the client and its suppliers jointly improve their products and processes back in the development and series start-up stages, they achieve marked cost and competitive advantages. Porsche Consulting supports its clients in strategic and operational supplier management. In doing so, the consultants employ strategies that have proven themselves at the Porsche sports car company. Porsche has continued to perfect its supplier management since the crisis of the early 1990s – and that’s with more than 80 percent of value added externally, high variation in small unit numbers, and strict demands on technologies, quality, processes, and prices.
In addition, the consultants develop new approaches to supplier management of the future. The trend is moving from “preferred supplier” to “preferred customer.” Porsche Consulting supports clients in shaping these strategic partnerships in which suppliers and manufacturers meet on an equal footing. They agree upon exclusive aspects of cooperation and define capacity levels that are both committed and flexible.
Contact
Federico Magno
Executive Director Mobility
Phone: +49 711-911-32300
E-Mail: Federico.Magno@porsche-consulting.com
Porschestraße 1
74321 Bietigheim-Bissingen
Germany