Industry: Automotive

Procurement

Purchasing spend represents up to 70 percent of cost of goods sold for automotive suppliers. Oliver Wyman helps clients shrink that.

Rising competitive pressure on price and quality and growing supply chain complexity requires automotive suppliers to manage their costs efficiently. Product costs are the most important cost pool by far, if a company wants to significantly reduce its cost base. It is essential that automotive suppliers find a cross-functional, holistic approach for addressing the most important technical, commercial, and process-related levers in collaboration with customers and suppliers.

Oliver Wyman has extensive expertise in reducing product costs across nearly all vehicle components through a combination of measures tailored to customers' specific needs, including advanced make-versus-buy strategies. Our competence ranges from strategic approaches for managing  product portfolio complexity and modularization, to operational levers such as the improvement of procurement, or the reduction of costs by redesigning the product or adapting the process chain. Experience shows that the highest savings are achieved when measures are jointly defined and implemented as part of a cross-functional project involving the procurement, supply chain, quality, R&D, production, and sales functions. We help automotive suppliers to achieve superior purchasing performance in a sustainable way by improving the maturity of the purchasing organization along all dimensions: strategy, structure, processes, HR, and IT and tools.

Apart from product cost reductions, automotive suppliers can unlock major cost reduction potential by improving indirect material costs. A combination of low-cost procurement and smart spending that involves all of the relevant functional departments can address spending over the long term. Companies can sustainably improve the performance of their supplier landscape by professionalizing their increasingly globally active procurement organizations across processes, structures, human resources, and systems.

Oliver Wyman, with our many years of experience, the extensive hands-on commercial and technical skills of our consultants, and our know-how regarding the industry environment and methodology, can be a valuable partner to companies seeking to improve their procurement functions.

Lars Stolz
Ramping-up sourcing capabilities is still one of largest profitability drivers for most automotive suppliers, who often lag behind automotive manufacturers.
Lars Stolz Head of the Automotive Supplier Team Oliver Wyman

Procurement Our Thinking