Emiel Henrix is the director of purchasing for NedCar, the Volvo-Mitsubishi joint venture in the Netherlands wihich produces the V40 and S40 models for Volvo, together with the Mitsubishi Carisma. Henrix has the difficult task of coordinating the partners' different methods of dealing with suppliers.
He was interviewed by Edmund Chew.
How much does NedCar spend on production parts each year?
In 1997 we spent Fl (Dutch Guilders) 3.7 billion ($7.4 billion). This year we will spend Fl4.5 billion, as our production volume is increasing. By 2000 our plan is to spend Fl5.7 billion.
How much do you outsource?
Our in-house operations are quite limited. On current models, 75 percent of our total cost is outsourced. We are still increasing our outsourcing activities because we feel we should concentrate on our core abilities.
Can you give some examples of NedCar's outsourcing?
We used to do seats and door panels in-house, but now these are bought from outside. We are in the process of taking the small body pressings out, and we will do the same with the instrument panels. In the future we will outsource even bigger modules, while finding the right assembly level for our operations.
How do you select your suppliers?
Mitsubishi and Volvo define what type of product they want to put on the market, and we bring in the suppliers early. They are invited to present their ideas, technology-wise and process-wise. We mainly select on capability and target cost. We look at capability in terms of engineering, quality and logistics. Project management is also important. This has a big influence on the end result.
Have there been any big changes in your dealings with suppliers?
We want to give out the same message to all our suppliers, so we are bringing them all together into our Supplier Partnership Program. All our projects have pre-trials, and our suppliers are heavily involved in building the cars. If they bring parts that don't fit or don't assemble easily, they can change them quickly.
What are the major differences between Volvo and Mitsubishi?
Obviously, there are differences in focus. For instance, Volvo is concentrating on developing the modular approach. As for Mitsubishi, it is a company with a big technological background. It has its own particular way of working with its Japanese suppliers. We have to tune into that, but also explain that the situation in Europe is sometimes different. We have found that our European supplier base can support Mitsubishi's programs here very well.
How is responsibility for sourcing divided between NedCar, Mitsubishi and Volvo?
We have people from Volvo and Mitsubishi purchasing here at NedCar. They work with my department and they are also in contact with their home organizations.
Our policy is very clear. We want to have a 100 percent common supplier base. We have not succeeded in that aim completely - at the moment it is about 95 percent.
What is the most important thing you are working on with suppliers at the moment?
We focus on everything. When we are running projects with suppliers and costs have to be brought down to come to target, then of course cost reduction is very important. But if I had to pick one thing out it would always be quality. If you have quality, the rest will follow.
What other issues are important?
Timing to suppliers is very important to Volvo. We have a customer order production system which means that the buyer has up until a few days before production to change the specification of the car. We are adopting the system for Mitsubishi models as well. This means that we have to be highly flexible, not only in our operations but in our relationship with suppliers.
Are there any suppliers working inside your plant?
At the moment we have one supplier, Inalfa, inside as part of our outsourcing program. They are producing sub-assemblies for the bodyshop. They intend to set up a doorstep plant near NedCar, and some of our people will join Inalfa.
What percentage of parts are common to both Volvo and Mitsubishi?
Around 30 to 35 percent of purchased parts are common. There are also some parts which are similar, where we use the same supplier and basically the same production process. But there will be adjustments for either Volvo or Mitsubishi. About 40 percent of parts are unique.
