Scania restructures its supplier network
Scania has signed an agreement with Finland's PK Cables on supplies of wiring and electrical cables to all Scania assembly plants the world over. The agreement also requires PK Cables to take a more prominent role in product development. With this agreement, Scania is reducing the number of suppliers in this key area and at the same time making considerable cost savings.
The agreement with PK Cables is the result of a supplier restructure initiated by Scania. A total of 13 product group areas - including steel and pipes, wiring, forged components and lighting - have been identified and either are or will be subjected to a thorough review.
"Our Supplier Structure Project is part of a drive to tailor our operations so we can offer a global model range on a global market. It is also part of the cost-reduction campaign that is necessary in order for Scania to survive in the face of increasingly tough competition. Material costs account for about 50 percent of the truck's value. Reducing these costs is thus crucial to our continued competitiveness," explains Per-Olov Svedlund, head of Procurement & Industrial Development at Scania.
Scania currently has about 650 suppliers in Europe and 250 in Latin America. These encompass everything from companies that supply off-the-shelf items and firms manufacturing components according to Scania's instructions, to companies that take partial or even full responsibility for sub-component development and delivery to Scania.
"We simply do not have the resources to work together with as many suppliers as we do today," says Per-Olov Svedlund. "In order to reach our cost targets, we need a new way of working together with our suppliers."
That is why Scania has now launched a process of co-operation with its suppliers, with the aim of utilising and developing their expertise. For instance, Scania places its own resources at the disposal of these companies for evaluation and development of their potential as suppliers.
"It's all about establishing a long-term and mutually developmental framework for co-operation with suppliers the world over. The aim is to encourage our suppliers to take greater responsibility for the parts, components or systems they deliver. Our own product development should focus on areas that are vital to functionality, and those that are unique to Scania's vehicles and the Scania brand," continues Per-Olov Svedlund.
"In order to secure a future as a supplier in this integrated development process, it is necessary to have competent resources for in-house product development, materials technology, testing technology and more. We expect a fully-tested design or product, not just a drawing," concludes Per-Olov Svedlund.
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