Renaults Odile Desforges says that whenever a family of goods is added to the Renault Nissan Purchasing Organization, it saves 0.5 percent on purchasing costs.
"I expect the number of our common suppliers to shrink 20 percent in the next five years," says Odile Desforges, who heads the joint purchasing operations of Renault SA and its partner, Nissan Motor Co. She declined to say how many suppliers the purchasing organization has.
The purchasing organization was set up in 2001. It handles about $33 billion in purchasing a year, or 70 percent of the two companies' procurement. There are no plans to seek 100 percent joint purchasing, Desforges says.
The purchasing organization's responsibility has grown to include logistics, capital goods and electronics, in addition to chassis and powertrain parts. The quality of parts bought from traditional Renault suppliers has "improved drastically," Desforges says. That has been an important factor in overcoming Nissan engineers' reluctance to use those parts.
An independent survey commissioned by suppliers showed that the number of faulty parts per million for parts from original Renault suppliers had fallen under 100 at the end of 2004, compared with 150 a year earlier.
Desforges didn't say how much she hopes to save by the planned consolidation of suppliers, but she pointed out significant cost reductions.
Each time a family of goods is added to the purchasing organization, it saves 0.5 percent on purchasing costs. That reflects the price concessions suppliers are willing to make in return for greater volumes and a potential long-term relationship with a big customer.