Munich. A bribery affair involving three ex-BMW employees and a number of the carmaker's suppliers is an exception, says a top executive at the German premium carmaker.
"This is not a serious fire," said Klaus Richter, manager of BMW's material logistics department.
Richter said a "small nucleus of employees" were active in the corruption affair.
"We have fired the employees who were involved and we expect suppliers to take similar action," Richter said.
If a supplier doesn't follow BMW's lead, the carmaker will assume it tolerates this kind of behavior, he said.
Attorneys at the Munich prosecutor's office are investigating allegations that the three executives fired by BMW took bribes from five suppliers.
Richter has issued guidelines to staff to prevent a similar problem happening again.
He expects his purchasing agents to report any irregular advances from suppliers immediately to their supervisors.
He also expects sales staff working for suppliers to report questionable proposals from BMW purchasing employees.
Richter and his worldwide staff of 850 employees purchased material valued at 20 billion to 25 billion euros, or about $23.72 billion to $29.65 billion at current exchange rates, last year. He knows about the temptations for the company's purchasing agents and suppliers' sales staffs.
"The volumes that we deal with are huge," he said. "Orders for something like seats can quickly add up to billions over the life of a model."
Despite all the controls, there is no absolute security, Richter said. BMW's controls include multiple reviewers in price negotiations or the participation of different departments in granting contracts.
BMW maintains about 1,000 relationships directly with suppliers. Richter has led BMW purchasing since June 2005.
More cost cutting planned
To maximize costs and quality, BMW launched a special program two years ago. Since then, more than 10,000 proposals for improvements were examined at BMW and its suppliers.
"We implemented about 30 percent of them," Richter said.
In the future, he wants to pursue further cost-savings.
As a result, important criteria in supplier selection, such as quality, cost leadership, the capacity for technical performance, and on-time delivery should be checked and rechecked over the contract's entire duration.
To Richter, the most important thing about the collaboration with suppliers is transparency. If a supplier is ready to be transparent in doing business with BMW, there is a chance to optimize costs beyond price negotiation pressures.
"In my view, the suppliers have the choice. A great deal of transparency means a long-term, solid partnership with joint cost optimization and, in the end, a competitive position for both parties," Richter said.
Less transparency means that BMW is making purchases for the short term, with the risk for the supplier that "we take another company on board at some point."
You may e-mail Klaus-Dieter Floerecke at [email protected]