Procurement

Last year was characterised by an overall recovery in the commodities markets. Key purchasing objectives were achieved, such as reducing costs, ensuring continuity of supply, optimising quality and implementing embedded material group strategies.

Commodity prices rising

While prices had continued to fall in the primary markets in 2015, the trend was reversed in 2016. Overall, all the average prices for the year were slightly higher than the ranges that had been forecast. However, commodity prices have only a limited influence on the price at which DEUTZ procures parts from suppliers because there is a very high element of value added.

Measures implemented to reduce costs

With regard to the material groups, we primarily focused on exhaust aftertreatment, exhaust gas recirculation and filtration last year and were able to reduce costs in the overall system. We see potential for achieving further savings by increasing the proportion of procurement from emerging markets. This applies, above all, to China because of the competitive environment, particularly as quality standards in the supplier industry are continuing to improve there. We have concluded a purchasing agreement with our joint venture Deutz (Dalian) Engine Co., Ltd., China, in order to coordinate procurement potential in the Chinese market.

Supply chain and supplier performance

We have been able to further optimise supplier performance in the supply chain, with the overall trend continuing to improve.