Car firms boost joint buying

Supply Management, Apr 24, 2008 by Bagshaw, Steve

[Automotive]

Auto giants Renault and Nissan have accelerated their joint purchasing operation, giving it responsibility for 90 per cent of spend across the two firms.

The Renault-Nissan Purchasing Organization (RNPO) will this year spend $94.7 billion (£47.8 billion), up from $91.5 billion (£46.1 billion) 83 per cent of spend - in 2007.

The jump includes RNPO responsibility for the procurement of after-sales parts and accessories. Previously this was carried out by each company.

"It also includes marketing and communication spend for Nissan, including TV advertisements and posters," said a spokesman for RNPO. The joint body already controls that spend for the French partner. But the purchasing body is unlikely to extend its reach further.

"The remaining 10 per cent is in very difficult areas," he added. "These include real estate and HR services such as training for each company."

And he stressed the high-profile purchasing team is a crucial part in each company's profitability. "The RNPO is seen as very positive within the group. It enables us to gain economies of scale, make substantial savings and is a major aspect of the alliance [between the two firms]," the spokesman added.

Established in 2001, the RNPO was the first joint company created in the alliance between Renault and Nissan. It acts as an intermediary for both organisations, dealing with suppliers and setting rates before providing buyers at each company with the information. They then go ahead and spend the money.

Renault alone has a procurement department of 2,000 staff.

The RNPO has, according to the spokesman, "thousands" of vendors, but 600 "major suppliers".

It is led by senior vice-president, Renault purchasing chairman and managing director, RNPO, Odile Desforges.

Steve Bagshaw

steve.bagshaw@supplymanagement.com