Business Daily from THE HINDU group of publications
Thursday, May 08, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Thursday, May 08, 2008 ePaper | Mobile/PDA Version | Audio |
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Corporate
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Outsourcing Fiat sets up intl purchasing office “We are sourcing auto parts worth €30 million at present from India and by 2010, our target is to increase the number to €50 million.” Our Bureau New Delhi, May 7 Driven by cost advantage that countries such as India and China offer, the Italy-based Fiat Group announced setting up of an international purchasing office in New Delhi that can support its global production facilities in Europe, North America and Latin America. Through its purchasing office, Fiat will source components for different vehicles, including tractors, cars and commercial vehicles. “We are sourcing auto parts worth €30 million at present from India and by 2010, our target is to increase the number to €50 million,” said Mr Gianni Coda, Fiat Group Executive Committee Member & Chief Executive Officer for the Group’s international purchasing operations. Fiat began sourcing from China a year ago at a volume of €200-million worth of components in the first year. When asked if China was more competitive compared to India, Mr Coda replied, “There is not much difference. Both the countries roughly offer 12-15 per cent cost advantage. It is just that in some parts like glass, India has an advantage and in some cases, China scores higher.” Sourcing strategyThe company official explained that the reason for setting up its purchasing office now was mainly due to the integration of its worldwide sourcing operations from January this year in which Indian vendors were also being included. Fiat expects the strategy would be central in helping the group achieve its growth and margin expansion plan for 2007-2010 under which it plans to buy €8.5 billion of components from the ‘best-cost countries’, including India and China by 2010. Mr Coda said that the components will be related to engine components – gears, axles, castings, glass in which India has a cost advantage. “We have an engine plant in Poland that can produce 800,000 units. So there is a huge opportunity to supply engine parts there,” he cited. Fiat is already engaged with 50 suppliers in the domestic market for global sourcing. But, the company did not elaborate on the expansion plan of their supply base. The international purchasing office would be headed by Mr Neeraj Hans with a team of 15 employees which is expected to grow to 50 by the year-end. More Stories on : Outsourcing | Automobile Components
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