Centralised buying helps Fiat go global

27 March 2008
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27 March 2008

Fiat has centralised its purchasing operations and is establishing new global sourcing offices.

The reorganisation is part of the Italian motor group's strategy to centralise its technical operations. The group comprises a number of brands including - Fiat, Lancia, Alfa Romeo and Maserati - and the purchase of common goods is now sourced centrally to make the best use of its ?34 billion (£26.8 billion) purchasing budget, ?25 billion (£19.7 billion) of which is spent on commodities.

The firm plans to cut its overheads by sourcing from what Gianni Coda, senior vice-president of Fiat Group Purchasing based in Turin, calls "best country sourcing". It has already set up a new office in China led by Jack Cheng, vice-president, Fiat Group China, who is CPO in the global sourcing office in Shanghai.

Cheng built the office from scratch and it now has 100 staff including buyers, quality engineers and technical experts who work alongside one another.

Last year ?70 million (£55.2 million) of goods were sourced from China, this year the company hopes to increase that to ?250 million (£197 million), and aims to reach ?1.5 billion (£1.2 billion) by 2010.

Cheng told SM: "It's quite new for Fiat to source from China, we have to catch up. We're small, we're coming later than other firms but we're coming at the right time and still have a good chance of making savings."

As part of developing its global reach, a new 50-strong sourcing office is expected to open in India this month, and the firm is planning a similar centre in Russia.

SMmar2008

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