GRI-G4  12, 13, DMA, EC8, EC9
This content was subject to assurance by SGS Italia S.p.A. (14 March 2014).

Supplier profile

Suppliers are strategic allies who support our creation of successful and exciting vehicles that deliver best-in-class quality, innovation and performance to our customers.

We believe that cooperation is what makes the difference. Our supplier relationships go beyond the purely commercial sphere and include a mutual understanding of what it takes to promote good practices and pursue responsible and sustainable development. This is demonstrated throughout the year and at such events as Group Purchasing’s Annual Meetings that include recognition of suppliers for exemplary performance. Today, globalization requires leading supply chain management methods that ensure the widespread incorporation of sustainability criteria in the management, training, selection and engagement of suppliers; in so doing, these practices help to limit exposure to unexpected events and supply disruption while building long-term core competence. Group Purchasing is the Fiat and Chrysler organization responsible for supplier management by setting global purchasing strategies as well as developing an integrated worldwide process. This organization works with peers and counterparts to integrate key environmental, social and governance considerations into its global purchasing processes, thereby enabling responsible and sustained economic success for the extended Group enterprise.

The ultimate governance of strategy in relation to supplier management lies at the highest level of the management organization.

The Group evaluates the effectiveness of its management approach through external audits and feedback from various stakeholders. In 2013, all information related to the model for sustainable management of the supply chain was assessed by SGS by means of a high level audit as per the AA1000 and Assurance Standard principles, which did not find any gaps in the management approach. Further improvement is expected by continuous application of the new KPIs related to an extensive supply chain monitoring process.

Furthermore, media monitoring, stakeholder commentaries and other public information gave no reason for concern, as reported by the rating agencies responsible for assessing the Group’s supply chain management processes.

In 2013, Group Purchasing managed approximately €44.5 billion(1) in purchases through a supply base of 2,884 companies (direct material suppliers). The top 184 supplier parents producing roughly 57% of the total purchase value were identified as key suppliers.

Through a formal supplier classification process, the Group identifies its strategic suppliers on the basis of the following criteria: allocated spending amount; production and spare parts capacity; the absence of technical and commercially viable alternatives; and the percentage of Group procurement orders in comparison to the suppliers’ annual turnover.

Approximately 69% of the direct material purchase value is for plants in the NAFTA region, 19% for plants in EMEA, and 12% for LATAM. Roughly 73% of direct material suppliers are located in NAFTA, 19% in EMEA, 3% in LATAM, and 5% in APAC (percentages refer to the monetary value of direct material purchases managed by Group Purchasing).

In 2013 the Group added 442 new suppliers, and a very small number of supplier relationships were terminated. Additionally, there were no significant changes in our supply chain’s structure nor any notable outsourcing activities. Starting in 2014, the Group will begin to utilize our re-qualification process to monitor changes in the location of suppliers' plants from one country to another.

Although the Group does not purchase raw materials directly (with the exception of steel and other metals used for direct production), it monitors overall consumption and price trends.

The Group is aware of the impacts of its operations on local economies, and is therefore committed to providing equal opportunities for multicultural businesses in the selection and qualification processes. Group Purchasing leverages its existing and long-standing supplier relationships and regularly seeks to understand and support their issues.

In general, the selection of suppliers is an operational phase of the sourcing process categorized by commodity group (e.g., direct materials; capital expenditure and indirect materials; and services), each of which is regulated by specific procedures.

Whenever possible, we utilize local suppliers at major locations of operation (based on the amount of spending allocated) in order to generate direct and indirect income and employment opportunities in the communities where the business is located; this also serves to minimize transport-related environmental impacts. The term "local suppliers" refers to suppliers operating in the country where a Group plant is located. Enhancing skills and building industrial capacity through local content favor economic and social growth for local communities.

In addition, the Group constantly monitors and manages any critical situations arising in the automotive supply chain to ensure prompt detection and mitigation of potential disruptions. Resolution actions may entail providing support for restructuring plans and, where necessary, temporary cash-flow support with the objective of ensuring supply continuity and preserving jobs if possible. In some cases, such actions are taken jointly with other automakers.

Highlights

Group Purchasing worldwide

2013
Direct and indirect material purchases managed by Group Purchasing(2) (% of total Group purchases) approx. 95
Direct material suppliers (no.) 2,884
Concentration of direct material purchases (% of purchases from top 184 suppliers) 57
Value of purchases from direct material suppliers(3) (€ billion) 44.5
Value of purchases from indirect material suppliers(4) (€ billion) 10.9

Concentration of Group Annual Purchase Value (APV) on local suppliers at significant locations of operation and by emerging markets(1)

Purchasing

Purchases(2)by origin

Group Purchasing worldwide

 

Purchases(2) by destination

Group Purchasing worldwide

 

Purchases(2) by type

Group Purchasing worldwide

 

(1) Value of purchases from direct and indirect material suppliers totals roughly €55.4 billion.
(2) Refers to the monetary value of purchases managed by Group Purchasing.
(3) Direct materials are pre-assembled components and systems used in assembly.
(4) Indirect materials are services, machinery, equipment, etc.
(5) Refers to markets where Group plants are located (source for “Emerging Markets”: Dow Jones Indices Country classification system, effective September 2011).
(6) Refers to the monetary value of direct material purchases managed by Group Purchasing.