1. OUTSOURCING ES4C9 SUPPLY CHAIN MANAGEMENT Raj Mamtora

2. CONTENTS 1.INTRODUCTION 2.COMPANY OVERVIEW 3.COMPANY OUTSOURCING - WHAT AND WHERE 4. THE RISKS 5. IMPROVEMENTS 6. OUTSOURCING IN 5 YEARS

3. INTRODUCTION Define: Outsourcing “Outsourcing is when a business function, particular task, role or process is contracted out to a third party over a considerable period of time.” DesignPartsAssemblyDistributionDealerEnd User Supplier Pie SCM: OUTSOURCING TYPICAL AUTOMOTIVE SUPPLY CHAIN SUPPLY CHAIN MANAGEMENT 1 Two primary reasons to outsource: To lower the purchase price To improve quality

4. COMPANY OVERVIEW “MOTION EMOTION” The group also manufactures automotive parts such as:  Seats  Doors  Front-ends The group primarily operates in Europe. It is headquartered in Paris, France and has 198,220 employees. PSA Peugeot Citroen (Peugeot) is engaged in the design, development, manufacturing and sales of passenger cars, light commercial vehicles, scooters, and motorcycles. INTRODUCTION SCM: OUTSOURCING  Acoustic packages  Cockpits  Exhaust systems 2

5. PEUGEOT SO WHAT DO THEY OUTSOURCE? SCM: OUTSOURCING Engine Category: - Inlet and outlet valves - Fuel injection systems - Air filters, oil filters and spark plugs - Car cylinder head blank, inlet pipes - Automatic gear case, aluminium alloy die- castings - Gear case and bearings Chassis and drive train parts category: - Shock absorbers - Alloy wheel - Clutch disks, facing, pads, brake hoses - ABS systems (antilock brake systems) - Aluminium Body Parts Category: - Wiper blades - Auto lighting and bulbs - Rear mirrors Other Products: - Electrical/electronic parts – non-durable and sporty accessories - Auto care chemicals such as wax and rust- proofing solutions - Tyres As well as the company outsourcing majority of the components for the production of a vehicle as shown on the left, typical business processes are also outsourced such as: Human resources – Customer care call centres – Detailed product development – Information Technology Services – 3

6. PEUGEOT SCM: OUTSOURCING OUTSOURCING LOCATIONS Key: Manufacturing Plants Components and Casting Plants Assembly Sites 4

7. PEUGEOT SCM: OUTSOURCING RISKS INVOLVED? Care with taking outsourcing to emerging markets - Culture An obvious risk relating to a problem that many of us face – Increased fuel price! Communication Foreign exchange currency. 5

8. PEUGEOT SCM: OUTSOURCING IMPROVEMENTS? Further rationalise the supply base - Currently 200-250 Automotive orientated ESP’s Carry out appropriate research with emerging markets Cost driven outsourcing must be well defined - set of rules and processes based on KPI Take carbon footprint into account. 6

9. OUTSOURCING SCM: OUTSOURCING THE NEXT 5 YEARS Will fuel prices really become an issue? - Local outsourcing becoming dominant - Less developed countries are coming up in the world Global outsourcing has hit a plateau Outsourcing will be location based - Places like Japan are still recovering from the Earthquake - Will the $157 billion budget for rebuilding allow for Japan to recover within 5 years? 7

10. OUTSOURCING THANK YOU FOR LISTENING ANY QUESTIONS RAJ MAMTORA