In 2018, our suppliers coped well with the persistently strong demand for engine components in the medium and heavy-duty sector and with the high level of orders on hand at DEUTZ. As in 2017, the management of supply bottlenecks was an important task for purchasing and this was achieved using preventive measures.

To cover the increased demand for crankcases and cylinder heads at the beginning of the year, we took early steps to secure an adequate and timely supply of these parts.

A particular issue in the year under review was disruption at our supplier Neue Halberg-Guss that resulted from several weeks of strike action by its workforce. In early December, a long-term solution was found that will ensure a stable supply situation for the coming years. By providing partial financing, the DEUTZ Group is actively supporting the new owners of the company in their plans to acquire the relevant production facilities and land at the Saarbrücken and Leipzig sites.

In 2018, despite the many new production parts that were introduced and the temporary capacity bottlenecks, we significantly improved delivery quality thanks mainly to preventive measures such as local audits and advanced product quality planning (APQP) 1).

Further slight rise in commodity prices

Prices for the commodities cast-iron scrap, iron and steel again rose moderately in the first half of 2018. They consolidated slightly in the second half of the year, however.

Gearing up procurement for new and innovative products

The activities and challenges involved in finding, selecting and nominating suppliers are intensifying because of the way the modular engine system is expanding to cover innovative drive concepts such as gas engines, bi-fuel, hybrid applications and all-electric drives.

Where it makes commercial sense, we are switching to a two-supplier strategy that will underpin our growth strategy. Furthermore, we are optimising our supplier portfolio from a geographical perspective.

Purchasing also plays a role in DEUTZ AG’s new three-pillar growth strategy for China. A purchasing strategy has been developed as an integral part of this and the first steps have already been taken. This includes the establishment of local purchasing operations in China.

1) Recognised advanced planning method for quality under which suppliers are closely and methodically managed during the project phase.