Working Closely with Suppliers Has Been Crucial to Audi’s Success in Mexico – Part 1

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By Nancy J. Gonzalez On 30 September 2016, Audi opened the 12th plant of the Audi global production network in San Jose Chiapa, Puebla, Mexico. The Audi Q5 premium SUV is produced at this 400-hectare site. The plant boasts an annual production capacity of 150,000 Audi Q5 models and employs directly up to 5,000 people. The OEM started to work early with its suppliers to guarantee the quality of the final product would meet Audi’s standards. Nowadays, Audi Mexico works with 180 suppliers to accumulate a 70% local content, and the company is willing to increase this percentage. Christoph Leiser, procurement director Audi Mexico, explained to MEXICONOW how the company has integrated its Mexican facility to its supply chain and how the new suppliers in Mexico meet the high-quality standards this German company offers to its global customers. How has Audi integrated its supply chain in its Mexican facility? We started early collaboration with our suppliers. Shortly after we decided about the product, we launched this collaboration. We offered this special development program for our Mexican suppliers, which allows us to focus on all the important steps to have the start of production (SOP) in the right time and with the right quality. Also, it helps us to have the right volume and the right assessment. Together, we can decide which volume is optimal and even follow the greenfield and the brownfield projects and special projects in it, because we really support suppliers from the start of their construction through the building phase, to getting the assistance to get their plant ready. It is part of the success we have. We have a guideline that made possible to have the SOP after three-and-a-half years. Has Audi been able to find the right suppliers and the right quality for its products in Mexico? Yes, but it was not done automatically. It was an intensive scouting and sourcing. At the end we were really successful. The figures show us 70% is local content, and we are really satisfied with that. It also shows us 70% green and brownfield. We could really give suppliers the chance to build, to create a new plant or a big expansion of the existing ones. We are really happy with the results. What have been the challenges of manufacturing in Mexico? We had four challenges: we came to a new country; we had to build and open a new plant; we had to hire and train new people, and had a SOP for a new modeling. There was no Plan B. The Q5 manufactured here is the model for the world market, except for China and India. The biggest challenge was to focus together with the suppliers towards one goal: the SOP. There is just one SOP; we don’t have a backup plan because the model is not produced anywhere else. Now, Audi is manufacturing the hybrid Q5, what are the challenges for the department you are leading with this model? The challenge is not only for my department, but also for the whole plant. Now we have to work in hybrid systems. That is different from normal combustion engines. We had to do special trainings with all our employees and we have special security measures within the plant.