Fiat Group Automobiles, one of the world's leading carmakers, needed to make major cost reductions in their €1 billion annual purchasing budget.
The company already aimed to reduce costs by several hundred euros per car, to meet a total target exceeding €100 million by year end. We accelerated this programme by adopting a strong methodology, initially focused on four models crucial to Fiat’s future success: Croma, Grande Punto, Alfa Romeo 159 and Ducato.
Our approach created an understanding of all costs involved (including components, supply chain, technical design) and then developed and captured cost-saving ideas. Using our unique cost model - reinforced by our knowledge of automotive manufacturing processes - the joint team determined what the components should cost, investigated disparities between this and the quoted price, and then discussed these in detail with suppliers to agree savings. Finally, to analyse the complexity of Fiat’s vehicle design and parts, we stripped down 16 competitor vehicles to compare their design with Fiat’s equivalents and identify cost benefits from technical changes.
The programme helped Fiat achieve their cost reduction objectives. We identified options to deliver annual savings of more than €100 million per annum, of which €80 million were realised in the first year.
Carlo Bassotto, Engineering and Design, Fiat Group Automobiles, said: “PA worked with the integrated multi-disciplined Fiat teams to significantly improve our way of working. In particular, the structured dismantling, evaluation and bench-marking of Fiat cars with competitors’ identified major improvement opportunities. It laid the groundwork for a tremendous increase in idea generation, evaluation and implementation - for both current and future models.”
“The impact on Fiat goes well beyond the four new models. Fiat has significantly improved its approach to costing for all its product ranges.”
Gianni Coda, Fiat Group Purchasing
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