ZF - the Euro 29.2 billion German automobile component manufacturer on Wednesday announced the setting up of a "global sourcing office" in Chakan , Pune , in a bid to take advantage of India's cost competitiveness.
The vehicle chassis and driveline component maker aims to triple its sourcing from India to 100 million Euros, in the next 18 months, in line with Modi Government's 'Make in India' campaign.
Calling the campaign - "Winds of Change," at the ZF India Supplier Day 2016, the company said it will source forging, casting and stamping material from India from about 75-100 shortlisted suppliers. Horst Wiedmann, head of strategic materials management & central services ZF Group told ET, India has an inherent double digit cost advantage over other locations, but more than that cost benefit, the base has proven itself to be a reliable quality source.
"Having been in India for the last 30 years, we have seen that the market has developed tremendously. Indian suppliers today command global standards and can compete in the champions league, they are very good source," Wiedmann said.
The executive VP at ZF Group, Wiedmann says this is "just the start" for ZF which globally sources components to the tune of 18-20 billion Euros. With natural calamities like floods and earthquakes hurting operations once in a while, Wiedmann says it is important to have multiple sourcing base.
"100 million Euros is the first goal post, off course, India can source a lot more. As part of this change, India can participate in being second or a third source. But India can also be a primary source in the future for some of the components, like it is for forgings," added Wiedmann. This move to set up a global purchasing office in Pune will enable local managers to reach a higher frequency and engage in deeper interaction with the group's supplier base. It also offers the suppliers the much needed window into a global organization offering multi-product opportunities, the company said.
The local sourcing team will also function as a Regional Commodity Office, allowing ZF to develop a quality portfolio of products for the Indian and overseas markets. The organization is streamlining its operations to create a real time link with its strategic suppliers who are working closely towards a strategic growth course for various products to support the GPO.
ZF has been operating for more than three decades in the Indian market. After the acquisition of TRW Automotive in May 2014, its current presence consists of 28 locations for catering to the automotive and non-automotive segments.