Procurement Intelligence Unit

The PIU recently held a case study interview with Daniel Scaglione, Head of Purchasing at McLaren Automotive to discuss how the business has transitioned from designing and engineering racing cars to high-end sports cars. The case study was particularly interested in gaining actionable insights into how Scaglione has developed his procurement team to support engineering to deliver an innovative product - the MP4-12C's Carbon MonoCell. The Carbon MonoCell continues the McLaren tradition of using carbon fibre - a high-strength and lightweight material, which helps to keep vehicle weight down, but increases occupant safety.

According to Scaglione, from a procurement point of view it is a big challenge to introduce a new supply chain to support such an innovation. It was therefore paramount that the team put together a "sourcing strategy that identifies strong suppliers with the potential to manufacture the product".

The complexity of identifying a supplier capable of delivering the MonoCell was particularly challenging, as was the technology required to manufacture a one-piece moulding of carbon; the sourcing process failed to uncover suppliers that were competitive or able to deliver the product. The next stage therefore was to identify a "range of suppliers" that could work together to produce the MonoCell. However, this also proved challenging and a turnkey approach became a viable option. This required investment in a new manufacturing facility and the introduction of the right technology and processes with a partner.

Developing an effective supply chain has its challenges, which buyers alone cannot manage. For this and other business reasons, Scaglione added that: "we are setting up a department and strategy to deliver a supply base new to McLaren". This department will initially cater for suppliers that contribute "80% of vehicle value". The overarching aim is to support supplier development and growth and thereby mitigate potential problems, thus the new department is focusing on creating appropriate key performance indicators to measure suppliers against "commercial, quality and logistics" targets.

Scaglione takes a flexible approach in terms of how he organises and incentivises his buying team. During pre-series development, buyer performance was based "around contract completion, component availability and supply, and a number of key commercial requirements". For the first six months of series production, he added, the key requirement will be to deliver a competitive customer car to market, ensuring "we have a service network to provide spare parts and ensuring that the customer expectations are met". This requires different procurement key performance indicators, based around sustained parts supply to support manufacturing and the after-sales network.

For this, the department appears in a good position as its director of purchasing and logistics regularly presents to the McLaren Group's board of directors, which helps to put his team's agenda in a strong position. As a result, "we have demonstrated proven year-on-year cost savings, obtained resource to fund consistent training programmes, and have a joined up commercial strategy across the Group".