Supply Chain Sustainability
Achieving best supply solutions. A twenty-first century supply chain requires a global perspective. AGCO Global Purchasing sources components from all over the world, always searching for the best, most sustainable value for our customers.
ASPIRE to Collaborate
- Introduction
- E-Sourcing
- Cost Competitiveness
Supply Chain Sustainability & Risk Prevention
- Introduction
- Labor Chain
- Supply Chain Risk
Quality
- Introduction
Logistics & Material Management
- On Time in Full (OTIF) Performance
- Logistics Agreement
- Performance Compliance
- Supplier Development
Aspire to Collaborate
AGCO aims to build strong, lasting relationships with key suppliers that add value to its products and services, enhancing customer value and global competitiveness. Suppliers must align with AGCO’s vision and commitment to ethics, sustainability and continuous improvement. AGCO uses a crossfunctional approach to communicate requirements and expectations effectively.
Close cooperation and joint development projects foster trust and elevate AGCO as the "Customer of Choice." Both AGCO and suppliers benefit from delivering high-quality, reliable products at competitive prices, ensuring smooth operations and success in the global market. Performance criteria are measured, monitored and reported transparently using the APEX Supplier Performance System.
AGCO recognizes the need for strategic long-term suppliers and has selected certain direct material suppliers for the Path to Partner-Level Initiative. This initiative aims to help suppliers achieve or maintain Partner-Level status through improved key performance indicators (KPIs), business relationships and integration into AGCO systems. The Global Commodity Manager will work closely with these suppliers on innovation and collaboration efforts.
AGCO Path to Partner-Level Relationship Levels:
- Partner-Level: Exceeds performance standards, serves as a benchmark, contributes actionable insights and fosters innovation.
- Preferred: Exceeds performance standards, surpasses cost-saving targets and provides a competitive advantage.
- Regular: Meets minimum performance standards and contributes to cost-saving targets.
- Conditional: Fails to meet minimum performance standards.
E-Sourcing
A smooth sourcing process is crucial for AGCO as it enables us to get fresh solutions for our farmers at the right time, right quality and at the right cost. To ensure this, AGCO’s direct material sourcing process is run via our supplier portal and e-sourcing platform APEX. At the beginning of the business relationship between you and AGCO, your purchasing contact will send a link for self-registering your company into APEX. Once the self-registration is done, you will get access to the system and can maintain your contact information, access e-sourcing events and much more.
Cost competitiveness
1. Cost Reduction
AGCO expects suppliers to: Deliver 3% year-over-year cost reduction on current business through productivity improvement, SIG (Supplier Idea Generation) projects,and other initiatives; meet NPI cost targets; collaborate on tooling cost reduction; and provide transparency throughout the supply chain.
2. Continuous Improvement
Suppliers are strongly encouraged to implement rigorous internal processes for value engineering and supply chain cost management. AGCO strives to work with suppliers who actively collaborate with us to achieve optimum supply solutions. Suppliers should continuously focus on cost structure improvement and driving LEAN improvements through AGCO’s Supplier Development initiatives. This supports AGCO’s strategy to make fact-based sourcing decisions based on total cost that will yield mutually beneficial results.
Supply Chain Sustainability & Risk Prevention
AGCO is committed to integrating sustainability into our core business strategy, in line with our purpose: to deliver farmer-focused solutions to sustainably feed our world. We hold our suppliers to the same high standards we hold ourselves. We view our suppliers as crucial partners to help us achieve positive outcomes for people and our shared environment. At every step of our value chain, we support the professional farmers who feed our world together.
The AGCO Supplier Code of Conduct codifies the principles we require our suppliers to agree to and abide by.
Labor Chain
AGCO’s responsibilities include protecting and managing our own labor pool, plus we hold our suppliers (and our suppliers’ suppliers) to the same high standard of ensuring a safe, legal and healthy labor force according to the principles of our Supplier Code of Conduct. We train our employees on these important expectations and audit targeted suppliers to verify they are adhered to ongoing.
Learn more about how AGCO vigorously complies with legal and civil society expectations for corporate social responsibility throughout our supply chain:
Supply Chain Risk
Supply chain risks are unavoidable and on the rise, impacting every organization in the world. A consolidated global supply base and reduced inventory requirements amplify supply chain disruptions; one event can have widespread and severe consequences. AGCO teams with our suppliers to mitigate potential disruptions to our supply chain involving factors such as transportation, currency, raw material fluctuations and geopolitical conditions. This goal cannot be accomplished without you — our suppliers — working together with AGCO as one team with common goals.
We ask you to:
- Act in a manner consistent with AGCO's corporate beliefs and Supplier Code of Conduct
- Proactively monitor your own supply base
- Be transparent about potential problems
- Respond to AGCO requests in a timely manner
After receiving the renowned "Excellence in eSolutions" award for its innovative and comprehensive supply chain risk management approach in 2015, AGCO was among the very first companies globally to receive the newly introduced "Secure Supply Chain" benchmark certificate.
The "Secure Supply Chain" benchmark certificate was awarded by the Association Materials Management, Purchasing and Logistics (BME), Europe’s leading supply chain association. With more than 9,000 individual and corporate members, it offers the first international, neutral assessment tool for the procedural and organizational implementation of a globally secure supply chain. The tool offers companies the opportunity to measure and optimize their businesses based on benchmarks, while simultaneously allowing them to document their accountability toward shareholders and stakeholders. It also enables companies to manage the risks that occur in their end-to-end supply chain, including on a supplier and location level. AGCO encourages all its suppliers to participate in the "Secure Supply Chain" benchmark.
If you have questions about supply chain risk management at AGCO, please email the Risk Management team at RiskMgmt@AGCOcorp.com
Quality
To achieve zero defects, AGCO and its suppliers must implement a consistent Advanced Quality Planning Process (APQP). This involves effective serial monitoring, re-qualification and continuous improvement of both products and processes. AGCO and our suppliers need to collaboratively develop, plan, implement and ensure failure-free processes and products.
AGCO’s quality approach is based on preventive action in four key areas:
Supplier Validation Process: This includes the Supplier Readiness Review Plus (SRR+) Assessment Audit and Technical Process Assessment (TPA) for specific processes.
Nomination Process: This involves a technical review and feasibility analysis by the supplier.
Product Quality Assurance: Ensures that preventive and formalized quality measures are defined and applied, from the Production Part Approval Process (PPAP) for complex components to serial follow-up.
Supplier Performance (KPI): AGCO monitors supplier performance using key indicators such as Parts per Million (PPM) compared to global targets, Non-Conformance Report (NCR) impact and reactivity, project status versus schedule and the cost of poor quality.
Logistics & Material Management
1. On Time in Full (OTIF) Performance:
- Mission: Ensure an uninterrupted supply chain to AGCO’s manufacturing sites, supporting the Farmer-First strategy.
- Measurement: Suppliers must deliver components on time and in full, adhering to shipping/delivery dates and quantities.
- Expectations: Preferred suppliers should consistently meet delivery schedules and provide accurate documentation.
- Criteria:
- Direct Material Suppliers: Deliver two (2) days early to zero (0) days late, 100% order quantity.
- Freight Carriers: Deliver exactly on time, 100% order quantity.
2. Logistics Agreement:
- Participation: Suppliers must comply with AGCO’s Logistics Agreement.
- Key Areas: Lead time, Supplier Network Collaboration, Packaging and labeling compliance, Transportation Management System, Capacity Management System and Premium Freight compensation.
3. Performance Compliance:
- Importance: Supplier compliance is critical for AGCO’s operational performance and customer satisfaction.
- Communication Standards:
- Ensure timely, clear and consistent communication to maintain transparency and address any issues promptly.
- As a supplier to AGCO, you are required to use EDI or AGCO's Web-EDI portal. The messages exchanged are purchase orders and confirmations, delivery schedules, advanced shipping notifications and invoices.
- AGCO expects our suppliers to actively work towards establishing a direct EDI connection with us to streamline our communication and improve operational efficiency.
- Systems:
- Supplier Network Collaboration: Timely order confirmation, accurate ASN data, electronic invoicing.
- Transportation Management System: Timely transportation orders, accurate data.
- Capacity Management System: Timely capacity reviews and updates.
- Container Management System: Timely ordering of empties, accurate inventory information.
- Performance Calculation: Average of seven criteria, expressed as a percentage.
4. Supplier Development:
- Continuous Improvement: Suppliers should continuously improve performance and efficiency.
- Methods and Tools: Capacity Assessment, Lean Assessment, Value Stream Mapping, Self-Auditing, Kaizen, Root Cause Analysis and regular review of non-compliances.
- Assessment: AGCO will evaluate suppliers’ capabilities to improve materials management efficiency and reduce costs from errors and waste.
