Supplier Management

A long-lasting partnership between Infineon and our suppliers is vitally important for future business development. Purchasing products and services already accounts for more than 50 percent of our revenue, and its share of costs is continuously rising. Our purchasing capability and the competitiveness of our suppliers are strategic core elements of our company.

Only by working together with our suppliers to optimize the entire value chain will we be able to secure a distinct competitive advantage in the future.

For the reasons mentioned above, we have adopted a holistic, company-wide supplier-management approach.

Supplier Management is the organisation, controlling, and development of supplier relationships. Supplier Management is based on four interlocking modules, through which uniform sourcing, evaluation, classification and development of suppliers is achieved. It´s objective is to increase purchasing's contribution to Infineon’s bottom line profit.

Infineon will concentrate on its most important suppliers and develop/maintain strategic alliances with key suppliers.

Goals of Supplier Management are:

• The management of our suppliers, based on the total cost of the relationship
• The concentration of purchasing volume on the best suppliers
• The decrease in purchasing costs and increase in supplier performance
• The improvement of co-operation
• The optimization of the entire value chain in collaboration with our suppliers

Supplier Evaluation

We at Infineon strongly believe that we can only succeed if our suppliers, who play a vital role in the whole development and manufacturing process, also give their best. For this purpose, Infineon´s most important suppliers are carefully evaluated via the Supplier Evaluation System (SES).

The Supplier Evaluation process measures the performance and efficiency of suppliers using standard Infineon-wide criteria.

All suppliers that make up 80 percent of our purchasing volume are to be evaluated. These are generally our largest suppliers; however, smaller suppliers are also included if they are strategically important.

Each evaluation comprises the following five Infineon-wide standard categories:

Suppliers are evaluated world-wide. The individual results in each evaluation category are weighted and aggregated to provide an overall result for each supplier. On the basis of these results, the supplier is placed into one of the three standard performance classes that have been defined across Infineon:

Preferred – Standard – On Probation
The evaluation frequency is geared to site-specific requirements. On the corporate level, the evaluation is done once a year to Infineon's major suppliers.

Goals of Supplier Evaluation are:

• To evaluate the performance of our suppliers (document performance and development over time)
• To identify areas of improvement (strengths and weaknesses) in order to work on corrective action plans
• To compare suppliers against competitors and markets (benchmarking)
• To concentrate our purchasing volume on the best suppliers.

The SES Process is based on:

Conducting evaluations

Suppliers are evaluated by appropriate experts from purchasing, logistics, quality, and technology in our locations around the world. These evaluations are entered into a common system directly on-site.
 

Analysis of evaluation data

As a prerequisite for successful supplier development and to support the determination of improvement strategies/targets (Corrective Action Plans-CAPs), SES offers various ways to analyze and interpret evaluation data.
 

Infineon-wide communication of results

Once evaluation is completed, the results are made available on the system for all authorized users within the company. Thus, supplier performance is transparent throughout the organization and can be communicated clearly.