Global procurement activities. The Daimler Group’s procurement organization consists of three departments – Procurement Mercedes-Benz Cars and Vans, Procurement Daimler Trucks and Buses, and International Procurement Services for non-production materials – and is present at more than 50 locations all over the world. The goal of the procurement organization is to create the world’s most effective supplier network and thus to contribute to Daimler’s overall success. The best suppliers are recognized each year for their outstanding performance with the Daimler Supplier Award. In the context of the Daimler Key Supplier Meetings in 2012, we also awarded a special prize in the category of “Partnership” to our Japanese suppliers. Above all, this was to honor the exceptional commitment of our Japanese partners with the reconstruction of the supply chain after the natural disaster in March 2011.

Performance-oriented partnership with our suppliers. Under the “Commitment to Excellence” motto, the Daimler Supplier Network (DSN) defines the business philosophy of Daimler’s procurement organization. Its principles are performance and partnership: With the help of the external balanced scorecard, suppliers’ performance is measured in the categories of quality, technology, costs and reliability. To us, partnership means fairness, dependability and credibility.

Sustainability and integrity in procurement. In order to be successful also in the future, we take our responsibility to the environment and society very seriously. Our suppliers are contractually obliged to fulfill the standards we have defined in the areas of business ethics, environmental protection and human rights. In addition, they are also required to propagate those standards in their upstream value chains. We support our suppliers with this task by providing targeted information and extensive possibilities to obtain further qualifications. The central information platform for this is the Daimler Supplier Portal. In 2012, we reformulated our principles and the expectations we place on our suppliers with regard to the topic of integrity, and communicated them to our suppliers around the world in the form of a brochure.

Expansion of local sourcing activities. Daimler is expanding its procurement activities in international markets. In the future, we want to purchase more from local suppliers – especially in those countries where we are expanding our production activities. In 2012 for example, we started various activities for the development of local suppliers and sub-suppliers in the BRIC countries.

Prices of raw materials remain volatile. Market uncertainty in connection with the European sovereign-debt crisis once again led to large price fluctuations in raw-material and capital markets in 2012. After the economy-related fall in raw-material prices in late 2011, the trend reversed in early 2012 and led to significant price increases, especially in the first quarter. As the year progressed, somewhat lower raw-material prices were offset by the euro’s loss in value. Overall, the development of prices continued to be very volatile. Daimler protects itself against price fluctuations with a number of measures, including long-term agreements and hedging transactions.

Continuous risk management. In the year 2012, we continued to regularly monitor the financial development of our suppliers in the context of our risk management. We focused on refinancing, the development of working capital and the continuation of productivity-enhancing projects. Due to the great importance of suppliers for our production processes, the Daimler Supplier Risk Board convenes regularly. If required, it also develops and decides on measures so that we can react at short notice to any potential supplier insolvencies.