RubberNetwork Reports $105 Million in Savings for 2004

Tire and rubber industry consortium points to benefits of strategic sourcing, supply chain efficiencies for members

Tire and rubber industry consortium points to benefits of strategic sourcing, supply chain efficiencies for members

Atlanta — February 17, 2005 — Global tire and rubber industry consortium RubberNetwork this week reported that it had saved its nine member companies more than $100 million in 2004 and more than twice that amount since the consortium's inception.

"Sourcing savings results for RubberNetwork members were $105 million [in 2004], passing the $100 million mark for the first time," said RubberNetwork Chairman and CEO Philip J. Ringo in announcing the company's year-end results.

Nine of the tire and rubber industry's largest companies formed RubberNetwork in 2001. Member companies include Continental Tire, Cooper Tire and Rubber, Goodyear, Hankook, Michelin, Pirelli Tire, Sumitomo Rubber, Toyo Tire and Rubber, and Yokohama.

Savings in All Regions

RubberNetwork said it pools its members' collective resources and, through strategic sourcing and supply chain management, delivers reduced costs, increased efficiencies and opportunities for relevant benchmarking and knowledge sharing.

The $105 million in reported sourcing savings for 2004 bring the consortium's cumulative savings for its members to more than $230 million since inception. Ringo said that the 2004 savings were a 10 percent improvement over the previous year.

The company noted that the savings were in all regions served by RubberNetwork: Asia, Europe, Latin America and North America. The savings came through strategic sourcing of a range of direct and indirect material, goods and services, and were achieved through single-member events and multi-member collaborations, according to RubberNetwork, which said that its sourcing of direct materials is conducted under the guidance of applicable anti-trust law.

Efficiencies for Suppliers, Too

The company also noted that during 2004 it connected more than 140 direct material suppliers to RubberNetwork members through the consortium's Supply Chain Supplier Network in Japan, Europe and North America.

"Providing one point of contact to tire and rubber industry direct material suppliers benefits both our members and the supplier community," said John Garrison, chief operating officer of RubberNetwork. "The potential for process savings, more efficient production, planning and working capital reductions from improved inventory management is noteworthy."

RubberNetwork's supply chain activity began as a pilot project in 2002 and was fully launched in Europe, Japan and North America in 2003.

Shanghai Office Planned

The consortium also announced its intention to establish a fifth office, in Shanghai, by the end of the first quarter. The RubberNetwork board of directors confirmed this step at their December 9 board meeting in Singapore. "The decision to provide more support to our members' commercial activity in that region reflects the success of the RubberNetwork China Sourcing Council, which started earlier in 2004," Ringo added.

RubberNetwork currently has offices in Amsterdam, Atlanta, Singapore and Tokyo. The consortium also provides services to member companies in Latin America through a partner company, Webb Negocios, headquartered in Rio de Janeiro.

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