Purchases performance

  • The purchases of goods and services by the Tyre business represent 94% of Group purchases
  • 78% of suppliers are located in the same area as the supplied Pirelli affiliates
  • More than half of the acquired value is represented by OECD countries
  • Raw materials remain the most important purchasing category, accounting for 55% of the total

Following is an overview of the purchases of goods and services by Pirelli in 2010/2009/2008, highlighting the weight of tyre purchases on total purchases:

Purchases performance
PURCHASES OF GOODS AND SERVICES
Percentage purchased against total purchases
2010 2009 2008
TYRE 94% 94% 94%
OTHER BUSINESSES (CORPORATE +
ECO TECNOLOGY + AMBIENTE + P ZERO)
6% 6% 6%

(*) The figures do not include the operations discontinued during the year that belonged to Pirelli & C. Real Estate S.p.A. (now Prelios S.p.A.) and Broadband Solutions S.p.A. The previous periods (2009 and 2008) were consequently restated on a comparable basis.


The following illustration show the breakdown of Pirelli (Tyre + Other Businesses) purchases by geographical area and the second illustration shows the number of suppliers corresponding to each area.
As readers will notice, more than half of the acquired value is represented by OECD countries. Likewise, the number of Group suppliers is far greater in OECD areas than in non-OECD areas.
It should be pointed out that 78%1 of suppliers are located in the same area as the supplied Pirelli affiliates, in accordance with a Local for Local procurement approach.

Percentage value of pirelli purchasing by geographical area*
  2010 2009 2008
OECD COUNTRIES EUROPE 50.0% 47.4% 49.2%
NORTH AMERICA 2.4% 3.1% 1.4%
OTHERS* 2.5% 3.1% 0.4%
NON-OECD COUNTRIES LATIN AMERICA 18.2% 26.4% 26.9%
ASIA 20.8% 15.4% 20.2%
AFRICA 1.5% 1.4% 1.9%
OTHERS 4.6% 3.1% 0.0%

(*) The figures do not include the operations discontinued during the year that belonged to Pirelli & C. Real Estate S.p.A. (now Prelios S.p.A.) and Broadband Solutions S.p.A. The previous periods (2009 and 2008) were consequently restated on a comparable basis.

Percentage of Pirelli Suppliers by Geographical Area*
  2010 2009 2008
OECD COUNTRIES EUROPE 58.7% 63.5% 49.2%
NORTH AMERICA 3.2% 4.3% 1.4%
OTHERS* 0.2% 3.4% 0.4%
NON-OECD COUNTRIES LATIN AMERICA 26.7% 22.9% 26.9%
ASIA 4.7% 4.5% 20.2%
AFRICA 3.0% 1.3% 1.9%
OTHERS 3.5% 0.1% 0.0%

(*) The figures do not include the operations discontinued during the year that belonged to Pirelli & C. Real Estate S.p.A. (now Prelios S.p.A.) and Broadband Solutions S.p.A. The previous periods (2009 and 2008) were consequently restated on a comparable basis.

As indicated above, the purchases of goods and services by the Tyre business represent 94% of Group purchases. Additional details on the purchases made by Pirelli Tyre follow below, broken down by type of purchase, and a snapshot of the number of suppliers corresponding to the types of goods/services acquired by Pirelli Tyre.

Percentage Value of Pirelli Tyre purchases by Type
  2010 2009 2008
Raw materials 55.4% 52.4% 59.5%
Supplies 4.6% 4.8% 5.1%
Services 28.7% 34.1% 25.6%
Capital goods 11.4% 8.8% 9.8%

Percentage of Pirelli Tyre Suppliers by type
  2010 2009 2008
Raw materials 3.0% 3.3% 2.6%
Supplies 38.9% 9.7% 5.4%
Services 47.3% 73.8% 82.8%
Capital goods 10.8% 13.2% 9.2%

The Table “Percentage Value of Pirelli Tyre purchases by Type” shows that raw materials remain the most important purchasing category, accounting for 55% of the total. This percentage was higher in 2010 than in 2009. The reason for the increase lies in the continuous growth of prices, particularly for natural rubber.
The total spent on “Capital goods” has also increased, being closely tied to the increase in industrial capacity that characterised the period.

In regard to the second table “Percentage of Pirelli Tyre Suppliers by Type”, which shows the number of suppliers by type, the criteria used to classify supply and service vendors have been refined. The number of vendors in these two categories continues to account for more than 80% of the total, although their weight on the total value of purchases is much less than, for example, that for raw material purchases. The fragmentation of supply and service vendors is evident, in comparison with the substantial concentration of just a few vendors of raw materials.

What follows is a graph illustrating the percentage composition of the mix of raw materials purchased by Pirelli Tyre in 2010. Alongside it we see the 2009 and 2008 data published in previous sustainability reports. Specifically in comparison with 2009, the weight of natural rubber rose in 2010 against a decrease in carbon black and chemicals. The average volume of raw materials used in 2010 for the production of tyres was about 1 million tonnes,including about 6% derived from recycled material.

Mix of Purchased Raw Material
  2010 2009 2008
Natural rubber 33% 24% 28%
Synthetic rubber 24% 23% 22%
Carbon black 11% 13% 12%
Chemicals 14% 17% 14%
Textiles 10% 13% 11%
Steelcord 8% 10% 13%