How Mercedes-Benz is Ensuring Manufacturing Efficiency

Mercedes-Benz is reshaping its procurement strategy through advanced manufacturing principles.

By harnessing automation, data-driven decision-making, and circular economy models, it is delivering both cost efficiency and sustainability.

The German automotive leader is demonstrating how digital manufacturing and strategic sourcing can work hand in hand to optimise the entire value chain.

Strategic sourcing and Game Theory

In its procurement division, Mercedes-Benz applies Game Theory — a structured, mathematical approach to negotiation that models competitive supplier interactions.

The aim is to identify the best-performing and most cost-effective partners while maintaining fairness and transparency.

Christian Netenjakob, Project Coordinator at Mercedes-Benz AG, explains: “We work on selected strategically-important sourcing scopes. We optimise the sourcing process in the interest of ensuring that Mercedes-Benz ultimately chooses the best supplier.

“Game theory is a scientific methodology that helps us analyse strategic interactions between participants in a market. Based on analyses and through the application of game theory methodologies, we define rules that are later applied to real negotiations and order allocations.

"These rules are binding for both Mercedes-Benz and the participating suppliers. This allows us to ensure fair competition and a transparent sourcing process.”

Through these structured negotiations, Mercedes-Benz drives manufacturing efficiency by creating reliable, high-quality supplier relationships.

The approach also allows procurement teams to anticipate market dynamics — reducing risks such as material shortages or cost volatility that can disrupt production lines.

Driving manufacturing efficiency with automation

In the manufacturing sphere, Mercedes-Benz is leveraging digitalisation and automation to improve operational efficiency across its plants and supplier networks.

Historically, the company’s digital landscape was fragmented, with multiple systems handling data across procurement and production.

Today, the focus is on unifying this architecture under SAP RISE and cloud-based systems, ensuring manufacturing and procurement data flow seamlessly from design to delivery.

Katrin Lehmann, Chief Information Officer at Mercedes-Benz Group AG, notes: “We had quite a differentiated system landscape overall, with many, many different applications. Now, we need to consolidate the data, put it on platforms, move to the cloud, ensure that this data is available because AI only works as well as the data foundation you have.

“We signed an SAP RISE deal to ensure that the most important applications can go to the cloud, as we can also consume AI and Joule and all the cool innovation stuff that we need for our colleagues to be even more efficient and productive.”

By deploying predictive forecasting and AI-driven analytics, Mercedes-Benz is transforming how it manages procurement and manufacturing.

Real-time data insights now guide production planning, material sourcing, and logistics — reducing waste, improving resource allocation, and ensuring supply continuity.

Automation is not only streamlining operations but also freeing skilled workers to focus on higher-value engineering and quality control tasks.

Circular manufacturing

Sustainability remains a cornerstone of Mercedes-Benz’s manufacturing philosophy.

The company’s six focus areas - environment and climate, resources and circularity, human rights, traffic safety, digital trust, and people - are integrated into its production and procurement processes.

The Kuppenheim recycling plant exemplifies this strategy. Opened in 2024, it operates as a mechanical-hydrometallurgical facility capable of achieving a 96% recovery rate for battery materials and other automotive components.

By reintroducing recycled materials into production, the plant reduces dependency on primary raw materials and cuts CO₂ emissions associated with new material extraction.

In 2022 alone, Mercedes-Benz recycled 32,400 tonnes of used parts and materials in Germany.

These efforts directly support manufacturing sustainability by extending material lifecycles and stabilising raw material supply.

Circularity, once a sustainability goal, has become a manufacturing advantage, lowering production costs, enhancing resilience, and driving innovation.

Mercedes-Benz’s procurement transformation shows how digitalisation, strategic negotiation, and circular manufacturing can coexist within a modern industrial framework.

By embedding automation and sustainability at every level of production, the company is setting a new benchmark for operational excellence in global automotive manufacturing, proving that efficiency and environmental responsibility are now inseparable drivers of success.