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Finding the perfect Negotiation Strategy with Game Theory.

His job is to make the performance of suppliers comparable and develop the optimal negotiation strategy for the procurement. As an in-house consultant for Mercedes-Benz in Böblingen, Christian Netenjakob makes use of game theory in order to provide good advice to purchasing specialists. According to Christian, everyday life is full of parallels with findings from game theory – whether concerning political discussions or the way a supermarket structures its prices and advertising. In his interview, he joins us for a conversation on changes in perspective, strategies, and what can be gained by looking beyond one's domestic horizon.

Christian, you deal with the optimisation of order allocation through the application of game theory. Could you describe your job in a bit more detail?

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: How will someone behave in the future? What effect will my own actions have? What consequences will the boundary conditions we impose have? 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.

In order to determine the "rules of the game" for supplier negotiations, many aspects and perspectives must be taken into account as a project coordinator.
In order to determine the "rules of the game" for supplier negotiations, many aspects and perspectives must be taken into account as a project coordinator.

Do you only consider the interaction between Mercedes-Benz and a provider, or are suppliers also considered in relation to each other?

Both. As a matter of course, we include all suppliers who could supply us with the goods in question, such as specific parts or materials. We do not only look at the "supplier set" as a whole, however, and also examine each potential partner individually: Are the suppliers' offers complete and comparable? What are their strengths and weaknesses? How can these be evaluated and taken into account in the sourcing decision? This concerns not only financial optimisation, but also the inclusion of differences between the products offered such as weight or performance data. The winner is not always the provider offering the lowest cost, but rather the one that offers the best price-performance ratio. We advise the purchasing specialists over a months-long process, during which we provide support with internal processes and stakeholder management in addition to advice on game theory aspects.

You consult on sourcing management projects in changing tandems and various team configurations. How important are agility and changes in perspective to you?

Extremely important! This is a major advantage of cooperation. It's a lot of fun to work in changing tandems and gain different perspectives on the challenges and solutions. We are in constant and intensive dialogue, including other team colleagues outside the tandem. This is also necessary because the application of game theory to purchasing is highly complex and requires the inclusion of many perspectives in order to gain different insights. We are eager to share our ideas within the team in order to address all possible challenges.

How would you describe your team?

We are a relatively young and very heterogeneous team. However, we also have common interests and meet up after work from time to time. This is highly beneficial for cooperation. Our team members include people who have business management, economic, or technical backgrounds and practical experience in operative purchasing or academic environments. We complement each other's skills. Personally, my background is in management consulting, where I dealt with topics concerning digitalisation in the context of purchasing. For example, I have added functions to the online tools we use in order to improve our working methods. When we finish a project, we share the experience we have gained with the entire team – the positive insights as well as the challenges encountered with the sourcing.

How does cross-functional cooperation work at Mercedes-Benz?

Our consulting activities for purchasing specialists naturally put us in closer contact with Purchasing than other functions. That said, it is very important to incorporate perspectives from other functions in order to nominate the best suppliers. I ensure this by talking to colleagues from other areas such as quality, technical development or logistics. I like being integrated into entire corporate processes and seeing how all the gears fit together.

For the highly complex analysis of the procurement, Christian is in constant contact with other departments and locations.
For the highly complex analysis of the procurement, Christian is in constant contact with other departments and locations.

Your work has an international scope, and you are in regular dialogue with Mercedes-Benz locations worldwide. Is this something specifically attractive about the job, in your opinion?

Absolutely. I hold discussions with colleagues in places like China, the US and South Africa, for example, because we serve as a central source of advice on allocations for these production locations as well. The incorporation of global perspectives is integral to the Mercedes-Benz Group. This international cooperation is always immensely interesting and I always enjoy being able to look at things through a different lens. I also had the opportunity to spend a semester abroad in Malaysia while studying industrial engineering at the University of Duisburg-Essen.

Did your time studying abroad change you?

Without a doubt. Malaysia is an incredibly exciting country. It has a rapidly growing economy and a multicultural society. Many different nationalities with different religions and backgrounds live together in harmony. Its geographical location in the centre of Southeast Asia is also exciting. Living there changed my perspective on many things. We often tend to be very critical about many things in Germany. In the Swabian dialect, there is a saying that goes something like "no complaints is praise enough" – but in my opinion, a lot of things are actually going very well for us.

What motivated you to apply for a job at Mercedes-Benz?

The company's consistent strategic orientation as an automotive manufacturer, concerning sustainability, electromobility and product innovation was a major factor in my decision to work at Mercedes-Benz.

Lastly, we have a question on a completely different subject: Your favourite hobby is bicycle racing. Have you set any specific goals in this context?

I would love to participate in the Ötztaler Cycle Marathon in Austria someday. The route begins in Sölden, and then travels over 227 kilometres through multiple countries with numerous alpine passes and with more than 4,000 altitude meters. That goal is still a long way off. In order to reach it, one has to train for a very long time.

When Christian Netenjakob (30) moved from Düsseldorf to Stuttgart to work at Mercedes-Benz, the Swabian Jura Mountains were a major locational factor for him. They now offer him an attractive place to train for bicycle racing, which serves as an important part of his work-life balance. His motto: The more mountains, the better! By the time he completed his master's degree in Automotive Engineering & Management, it was clear that the automotive industry would offer an industrial engineer like him an inexhaustible range of activity full of complex and multi-faceted challenges. His enthusiasm for the Mercedes-Benz brand began all the way back in his childhood, when his uncle who worked there would come by to visit with his Mercedes sedan.