Analysis of Supply Chain Strategy in Volkswagen

This article analyzes the existing supply chain strategy, key elements, and design in Volkswagen. It discusses the key elements of the supply chain, supplier relationship, logistics, and sustainability. Recommendations for improvement are also provided.

Operations and Supply
Chain Management
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Contents
INTRODUCTION...........................................................................................................................3
Analysis of the exiting supply chain strategy, key elements and design.........................................3
Key elements of supply chain:.....................................................................................................3
Supplier relationship:...................................................................................................................5
Logistics:......................................................................................................................................6
Sustainability:..............................................................................................................................7
Discussion and recommendation:....................................................................................................8
Recommendations........................................................................................................................8
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................10
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INTRODUCTION
Operations management related to a business practise that is related with various business
functions that are used for achievement of different set objectives. It is a basic process that is in
concern with the process of designing, formulation and controlling of different business
operations and functions that are part of manufacturing process of the products in which
company is dealing (Ayers. and Odegaard, 2017). Supply chain management is referred as a
procedure that is used for the management of flowing of goods and its process of conversion of
raw material, manufacturing, maintained of inventory, warehousing and then delivering it to
various retail stores in order to reach to the final consumers.
Volkswagen is a German organisation that is part o automotive industry ad was founded
on year 1973. Its headquarters are located in Gilaninia and Wolfsburg Attar. It is a flagship
marquee that is part of Volkswagen group and is involve in making automotive products. In the
year 2018, in April Herbert Diess has been appointed as CEO of Volkswagen.
Analysis of the exiting supply chain strategy, key elements and design
Supply chain is not a single activity it consist of a sequence of some steps that is part of
every organisation that is involved in manufacturing of some products. In the year 1997,
Volkswagen already had a some of their plants in locations such as Mexico, china, brazil and
south Africa. They had majorly concentrated their functions in Europe (Bozarth. and Handfield,
2019). They have also built up their plants in countries such as UK, India, Russia and china. This
approach is used in Volkswagen so that they can meet the requirements and expectations of their
present customers. Various activities that are part of this supply chain process includes
production activity, storage of the finished products, transportation of the products from
warehouses locations to retail stores and then finally shipping or delivering of the products for its
final use.
Key elements of supply chain:
Manufacturing business has been a very important part of every country’s economic
development. There is a supply chain process that is commonly used in these organisations so
that they are able to make effective use of their supply chain process:
Element First:
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Integration: It is a very important part of every supply chain process and is helping in
long terms success of every organisation, in this step there is integrations of activities on which
each aspect of the supply chain process has to be cumulated together in order tp develop
effectiveness in its every step. There is always benefit of collaboration of various aspects and
activities instead of their working as individual units (Formentini, and Taticchi, 2016). It is
helpful in improvement of communication and also reduction of lot of errors that can save time
and cost for a organisation. Leaders are also able to monitor all the areas of this supply chain
process so that if there are any defects or discrepancies in the whole supply chain process then
that can also be improved in the given period of time. In Volkswagen there are different
activities and part of their supply chain network which are integrated in the initial stages itself
which helps them in increasing the overall efficiency of each step that is part of their supply
chain management process.
Element Two:
Operations: It is second element of supply chain network and is gain a very important
aspect. In this there is formation of a strategy by a organisation so that their daily functioning and
operational work can be focussed on to increase its utility (Fredendall, . and Hill, ., 2016).
Actually, operation is a basic element that forms the backbone of entire supply chain activities as
manufacturing cannot take place without timely completion of all different aspects of operational
activities. In Volkswagen, there is the responsibility that is being assigned by the higher
authorities that they have to ensure complete effectiveness in all their operational work in terms
if getting most from their resources and utilisation of working hours of employees if production
is slowing down. All such improvements have to be taken care by the manufacturing team of
Volkswagen.
Element three:
Purchasing: This is the third element that is part of supply chain distribution network in
many organisations’. In this step there is there is acquisition of equipments, tools and materials
for having a continuous process of production (Grant, Trautrims, and Wong, ., 2017). This aspect
is related with the surety that Company has all the raw materials and products that are required
for purpose of manufacturing of their final products. Such as raw material supplies, various
equipments, tools, machinery in good working conditions, adequate supply of labour etc. are
some of the essential requirement without which a manufacturing process cannot take place in a
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organisation in a effective and efficient manner. In Volkswagen management ensuring that there
is timely availability of all the raw materials that is being required for their production. Mainly in
case of automotive industry there is work of assembling of different parts that has been acquired
from specialised manufacturers of such parts (Hardy, Bhakoo. and Maguire, 2020). So, it is the
responsibility of the management that they must have so that there is never a delay in production
activities. They also ensure that in case if high demand season there are more capital that is being
invested so that an uninterrupted supply chain distribution process can take place in their
organisation.
Element fourth:
Distribution: Distribution is fourth element of supply chain management process and it
actually ends the process of supply chain. In this step, there is actually the activity where product
reaches their final consumer or is reached to their final customers (Hugos, 2018). If a product
reaches to their final customer in limited time period and there is very fast delivery without much
lead time that is the waiting time by customer them it means there has been a success which is
achieved in the supply chain distribution process by a organisation. In Volkswagen, being a
global brand they have been successful enough to satisfy their customers in terms of the amount
of time they have to wait from their placing of orders and final delivery if products. This quality
of Volkswagen has lead to gaining of a competitive advantage of their other competitors. If all
the functions and operations are handed so correctly in Volkswagen that their products move
expeditiously from their warehouse to their final customers.
Supplier relationship:
supplier relationship management is a basic approach that is systematically used by
organisations for the purpose of approaching different suppliers and their contribution so that
there can be maximum benefit from their supplier’s performance that can be extracted by a
organisation. It is very important for building up of positive relationship between a buyer and a
supplier.
In Volkswagen mainly this is a part of their overall supply chain management process that
is being used to improve the process between their long term suppliers. They are using for
development of programs that can mutually benefit them as a organisation and their suppliers at
the same time. Such as they are offering competitive prices to their suppliers. It results into long
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terms relationships which is further very helpful in having competitive advantage over other
competitors such as Toyota, Hyundai etc. It is used as a part of strategic sourcing that is divided
into three steps as given below:
 Segmentation of suppliers that is based on the importance of material being
supplied by them in the course of business functioning.
 Development of performance management and governance models that has to be a
aligned with business process. Assignment of various stakeholders according to
different business objectives.
 Improvement of overall relationships with their suppliers is that they can share
theirs strategic information with other key suppliers which will result into better
manufacturing of product and services with high standards of quality.
Logistics:
Logistics management is a part of supply chain management prices that is used for the
purpose of planning, implementation and controlling of various activities. That is helping in
forwards & reverse flow of various services, activities, goods in a organisation. It is very helpful
in delivery of raw materials right from the acquisition and placing where actual production is
taking place in a organisation. The entire activities consist of multi level suppliers, agencies and
agents it further includes freight forwarders, custom departments, packers, logistic service
providers and final distributors. In Volkswagen all the activities related with efficient logistics
system is maintained by a special department that is created for this sole purpose only
(Schönsleben, 2016). Logistics and supply chain are two different departments in Volkswagen
that is logistics is a component of supply chain and is actually an extension of various supply
chain activities that are taking place in Volkswagen.
Logistics: There are basically to elements that re part of supply chain network of companies. It is
used so that there is proper functioning of all different aspects that are part of the supply chain
process. Such aspects include:
TQM (Total quality management): It is a basic technique that is used for maintain of high
quality in the overall manufacturing process. It is used for guiding and assisting the organisations
so that there are no more defects that are present on their manufactured products. In case of
Volkswagen there is adoption of TQM, as they are making efforts to examine all their products
on a continuous basis to ensure that the set standards of quality are adopted and present in their
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each product. In case of their supply chain network also there is timely examination of such
channels so that there is complete effectiveness. A basic approach that so focussing on customers
is also used by Volkswagen in which this brand using a model of ISO 9001 (Reimann,. and
Ketchen Jr, 2017). The main aim of this particular model is to meet the high quality standards on
a continuous basis.
 Six Sigma: Six Sigma is an approach that is applied for the purpose of statistical and a
data driven approach for continuous improvements. It is a methodology has an emphasis
on making improvements in the brand. It is a technique that is used for identification of
some defects that can be used for controlling the laid quality levels. The primary aim is
used for achievement of desired sales along with high quality because of which
Volkswagen has been able to build up their high goodwill in the external market.
Sustainability:
There is a very essential requirement that each activity of a supply chain management
process must be sustainable (Paulraj, Chen. and Blome, 2017). Which is basically means that it
must be helping their organisation in long terms in survival and at same time achievement of a
competitive advantage. In case of supply chain management the sustainability issue is related to
the overall network that has been established in terms if risk, environmental and various waste
cost that is associated with their whole manufacturing process.
In Volkswagen, being a high and established brand across globe, there has been a the task
of supply chain sustainability that is provide and performed by a supply chain analyst or a
suitability officer is appointed in various outlets of this brand. The overall work of this officer is
explained in below mentioned steps:
 Identification of some critical issues & all the areas where there is requirement of
innovation.
 Use of tools of supply chain management and various measurement tools so that
progress can be tracked and find the weakness of whole process.
 Setting of goals of supply chain process by implementation of scientific
recommendations’ and following up of all governmental regulations.
 Choosing and making collaborations with all the other sustainable suppliers.
 Maintaining of accountability across whole process of supply chain management.
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Above discussed are some the step that have been adopted a supply chain analyst so that
they can ensure long term sustainability of the whole supply chain process in Volkswagen
(Mathivathanan, Kannan, and Haq, ., 2018).
Discussion and recommendation:
Tools and techniques of global supply chain management and operations: It consist of the
various tools that are used by companies so that they are able to maintain their supply chain
network in countries across different parts of world (Lambert, and Enz, 2017). So that their is
smoothness and no location is facing short of supply in terms of products and is not able to meet
all the requirements of their customers.
In case of Volkswagen, there is a network of channels that is very advanced and consists of
high level of logistics management. Volkswagen also has a central logistics system. In the year
2004, they had their headquarters in Wolfsburg, Germany (Kache,. and Seuring, ). The major
role played consist of coordination of the resources that are shared across overall supply chain.
They all are working together with purchasing department and introduction of some new
technology & concepts.
Aspects of transportation: There are various aspects of supply chain management as a part of
network for organisations such as Volkswagen. The automotive industry the supply chain has
changed since the last two decades.
Recommendations
Analysis to solve various supply chain and operational problems. Volkswagen is a bran d
that is using different techniques so that they are able to implement them to achieve various
objectives. It is also used for the purpose of giving training to their staff. Many developmental
programmes have also started for the enhancement of employees’ skill and also increasing the
competence level.
More skilled employees having high technical competence, is require to be hired in Volkswagen
so that future plans can be successfully implemented in the organisation. Crisis management and
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flexibility is two major issues that have to be handled by Volkswagen in the given scenario. In
case of automotive industry it is a very essential requirement.
Digital future: There has been a complete transformation in the way in which automotive
industries used to function earlier and the way they have been functioning in today’s current
scenario. There has been more complexity since past two decades because of digitalisation for
shaping of Volkswagen for their supply chain network. Innovations that have been taking place
across operations such as they must make use of RFID, WRSITBANDS & Scanner gloves. They
are willing to work with various IT specialists for development of cloud based module of web for
transportation of shipping in Volkswagen.
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CONCLUSION
From above discussed points it can be said that supply chain management is a very
important aspect of every manufacturing organisation. In case of automotive industry there has
been growing importance of supply chain activities and various aspects that are part of this
process. It consists of understanding of different functions such as suitability issue, logistic
maintaining, and long term relationship with suppliers. Etc. Are some of key elements that
ensure that a particular organisation is having complete efficiency and effectiveness in their
supply chain management process.
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REFERENCES
Books and Journals
Ayers, J.B. and Odegaard, M.A., 2017. Retail supply chain management. CRC Press.
Bozarth, C.C. and Handfield, R.B., 2019. Operations and Supply Chain Management.
Formentini, M. and Taticchi, P., 2016. Corporate sustainability approaches and governance
mechanisms in sustainable supply chain management. Journal of Cleaner
Production, 112, pp.1920-1933.
Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.
Grant, D.B., Trautrims, A. and Wong, C.Y., 2017. Sustainable logistics and supply chain
management: principles and practices for sustainable operations and management.
Kogan Page Publishers.
Hardy, C., Bhakoo, V. and Maguire, S., 2020. A new methodology for supply chain
management: Discourse analysis and its potential for theoretical advancement. Journal
of Supply Chain Management.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Kache, F. and Seuring, S., 2017. Challenges and opportunities of digital information at the
intersection of Big Data Analytics and supply chain management. International Journal
of Operations & Production Management.
Lambert, D.M. and Enz, M.G., 2017. Issues in supply chain management: Progress and
potential. Industrial Marketing Management, 62, pp.1-16.
Mathivathanan, D., Kannan, D. and Haq, A.N., 2018. Sustainable supply chain management
practices in Indian automotive industry: A multi-stakeholder view. Resources,
Conservation and Recycling, 128, pp.284-305.
Paulraj, A., Chen, I.J. and Blome, C., 2017. Motives and performance outcomes of sustainable
supply chain management practices: A multi-theoretical perspective. Journal of
Business Ethics, 145(2), pp.239-258.
Reimann, F. and Ketchen Jr, D.J., 2017. Power in supply chain management. Journal of Supply
Chain Management, 53(2), pp.3-9.
Schönsleben, P., 2016. Integral logistics management: operations and supply chain management
within and across companies. CRC Press.
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