Volkswagen Group’s Production Process: An Overview

A business process is a set of repetitive, flexible but not inflexible, business duties and activities that result in an outcome that advances company objectives. This report discusses the production process of Volkswagen Group, which was founded in 1937 and has a market value of $78.21 billion. The production business process includes procedures for gathering raw materials, performing manufacturing operations, preparing the product, guaranteeing quality, and ultimately distributing it to the places of sale. Business processes can directly influence the effectiveness of business operations and growth. In particular, the production procedure of Volkswagen AG will be examined in this section. The operations that make up Volkswagen AG's business process include ordering raw materials, suppliers, and equipment, creating the desired things, controlling inventories, upholding the production process, and finally distributing the automobiles.  

ICON College of Technology and Management
Department of Business and Management Studies
BSc (Hons) Business and Management
DataLab: Generation, Analysis, Iteration
Coursework Title
Data Analytics Portfolio
Tutor: Dr S. Soroosh
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ID No: …………
Session: February 2023

Department of Business Management Studies DataLab: Generation, Analysis, Iteration
Table of Contents
Introduction........................................................................................................................4
1. Task 1: Company Operations and Business Procedures...........................................5
1.1 Flowcharts and Maps of Business Processes.....................................................5
1.2 Main/Key Business Decisions...........................................................................8
1.3 Business Digital Transformation.........................................................................10
1.3.1 Human Resources Recruitment.......................................................................10
1.3.2 Inventory Management....................................................................................10
1.3.3 Keeping Client Data in Custody.......................................................................11
2. Task 2: Data Management Systems.........................................................................12
2.1 Information/Data Management Systems................................................................12
2.2 Systematic Database Management....................................................................13
2.3 Big Data for Business.........................................................................................14
3. Task 3: Business Intelligent (BI) Tools.....................................................................16
3.1 Opportunities for Intelligent Tools and Systems....................................................16
3.2 Business Intelligent (BI) Support........................................................................17
3.3 Reflection on the BI tools....................................................................................18
Conclusion.......................................................................................................................18
Reference List..................................................................................................................19
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Introduction
A set of repetitive, flexible but not inflexible, business duties and activities known as a
"business process" is more specifically defined as a set of business actions and
activities that, when carried out by a single person, result in an outcome that advances
company objectives (Gaikwad, 2022). Organizational goals are the source from which
business procedures are created. The successful running of businesses and expansion
depend heavily on the repetitive and continuous execution of business processes. The
focus of the report that follows is business processes and the related activities. There
are a few procedures that are used globally throughout all of these business sectors,
regardless of the kind, industry, location, etc., of the firm. Operational processes, sales
processes, and customer service are a few examples of business processes. The
following piece will just explain the production process for the sake of clarity and to
make it easier for the readers to understand. The company of choice is Volkswagen
Group, often known as Volkswagen AG, a significant German automaker. Volkswagen
is the 182nd most valuable corporation in the world based on its assets and brand value
as of April 2023, with a market valuation of $78.21 billion (Companies Market Cap,
2023). It was founded by the German government in 1937 to mass-produce an
affordable "people's car." At the outset of the business, Wolfsburg, Germany, served as
the headquarters. Fast-forward to 2022, Volkswagen will have sold nearly 4.56 million
cars (Bruce, 2023). The production business process includes procedures for gathering
raw materials, performing manufacturing operations, preparing the product,
guaranteeing quality, and ultimately distributing it to the places of sale.
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1. Task 1: Company Operations and Business Procedures
Business procedures might vary from one firm to another depending on the product or
service produced and provided to the customer segment. Business processes can
directly influence the effectiveness of business operations and growth since they are
carried out by people or systems in a systematic manner to achieve a pre-defined aim
(Kiss Flow, 2023). In particular, the production procedure of Volkswagen AG will be
examined in this section.
1.1 Flowcharts and Maps of Business Processes
The "Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH" (Company for
the Preparation of the German Volkswagen Ltd.) was officially founded on May 28, 1937
(Volkswagen, 2019). Later in 1938, the firm changed its name to "Volkswagenwerk
GmbH" and constructed its primary factory in what is now Wolfsburg. Today,
Volkswagen AG is both a marquee name in the automotive sector and a representation
of Germany's economic miracle. Volkswagen AG produces automobiles in the mid-
range to luxury categories for both middle-class and upper-class consumers. Along with
that, it also owns several iconic luxury automobile brands that are renowned for their
performance and elite status, including Audi, Bugatti, Bentley, Lamborghini, and
Porsche. The Group's global production network will include 118 locations in 2021, 70 of
which will be automobile manufacturing facilities (Volkswagen Plants, 2021).
Additionally, it has the capacity to produce about 40,000 units each day. The center of
production hub is still in Europe. Ordering raw materials, suppliers, and equipment,
creating the desired things, controlling inventories, upholding the production process,
and finally distributing the automobiles are the operations that make up Volkswagen
AG's business process.
Input- Volkswagen produces distinctive cars that are all unique. Therefore, when
individual clients select their automobiles from a wide range of options and then sign a
contract, the plant receives the signal to begin manufacturing. The production process
for automobiles begins at the body shop where rolls of steel are purchased from
vendors. The steels are then treated using cutting-edge hydraulic technology. Most of
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the labor is carried out by automated robots to guarantee safety. At Wolfsburg, 1500
matrices of steel are utilized in one day (VG Factories, 2020). The steel is chopped and
formed into unique plates before being thoroughly galvanized. Volkswagen needs
around 20 hours to construct a typical vehicle (Ruffo, 2020).
Activities- The body is delivered to the weld shop where high-caliber welding machines
work to join various components into a body frame after it has been painted and
properly examined. Raw materials and components are carried out of the warehouse at
the same time. The engine and powertrain are built using these supplies from the
warehouse, and the chassis assembly line is where they are both put together. At
Wolfsburg, there is four assembly line. But it can differ from factory to factory. The
primary assembly line moves at a 60 second interval while various body sections are
attached to it (VG Factories, 2020). And at the end of this line finished car is obtained.
Figure 1: Business Production Process of Volkswagen AG
Output- To guarantee the quality our clients want, exact measurements, last-minute
modifications, and performance testing are performed after final assembly. Additionally,
before delivering the finished output automotive, the product's quality is verified often
throughout the process to guarantee high standards.
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Closure- The result was as follows, at this point, the automobiles have finally reached
the dealers, who subsequently deliver the vehicles to the consumers in accordance with
their requests. And after stopping to gather product orders, the procedure resumes.
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1.2 Main/Key Business Decisions
Being in a highly competitive sector, vehicle manufacturers must make some crucial
choices about how to increase market share as well as how to deliver the finished
product to the ultimate consumer. These procedures, like all others in a business, aim to
maintain maximum profit at the lowest possible cost. Volkswagen makes several
significant decisions about their manufacturing facility's location, the way things are
produced, how they are transported, and how they use their people resources. These
choices affect the future expansion of the company both directly and indirectly.
Production Decisions- The output of the manufacturing process is determined by
production decisions. It is directly related to the products quality as well as
their market demand. Forecasting the demand for items is the first step in the process.
The type of product that is offered, demand projections, manufacturing process,
capacity availability, and inventory level are other factors that influence production
decision-making. "one.PRODUCTION" is Volkswagen's manufacturing philosophy (VG,
2019). It aspires to combine the advantages and possibilities of their worldwide
production while also ensuring brand-agnostic coordination and profiting from the
consequent synergistic benefits (VG, 2019).
Production Plant Location- Volkswagens global production network will include 118
locations in 2021, 70 of which will be automobile manufacturing facilities (Volkswagen
Plants, 2021). Furthermore, there are 49 factories under the Volkswagen brand that
produce both automobiles and component parts. In Europe, where they have a larger
market share, are most of the factories. Volkswagen benefits from a strategic
geographical advantage over the supply and distribution chain thanks to these factories.
When choosing locations for production plants, Volkswagen considers factors such as
availability of access to equipment, quality control, and other factors. Fast forward to
2022, when Volkswagen sold about 8.26 million cars globally (Volkswagen's sales,
2018). Additionally, the location has a significant impact on taxes as well as the cost of
manufacturing for automakers. This decision-making results in a convenient location,
affordable transportation, and simple assembly.
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Inventory Decision- Lastly, inventory choices are made to always keep the proper level
of inventory. For automakers, having too much or too little inventory is a huge issue.
Because all manufacturers employ the assembly line manufacturing method, let us take
the example that if a factory does not have enough inventory of a specific item, it may
be forced to cease production until new inventory comes. and this may lead to delays,
increased costs, and lost income. High inventory also has negative implications at the
same time. In this decision-making process, factors including lead time, manufacturing
rate, and customer demand are considered. Volkswagen makes this option only to
lower inventory costs and ensure just-in-time delivery to the dealers to preserve market
share and inventory balance.
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1.3 Business Digital Transformation
Fundamental alterations to conventional information management are made through a
process known as digital transformation. In today's information-based atmosphere,
businesses with extensive technological knowledge have an advantage over their
competitors. And the business that makes cars is no exception to this rule. Digital
technology may be used by automakers like Volkswagen to reevaluate what customers
value most and develop operational models. Volkswagen can implement digital
transformation in the management procedures indicated.
1.3.1 Human Resources Recruitment
This technological advance may be used in the management and hiring of human
resources. One of the biggest private employers in the world is the Volkswagen Group.
Additionally, there is a great deal of cultural and ethnic variety in its workplace. The
group employs a total of 672,789 individuals as of December 31, 2021 (VG, 2019). To
guarantee efficiency, it might combine a digital process with a conventional one. such is
the use of IQ (intelligence tests, psychological evaluations, and AI. It lowers HR
expenses in addition to operating expenditures.
1.3.2 Inventory Management
An automobile manufacturer's consistent growth is greatly influenced by inventory
management. because it affects the company's market share as well as its brand
image. Volkswagen Group's internal management system for managing inventory
comprises key performance indicators (KPIs) for inventory management. Additionally,
its internal management framework is built on nine key performance metrics that are
generated from its strategic objectives (Annualreport,2020 Volkswagenag, 2020). It may
also make complicated models simpler to understand and formulate simple strategies.
In addition to ensuring efficient product delivery, the management system also
preserves market leadership.
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1.3.3 Keeping Client Data in Custody
Volkswagen AG may make use of cloud-based systems to quickly conduct future
market research and save customer-related data. Recently, AI solutions have become
quite popular due to their effectiveness and productivity. In order to provide quick
access and guarantee consumer privacy, the corporation may implement AI and crucial
data analytics tools. Additionally, it will aid in future client retention.
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2. Task 2: Data Management Systems
Volkswagen AG corporation uses Big Data, Catena-X, Cloud Computing (AWS),
Business Intelligence, as well as other software solutions from other organizations, to
handle information gathered from numerous resources (Volkswagen AG's database,
2018). It promotes a productive workplace by connecting the vast array of facilities
owned by the company.
2.1 Information/Data Management Systems
With global sales of over 295.73 billion dollars, Volkswagen Group is the largest
carmaker in the world by revenue (Volkswagen Sales, 2018). This vast empire uses
information management systems in practically every aspect of their corporate
operations to run smoothly. Inventories, sales, and human resources are crucial
divisions that use information more than any other division of the company. Being a
constant player in the worldwide market, the corporation must cope with a diversified
workforce from all over the world with varying cultures, skills, and motivations. The
Volkswagen Group's HR department operates under the motto "Empower to transform"
(Business S., 2018). The business prioritizes corporate governance, employee rights,
exceptional training opportunities, the idea of long-term service via methodical
personnel retention, and the desire to adequately balance performance and
compensation in its HR policies. (Business S., 2018) Volkswagen's Human Resources
Department also use the Hierology BI application. The HR staff uses this technology to
store and analyze databases. The HR staff may use this technology to investigate
employees' histories, failure rates, absentee ratios, and other matrixes to guarantee that
correct evaluations are conducted for those working in challenging departments. By
eliminating redundant data storage, this procedure helps the HRM department save
money by reducing the amount of time and administrative work that must be done. It
goes without saying that strategic management aids the business in the fiercely
competitive auto manufacturing sector.
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2.2 Systematic Database Management
Data collected from various business operations are stored in databases. The primary
goal of keeping a database is to preserve data electronically so that it may evaluate
prior data from various sources and derive original insights that will aid in business
development overall. Additionally, it is almost indestructible. The product department,
industry, and other databases vary depending on the sort of firm. In the vehicle
manufacturing sector, sales and HR are two significant sources of raw data gathering
that may be utilized to assure a study of the company's future growth. With relation to
hiring, compensation, promotions, employee assessment, performance, and general
well-being, HR as a department collaborates with practically every other department
within the company. Employee personal information, duty time and absence statistics,
working standards, a list of workers who submitted their CVs to the hiring panel,
training, and growth points, etc. are all included in the HR database. Utilizing these
data, Volkswagen AG's HRIS system generates a robust report that aids in the
company's strategic decision-making. However, a sales database is distinct from an HR
database. Sales statistics primarily include information on the vendors that a company
buys from and the automobiles that are sold. Both internal and external sources were
used to get these data. Product sales history, product stock data, prior year sales,
desire for a product based on historical demand, potential consumers, marketing
champions, maintenance data, consumer feedback, most and least sold items, etc. are
some essential features of sales data. This enormous database aids management in
making some important choices. Additionally, marketing and programs are finally
developed in the wake of this database to guarantee the study expansion of businesses
in the future.
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2.3 Big Data for Business
Big data is the term used to describe a collection of data that is huge in amount, difficult
to handle, both organized and unstructured, and that constantly inundates enterprises.
As a result, it keeps growing over time. However, the amount of the data is not what is
important. What important is what organizations can do with the data. Big Data is
utilized so frequently because it is a technology that offers greater storage capacity than
traditional software. Big data is diverse, always growing in bulk, and moving at a faster
rate. It is an intricate collection of data drawn from several sources. Big Data is used by
major automakers like Volkswagen to make business-related decisions. It makes use of
big data for predictive analysis, industry-wide data sharing for the supply chain,
predictive marketing, consumer trends, and the future of the auto industry.
Figure 2: Big Data used by Volkswagen AG
To improve organizational processes and make them more long-lasting Volkswagen AG
uses big data. Big data is used by a group of data scientists at the Group IT Data Lab in
Munich with the aid of AI. They also give it human thinking to consider, which gives it a
human touch. Huge amounts of data are evaluated and processed daily, including
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coordination and flow of products, critical financial information, demand figures, supply
chain figures, and units sold (Volkswagen Newsroom, 2018). And management
received direction about future strategy because of these findings. Volkswagen also
examines supply chain data sharing for the industry using big data. And by doing this, it
may obtain a preliminary assessment of the supply chain's state and take the necessary
action to assure a stable rate of supply.
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3. Task 3: Business Intelligent (BI) Tools
Business intelligence tools are a particular kind of powered analytical software that are
designed to estimate future outcomes based on historical data and offer insights into
current business operations. The ability of BI tools to gather, analyze, and present data
in a way that is simple for anybody to understand is one of its strongest points. There
are many kinds of business intelligence tools, but they differ in their dependability,
usefulness, and cost.
3.1 Opportunities for Intelligent Tools and Systems
The Volkswagen Group has established and made significant investments in a
comprehensive business intelligence platform. It went as far as to coordinate the
operations of additional factories with its main office. Analysis enabled management to
see delivery timelines in the present. The business gradually began to invest in BI
tools, and it now makes use of such tools. Organizational, technological, and business
views all play a role in its BI approach (Schlegel, 2018). As a result, the firm gradually
began to invest in BI tools, and it now makes use of those products.
Loop 11- Loop 11 is an online usability testing tool that assists the business in
evaluating various tool uses and provides the capability to identify issues with
navigation and usability (Loop 11, 2011). It might be quite helpful for Volkswagen's
marketing and design team. It does not utilize code inserts because it is entirely online
and remote. Additionally, it may replicate a real-world activity and offer conclusions on
pertinent facts. Its ability to operate in different languages is another one of its
distinctive qualities, which makes it perfect for Volkswagen.
Trintech- Companies can get financial solutions from Trintech. This program can help
Volkswagen resolve its financial problems. Additionally, it educates customers on how
to cut costs in corporate operations.
Knoy- To increase productivity and cut expenses, Volkswagen can use a program
called Knoy, to handle IT administration and infrastructure operations. This will simplify
all corporate activities and enable Volkswagen to realize significant savings in real time.
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3.2 Business Intelligent (BI) Support
The firm, its competitiveness, its clients, or its other stakeholders may all benefit from
the mentioned intelligent technologies, which can also assure consistent growth.
Because the majority of BI are created to facilitate and improve company processes.
These tools are used to maximize resource utilization in addition to utilizing technical
advances. The following describes their support.
Competitiveness- Trintech and Loop 11 are essentially forecasting tools that assist in
identifying market trends and in developing a strategy based on such trends to ensure
competitive advantage. Volkswagen makes use of KPL's data warehousing, predictive
analysis, and decision support systems to expand access to the most recent
information. Additionally, BI tools increase customer service while also lowering
production costs and providing improved product awareness.
Stakeholders- Volkswagen may link to and query data repositories with the use of
stakeholders-business intelligence technologies to analyze the data. These details
produce data that are simple to read and comprehend, enabling the business to
produce and send reports to the stakeholders. Stakeholders can clearly understand
where they are heading with the information. Likewise, they may make the required
judgments about their involvement in and influence on the company's operations while
simultaneously keeping an eye on the company's success.
Customers- Volkswagen can connect the activity of its consumers utilizing BI
technologies. The BI tools discussed above make it possible to examine a single
customer's purchasing history and obtain it immediately. Volkswagen can segment the
consumer base using this wealth of intelligent data, simplifying the customer buying
process.
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3.3 Reflection on the BI tools
Business intelligence tools are seen as advantageous for organizations, consumers,
and stakeholders, but they can have drawbacks. It might be difficult to isolate the
negative effects of intelligent technologies since they have so many implications for
business processes. Considering the bigger picture of the organization, intelligent
technologies are having an impact on employment rates, as well as on rising security
concerns and data breaches. These are covered below:
Increasing Unemployed Rate- Implementing BI technologies in company artificializes
the entire process and replaces human interaction with intelligent software.
Consequently, even if output and efficiency are rising, a significant number of jobs is
being lost. Thus, relatively highly educated workers like statisticians, labor economists,
and strategists are currently losing their jobs to BI.
Increasing security issues- Business hazards might develop when business intelligence
systems are used improperly to operations. As is well known, the focus of the modern
world is on information. Because of this, businesses in every industry that is competitive
must safeguard their own data security, especially if they heavily rely on BI. Such
reliance can occasionally raise security issues. making them an easy target for hackers
and their rivals
Conclusion
Without a question, data analysis may greatly benefit firms. They can analyze a vast
quantity of unsorted data with confidence and easily, enabling them to make important
judgments. However, it should be recognized that this benefit comes with significant
risks and costs. Therefore, company needs maintain balance to guarantee both security
and efficiency.
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Reference List
Annualreport,2020 Volkswagenag (2020). Volkswagen Konzern - AR 20 - Internal
Management System and KPIs. [online] annualreport2020.volkswagenag.com.
Available at: https://annualreport2020.volkswagenag.com/group-management-report/
internal-management-system-and-kpis.html.
Bruce, C. (2023). VW Global Sales Fall 6.8 Percent in 2022, Audi down 3.9 Percent.
[online] Motor1.com. Available at: https://www.motor1.com/news/630399/2022-global-
vw-sales-down-and-audi-sales-down/#:~:text=Volkswagen%20Sales%20VW%27s
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Loop 11 (2011). Online User Testing Tool | Loop11. [online] https://www.loop11.com/.
Available at: https://www.loop11.com/.
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Ruffo, G.H. (2020). VW Wants to Make Electric Cars in 10 Hours – the Same Goal
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help/company/our-factories.html.
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builds-industrial-cloud-for-all-plants.html.
Volkswagen Newsroom (2018). Data Scientists at Volkswagen Work on the pre-dictive
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https://www.statista.com/statistics/269034/leading-car-companies-worldwide-based-on-
revenue/.
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