Supply Chain Analysis of Volkswagen

Volkswagen is an automobile manufacturing German multinational company. German Labour Front founded the automobile company in 1937. Today, we’ll discuss the supply chain analysis of Volkswagen; it focuses on various SCM elements like procurement planning, inventory management, warehousing, automation, transportation, and distribution.

Supply Chain Analysis of Volkswagen

Let’s discuss the main elements of the supply chain analysis of Volkswagen are as follows;

Suppliers Network

Volkswagen has established a very large network comprising over 59000 suppliers and vendors in approximately 90 countries across the globe. The large and worldwide suppliers network would help the automobile brand to ensure the smooth availability of automotive parts, components, tools, equipment, and suppliers for the production of automobiles. Most importantly, the large suppliers’ network helps the company diversify the risk factors and improves the stable flow of products and goods.

Relationship with Suppliers and Partners

Volkswagen has developed a very good and effective relationship with its suppliers, vendors, and manufacturing partners. In order to promote sustainability and boost the morale among suppliers, the automobile brand awards the top-performing suppliers and partners. The automotive brand regularly offers training programs and e-learning programs for suppliers to improve their skills, expertise, and professional development. According to an estimate, approximately 2200 suppliers participated and benefited from the company’s e-learning and training courses and programs.

Suppliers Code of Conduct

Volkswagen has set up a strict code of conduct for suppliers to ensure their compliance with social responsibility, environmental sustainability, and human rights standards. The automobile brand has made a strong commitment to international human rights and labor standards to protect the interests of workers. It comprises of following elements;

• No child, slave, and forced labor
• Complying with occupation health and safety standards
• Freedom to join and associate with any type of union or organization
• Equal treatment of all employees regardless of their differences
• Fair wages, benefits, and incentive plans
• Not polluting the air, water, and soil with harmful and toxic elements
• Avoiding the import and export of hazardous waste

Digital Supply Chain

Volkswagen is investing a significant amount of capital resources in tech integration and the digitalization of the supply chain network. The automobile brand has developed a shared database with advanced and efficient technology, networking coordination, and collaboration with various partners. For instance, the procurement team performs standardized transactions with various suppliers and automates the whole process; it helps the company to accelerate and efficient its various business processes.

Procurement Strategy

Volkswagen has a well-developed and organized procurement process and they are proactively present in various countries and markets across the globe. The procurement team helps the company to procure required quality services, equipment, parts, plant, property, production material, and supplies. However, networking and coordinating with various procurement organizations help the company to become aware of the purchasing market.

The procurement unit of Volkswagen has roundabout 7 regional offices in various countries across the world. They play a key role in recognizing potential suppliers, developing contracts, and offering them training to gain a cost advantage in the procurement market.

Responsible Sourcing

Volkswagen is highly careful and cautious about the responsible sourcing of raw materials, parts, tools, equipment, supplies, and components from various suppliers and vendors across the globe. The automobile brand has made a strong commitment to the human rights standards and strict code of conduct for suppliers. It allows the company to ensure the compliance of suppliers with the globally recognized standards and requirements.

Environmental Sustainability

Volkswagen has made a strong commitment to environmental sustainability. The automobile brand is putting a great emphasis on the circular economy and decarbonization. However, the environmental sustainability initiative focuses on the following areas;

• Biodiversity and Ethical treatment of animals and birds
• Waste management and circular economy
• Efficient utilization of resources
• Decreasing greenhouse gas emission
• Evaluation of raw material and other resources

Production and Manufacturing Factories

Volkswagen has a network of approximately 136 production and manufacturing factories in approximately 29 countries across the world. They receive raw materials, supplies, parts, tools, and components from the company’s authorized suppliers and vendors; perform various production and manufacturing processes, and develop various types and categories of vehicles for different types of customers.

Dealership Stores

Volkswagen has a very large network of dealership stores in various countries and markets across the globe. They receive the automobiles and vehicles from the production and manufacturing factories. It is significant to mention here that the automobile dealers are working on a specific percentage of commission for the sale of vehicles. The end users could find and buy the vehicles from the authorized dealership stores of the brand.

Conclusion: Volkswagen Supply Chain Analysis | Volkswagen Supply Chain Management

After an in-depth study of the supply chain analysis of Volkswagen; we have realized that Volkswagen is the world’s leading retail automobile brand. If you are learning about the Volkswagen supply chain analysis; then you should keep in mind the abovementioned SCM elements; procurement, planning, transportation, automation, inventory management, and sortation.