Tuesday 28 May 2013

Volvo Car joins up manufacturing and purchasing

Volvo Car Group (Volvo Cars) will establish a new global purchasing and manufacturing function in order to reduce complexity and costs.

The new organisation, claims Volvo Car group, will also create “more distinct governance, quality assurance and cost control throughout the entire value chain”. The new unit will be headed by Lars Wrebo, currently senior vice president manufacturing.

"This change is part of our efforts to reduce complexity. We need to strengthen the substantial processes within the company at the same time as we strive to reduce bureaucracy. Lars Wrebo will have a central and comprehensive role through this new function which will be a natural hub together with Research & Development and Product Strategy," said Håkan Samuelsson, president and chief executive officer of Volvo Cars.

In this way, according to Volvo Car Group, the new function will be responsible for “optimising the value chain, from supplier to manufactured car, through material planning, logistics and manufacturing”.

Why is this happening now? And, if this new strategic direction is so important to the future direction of Volvo Car Group, why has it taken so long to implement? And why have other car and truck companies not hitherto combined the functions of manufacturing and purchasing?

And, if it is acceptable to link manufacturing with purchasing, why not link the design function with manufacturing under one head also? After all, in some companies ‘design for manufacture’ is an important consideration.

It is on occasions such as this that the human mind races forwards. What triggers such a move as this? Does it signify signs of influence from Volvo Car Group’s owners – Geely Automobile Holdings Limited in China? Or are the issues closer to home? And will it prompt other automakers to follow suit? If so, which will be the next? And when?

It is just possible, of course, that the possible the expected gains have been overstated and the difficulty of delivering them underestimated?

We know nothing of Lars Wrebo apart from the fact that he has, according to Volvo Car Group, “more than 25 years of experience from the automotive industry”.

He has spent most of his career at Scania Group and MAN before joining Volvo Cars on 1 April 2012 as senior vice president manufacturing. In previous positions he has been responsible for the whole production flow, from procurement of material to finished product, and emphasizes suppliers as one important success factor.

And so it is that after just 12 months working at Volvo Car group, Lars Wrebo has a new job.

As journalists we can but wonder what has been happening behind the scenes at Volvo Car Group. And why at this particular juncture has Axel Maschka, senior vice president purchasing, decided to leave Volvo Cars?

Which came first; the chicken or the egg? Did Axel Maschka decide to leave Volvo Car Group and as a result of his abdication, Lars Wrebo was handed the combined responsibilities of manufacturing and purchasing?

Or did the idea of combining manufacturing with purchasing spring from another direction and, as a result, Lars Wrebo won the competition to head up the new organisation?

According to Volvo Car Group insiders: “The establishment of the new joint purchasing and manufacturing unit means that the position as senior vice president purchasing will no longer exist; Axel Maschka has therefore elected to leave the company.”

According to Lars Wrebo "It will be even more vital in the future to view manufacturing at our suppliers as one part of the whole value chain. There is big potential in reducing waste by having a more integrated way of working."

From this it would seem that in future Volvo Car Group’s suppliers will come under intense scrutiny.

Notwithstanding this, Volvo Car Group’s Håkan Samuelsson has been fulsome in his praise of Axel Maschka.

"I would like to take this opportunity and thank Axel Maschka, who at the time of change has elected to leave Volvo Cars. Axel Maschka has been instrumental in building up a global purchasing function and realized strategic improvements and savings. He has also initiated several important joint cooperation projects between Geely and Volvo," he said.

The new unit becomes operational from 1 July.

Meanwhile, Geely claims that exports have become an important part of the company’s business, accounting for 21 per cent of the total sales volume of 483,383 in 2012. Total installed production capacity is 625,000 per single shift. Total workforce is 18,512 giving an output per employee of 26 vehicles.

It will be interesting to see just how soon the effects of Lars Wrebo’s new assignment bear fruit. Certainly other car makers will be watching developments carefully for any long-term implications.                                                           

No comments: