MP

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Volvo Car Corporation
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e-business challenges !
Shareholder value
What drives the business?
Business
People
Technology
Product, Manufacturing, Logistics, Information!
Change Management!
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Customer Ordered Production- Short lead-time,
high precision
DISTRIBUTION
DELIVERY
PRODUCTION
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SUPPLIER
ORDER
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Total Supply Chain
2nd tier
Vehicle distribution
Dealer/ Customer
Plant
1st tier
Transport
Physical flow
Capital flow
Information flow
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• Supplier relationships

Making the Transition
Purchase priorities
Supplier positioning focus

• Whole of life cost
• Partnership
• Shared default/risk

• Partnership purchasing

Strategic Purchasing

• Total cost of acquisition
• Process capability
• Cycle time
• Flexibility/innovation

• Preferred Suppliers

Strategic buying
Q U A N T U M L E A P

• Price
• Product quality
• Delivery

• Approved suppliers

Commercial buying

• Budget
• Headcount
• System costs
• Savings

Transactional buying

• Available suppliers

Internal focus of activities
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Material Planning and LogisticsImportant factors
for Volvo

• Customer Ordered Production

• Early involvment in vehicle project

• Landed cost

• Delivery precision

• Reliable Lead Logistics Provider

• Supplier communication - EDI

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Supplier to Consumer Logistics
Parts
M A R K E T A R E A S
Design for Logistics
Industrial Structure
Torslanda
Supplier choice
Gent
Capacity Flexibility
CCT ECT ECG
Uddevalla
Logistics Assurance
KDO
Test Pre-series Materials management
Inbound Logistics
Outbound Logistics
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Benefits supplier parks

• Improving order to delivery process and enables
  customer ordered production (COP)

• Reduces logistic costs and inventory

• Closer and quicker communication between the
  plant and park suppliers

• Improved quality

• Freeing up space in car manufacturing plant

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Change to Modules Systems
From
To


Many direct suppliers

• Module suppliers

Many direct contacts

• Less direct suppliers

Substantial own design

• Design by suppliers

• More second tier suppliers

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Fitting of modules systems in assembly
Cockpit
Front-end
Seats
Safety
SILS
SILS
SILS
SILS
SILS
SILS
SILS
SILS
Harnesses
Headliner
Door Trim
Wheel Tire
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Supplier Choice criteria's
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Delivery precision

• Number of parts delivered inside time frame
• --------------------------------
• total number of parts required
• Time frames
• minutes for sequence suppliers
• hour(s) for suppliers with transport time table
• 1 day for the rest
• Measuring point
• Where Volvo takes over responsibility!
• Mistakes punished at the earliest point of
  discovery, i.e. when required for arrears, when
  delivered for over-deliveries
• Common for all Volvo units

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LEAD LOGISTICS PROVIDER

Transport leverage and optimisation
Packaging leverage and standardisation
Transport precision
Track and trace along the supply chain
Protect materials and vehicles
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EDI (4 B 2 B)Electronic Data Interchange
Before

After
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Volvo Cars EDI Demands

• 100 usage of EDI without a manual interference,
  the business must include the following
  functionality's according to Volvos profile of
  the Odette subset of EDIFACT.
• DELFOR, Delivery schedules message.
• Calloff, based on DELFOR
• DELJIT only sequence suppliers.
• DESADV, Advanced shipping note.
• OTL, Odette transport label.
• INVOIC, Self-billed message
• ENGDAT, Engineering model exchange, Odette
  message.

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Logistic EDI flow
Purchasing
Orders
Agreements
Supplier
SAL
Orders
Data file
MFG
DELFOR / Call-off
Manual SHP-routine
SHP
DESADV
Goods / Labels
VCC-Unit
SAL Sales Office MFG Manufacturing unit SHP
Ship from location
EDI Self Billed INVOIC
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EDI Vs WEBTwo Scenarios
EDI Web Service Provider
EDI file
Browser
EDI file
Volvo
Supplier
EDI file
EDI file
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EDI Vs WEB

• EDI
• A need for Volvo to reach customer Order
  Production
• A need for many suppliers
• Application to application without a manual
  interference.
• WEB
• Reachable everywhere
• Cheap
• A possibility for small suppliers to provide us
  with EDI
• Higher risk for errors due to manual handling

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Future supply chain demands need e-business
development!
Exchange of demand and capacity information
along the supply chain for critical items !
Exchange of problems and inventory
informationfor pro-active decisions !
Transparency and visability is a must !
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Thanks for your attention!