Volvo 2006 Annual Report Download - page 26

INTERVIEW
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DEVELOPMENT
SYNERGIES
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SYNERGIES
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further, due to the fact that the Volvo Group has
such a high volume of important components
that major suppliers want to cooperate and are
offering excellent conditions. And, the volumes
are likely to increase, since the Volvo Group and
Nissan Diesel have commenced purchasing
cooperation.
Global organization
Volvo 3P’s head office and global development
center is located in bright, airy premises adja-
cent to the Volvo Trucks plant in Lundby,
Göteborg, but the organization is global with
more than 2,900 employees and 600 consult-
ants in eight offices on five continents.
“It is important to be established in close prox-
imity to truck operations,” stresses Torbjörn
Holmström. He believes that it is also crucial
that in formation an d knowledge are exchanged
freely between the various countries.
“We have taken the best expertise in terms
of development of various truck types from the
three truck companies and important ingredi-
ents such as quality and cost efficiency and
learned from each other.”
And, the one thing he would like to specific-
ally highlight is the company culture, in which
nothing is regarded as an obstacle, but instead
assistance and support is provided to each
other to jointly create solutions that contribute
to strengthening the position of the Volvo
Group.
What are the major challenges facing Volvo
3P?
“The simple response would be to point to all
the products that are being developed and that
will comply with future demands in terms of
environmental laws. Today, jointly with Volvo
Powertrain, we look at what must be delivered
between 2010 and 2013. However, crucial to
our success is that we must successfully con-
tinue developing the intellectual capital and
stimulate exchange of thoughts and ideas,”
says Torbjörn Holmström.
horizon. This is to ensure that the Group has the
correct products in the long term and to coord–
inate technology and components between
truck brands.
“We implement rolling eight-year plans for
products and a ten-year plan for technology
development. But the plans are not written in
stone, they are adapted each year to changes
in the Volvo Group and the environment. There
is a list of what the Group would like to imple-
ment and it is a question of distributing re-
sources to the correct projects,” says Torbjörn
Holmström.
Bulk purchasing generates lower costs
To date, purchasing is the area in which coordi-
nation gains have been most significant. The
Volvo Group has considerable size and pur-
chasing power when negotiating purchasing
contracts with suppliers. In the past year, the
focus was on the significant increases in the
prices of raw materials such as steel and other
metals, rubber and plastic.
Torbjörn Holmström feels that by implement-
ing global purchasing and larger volumes, price
increases were handled in a satisfactory man-
ner. He also stated that in the past years pur-
chasing was concentrated to fewer strategic
suppliers.
An increased portion of joint technology and
components also means positive effects in
terms of purchasing, in which one selected
supplier receives increased volume b a se, w h ich
results in lower production costs and improved
coverage of development costs.
“We have reduced the number of suppliers
from 2,500 to around 1,500. We have also
reduced purchasing costs, and my opinion is
that we a re just as e ff ective as those companies
that are regarded as the strongest purchasers
in the market”, says Torbjörn Holmström.
Are there any gains left in purchasing?
Torbjörn Holmström believes that there are
possibilities to improve purchasing conditions
Efficient product development
In terms of the number of employees, product
development is Volvo 3P’s largest area. Nearly
2,300 employees work in close collaboration
with the three truck brands and Volvo
Powertrain. Volvo 3P concentrates on chassis,
cabs and electrical systems, while Volvo
Powertrain works on the driveline, meaning the
engine, gearbox and the rear axle.
The work is based on common architecture
and shared technology between the truck
companies. This offers many advantages.
Resources such as expertise, time and capital
can be combined to produce a joint solution to
a difficult technical problem, instead of distrib-
uting resources for three different alternatives.
This strengthens the motivation to invest
resources in developing optimum solutions for
each truck model based on the customer’s
requirements.
“A truck contains a large number of compon-
ents that are common in all trucks and this
applies to the driveline as well as the work we
do. This produces improved quality and lower
costs, which is advantageous to our customers.
Development resources are also released to
develop truck models that are even more opti-
mized for different types of transports, by
adapting solutions to each brand core seg-
ment. It is vital to remember that Volvo 3P is
there to strengthen each brand, not to dilute it,”
says Torbjörn Holmström.
This is why there are distinct definitions for
the souls of the different brands, in terms of
appearance, cabs, interior fittings, engines and
driving performance. A truck from Volvo must
naturally feel like a Volvo just as there are dis-
tinct vehicles from Renault Trucks and Mack
Trucks.
Product planning for the future
When product development is about producing
the correct products for l aunching within one o r
a few years, product planning has a long-range
22A global group 2006