Volvo 2010 Annual Report Download - page 17

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Improved profitability through cost control
Industrial Operations
10Q2
10Q109Q4 10Q410Q3
0
20
40
60
80
+25%
+3%
Net sales
Selling, administrative, reserach and development expenses
Volvo Production System (VPS) is an important
tool in the effort to increase operational excel-
lence. It contains methods to make operations
more efficient and reduce productivity losses.
Competence development is a key part of VPS.
Great effort is placed on developing employees in
new, future technological competencies.
Substantial cost savings
In 2009 as well as 2010, substantial measures
were implemented to lower the Group’s costs on
a permanent basis. Short-term, they have been
focused on quickly changing over the Group to a
new, lower cost base while at the same time
securing the Group’s long-term competitiveness.
All parts of the Group have been subject to cost
savings in a number of areas. The measures have
produced results and substantially lowered the
total costs for, among others, sales and admin-
stration as well as for research and development.
As the Group now grows again, it is of vital impor-
tance that costs increase at a slower pace
through increased efficiency and productivity and
thus assist in raising profitability.
Future direction
Within the strategic area of Operational Excel-
lence the future direction is:
• Lowering the product cost.
• Utilizing the global production capacity with
regional support.
• Productivity increase in the industrial system to
strengthen competitiveness.
• Focus on closer and more long-term cooper-
ation with well-performing suppliers and take
further advantage of large purchasing volumes.
• Reduce administration by fully utilizing the busi-
ness units.
• Increase productivity in product development.
• Increase flexibility to be able to rapidly adapt the
cost structure to changes in demand.
• Increase competency and diversity with strong
employee commitment.
Operational excellence is an important factor for securing
a sustainable profitability for the Group. The work with
operational excellence includes lowering the manufactur-
ing costs and the cost of sales and administration as well
as making product development and other processes more
efficient.
STRATEGY
Operational
Excellence
13