Can you prevent Volkswagen another mess with its suppliers?

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Factory Wolfsburg – Photo: funky1opti (Flickr) CC BY

After a week of very turbulent in Germany, next Monday will return to normal 10 factories of Volkswagen. Have ceased to produce thousands of units of the Volkswagen Golf and Passat due to lack of parts from two suppliers of the group Prevent. This means a lot of money in losses.

The representative of the company’s employees, Bernd Osterloh, has suggested that one of the solutions consists in that Volkswagen controls total or partially the shareholders of the companies that supplies them with parts, to have the power of decision-making (voice and/or vote). This implies a great investment, not an expense.

The production loss will be compensated by working more hours

this Is a solution similar to the one that Toyota have with some suppliers, where the logistics chain is vital due to the production philosophy just in time. In other words, Toyota is working with the least possible stocks, if a provider fails, the production is compromised quickly.

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Chain of production of the Volkswagen Golf

In fact, although the suppliers of Toyota are not precisely famous for being very conflicting, the japanese giant has already experienced several logistical problems due to causes of force majeure, i.e., natural disasters or industrial accidents. The clearest case was in the 2011 earthquake, when it suffered shortages of multiple components at once.

as A result of that, Toyota strengthened and diversified its logistics chain, for which only a single provider does not stop a production line as a whole. For example, the problem suffered by the metallurgy company Aichi Steel left japanese factories without steel plates for a week. It was not by a natural disaster, but by an accidental explosion.

natural disasters are, by definition, inevitable, but you can lessen its consequences. In the case of Volkswagen, there has not been disputes of association, but that has been the company itself the cause of the problem, to tighten the rope in relation to the two suppliers, it IS Automobilguss and CarTrim.

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it Turns out that Volkswagen cancelled an order months view to CarTrim, and the group Prevent demanded a compensation of 58 million euros for the investments that had been made to meet that commitment. By refusing Volkswagen to pay, it interrupted the flow of seats and steel parts for gearboxes.

According to the Sueddeutsche Zeitung, Volkswagen has paid a compensation lesser of 13 million euros, and will continue to work with both providers other six years. Yes, Volkswagen will be able to get up to 20% of steel parts for gear boxes on the other side during that period.

Now Volkswagen is in a economic situation very good if we ignore the consequences of the Dieselgate. Because the industrial giant has (18,400 million euros to cope with such consequences, measures have been taken to reduce at 1,000 million euros the cost. Prevent accused Volkswagen of wanting to outsource its suppliers that cut.

Process of production in one of the affected plants, in Braunschweig

In any case, the germans are not given to flirting with the risks. A future entry in the register of shareholders of some providers can be a solution to the problem. On this occasion justice has collaborated with the purposes of Volkswagen, already forcing the providers to continue with the supplies agreed.

The industry of the provider or assistant is vital to this business, since the manufacturers can’t do for themselves all and each one of the parts that are mounted in their cars, and rely on third parties. In recent months, a supplier has given a lot to talk about, Takata Corp, had provided for years airbags that can become murderers of passengers if it has been exposed to moisture for several years.

Other providers have been fined by agreeing on prices and raise costs

To the big car they really want to be at peace with their providers, especially if they are external and do not control them. A policy of storing to the test of disasters can dampen the impacts of a lack of supplies, in exchange for raising the costs. This is about finding a balance between the rationalisation of costs and the security safe.