Top-quality machines demand top-quality parts.
Through regular interaction Volvo Construction Equipment engages with its key suppliers to nurture the good relationships critical for both sides.
Faced with globalization and the rapid industrialization of new markets, companies such as Volvo CE have to be nimble and fast-footed in the market place. This requires strong, long-term relationships with suppliers.
Volvo CE regularly brings together its key suppliers to meet senior Volvo CE leaders for strategic discussions. These meetings, organized regionally in Europe, Asia and North America, are becoming increasingly important for Volvo CE, explains Rahmi Toptas, Director Supplier Development Europe, Purchasing and Supplier Management.
“By bringing together Volvo CE’s top management with our key suppliers, we get across the same strategic messages in one go. We also have an opportunity to engage in frank discussion and gain valuable feedback from our production partners.
Indeed, it is not necessarily easy being a supplier to Volvo CE, Toptas admits. “We are very demanding. The standards for our suppliers are pretty close to the requirements of the automotive sector: just-in-time delivery, low stocks in warehouse, guaranteed quality, etc. Volvo CE is also very advanced in developing a green supply chain, which is a ‘must’ requirement for suppliers.
“To be a supplier to Volvo CE, you need to be in tune with what is happening here. We cannot change our own strategies and product lines fast if the suppliers cannot keep up. They are the experts in their product areas, and often need to find the clever solutions. If we both get it right, the payback is enormous.
Volvo CE’s suppliers deliver the key components of the company’s machines: everything from the chassis, transmissions and power trains down to simple screws and bolts. All in all, it is an enormous volume of parts and a big annual spend.
“These suppliers are a key part of how we build our machines. Every part we buy has to fit perfectly and work seamlessly with guaranteed quality,” Toptas says.
The Supplier Days’ events have been very successful over the years and are greatly appreciated by our suppliers, he adds.
“The meetings give us time to share information with them in an open way. We can be open and transparent about where our businesses are going and align our suppliers around our priorities. At the end of the day, we are looking for a long-term relationship which is profitable for both parties. If they don’t survive, we won’t survive. We need each other long term.”
It is important for Volvo CE to get supplier reaction and constructive feedback on its strategic thinking, Toptas continues.
“In the past, we talked about a three years strategic period for our business but now things are changing so fast, we face many moving targets. So this discussion forum genuinely helps shape our future actions together.
“Today’s global market is becoming more challenging. Competition is becoming tougher and tougher and we must be at the top of our game in managing the necessary changes and making sure it always becomes a competitive advantage,” he says.
On September 21-22 at the European Supplier Days, more than 100 of Volvo CE’s biggest suppliers in Europe came to its Brussels headquarters for two days of presentations and discussions.
“These suppliers are very important to our business and we are important to them,” Toptas stresses. “Our business volume often representing 10 to 30% of their turnover. It is also a useful occasion to organize individual face-to-face meetings with suppliers from distant regions and build personal relationships.”
RIGHT FIRST TIME
The overriding theme for the 2016 Supplier Days was the importance of getting supply chain collaboration ‘right first time’, so as to further strengthen competitiveness and guarantee customer satisfaction at all times.
The two-day meeting brought together Volvo CE senior management with key account managers and senior management from the suppliers. Volvo CE’s senior executives gave an overview of the world market for the company’s products, showing where it is going and where it is experiencing or anticipating bottlenecks.
“It is important that we give the key messages straight to the people at the top,” Toptas says. “We have a very strong focus this year on the delivery of our future new products ‘right first time’. This means from the quality, delivery and cost perspective and we won’t achieve this without having the right suppliers with the right relationship.
“In recent past meetings we have focused on issues such as supplier agility and lead time reduction. And indeed since these meetings, and from a quality, cost, delivery (QDC) perspective, we have been successful and have seen great improvements on supplier lead-time, delivery precision and quality performance.”
Toptas has a 50-strong supplier development staff under his wing. This team focuses continually on ways of improving quality, delivery and cost using lean manufacturing tools. “If we detect any difficulties, we go to our suppliers as troubleshooters and find ways to optimize the production and delivery processes and assist in the identification and elimination of waste.
“I believe that today we have a good supplier base, and one founded on a long-term relationship and close collaboration. We need them as much as they need us. It is a collaboration of trust and understanding. We can go nowhere without our suppliers."