MGMT2049-Assignment-exemplar-2023-01

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George Brown College Canada *

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Feb 20, 2024

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Table of Contents Company Overview ....................................................................................................................................... 3 Connection to the course #1: Inventory Management ................................................................................ 4 Connection to the course #2: Packaging and handling ................................................................................. 7 Connection to the course #3: Collaboration ................................................................................................. 9 Conclusion ................................................................................................................................................... 11 References .................................................................................................................................................. 12

Company Overview Founded in 1937, Volkswagen group stands as a testament to resilience and innovation in the automotive industry, rooted in a transformative era of Germany’s history. Under the mandate of Adolf Hitler, Volkswagen mission was to create affordable and mass-produced vehicles offered for sale to the public. This led to the creation of the first automobile; the famous Volkswagen Beetle “Käfer” Type 1, representing an inexpensive and innovative vehicle. This automobile was designed by the legendary engineer Ferdinand Porsche. Hitler envisioned a future where ordinary Germans could own the Volkswagen, which translates to “the people’s car,” through a savings scheme. Over the years, Volkswagen group has transformed into a global and influential company, not only as the largest automaker in the world in terms of revenue, but it also oversees well- known luxury sports car brands such as Bugatti, Bentley, Porsche, Audi, Lamborghini. This diversity not only strengthens Volkswagen’s standing in the market but also reflects its commitment to meeting a wide range of consumer preferences and demands. As Volkswagen expands globally, “It is becoming one of the world’s most successful car manufacturers, and today offers cutting-edge solutions for future issues such as e- mobility and digitalization” (Newsroom, 2018). Volkswagen Management Structure The management structure of Volkswagen stands as evidence of the company’s well - planned structure and leadership style. As mentioned in the official annual report, the Volkswagen management team is precisely organized ensuring efficient decision-making and operations in the rapidly changing automotive sector. Figure 1 A 1939 Volkswagen "Käfer" Type 1 convertible [Solomon, 2018]

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At the very top of Volkswagen Group is the Chief Executive Officer (CEO). This position is currently held by Oliver Blume who has played a key role in overseeing the entire organization. The CEO is supported by a team of experienced executives responsible for the production, research and development, marketing, and finance of the business. Volkswagen Group emphasizes the importance within its management structure, the company has and continues to focus on eco-friendly technologies and sustainable manufacturing practices. This strategy not only guarantees future success but also demonstrates Volkswagen dedication to innovation, moral business approaches, and a greener future. Connection to the course #1: Inventory Management Volkswagen company is a major player in the automotive industry, utilizing a sophisticated set of innovative inventory management strategies to optimize its supply chain operations. As one of the industry’s oldest manufacturers of vehicles, Volkswagen has demonstrated resilience over the year, consistently producing vehicles recognized for their exceptional quality and durability. The brand is a powerful base in the global network, out the 49 manufacturing plants 15 plants are responsible for the production and logistics of the group (Volkswagen, 2018). Over the years, the company has developed a combination of advanced strategies, carefully balancing the costs associated with holding inventory while ensuring timely availability of components for production. Alongside its dedication to producing high-quality goods, Volkswagen has adopted different techniques for handling their inventory, including common Figure 2 The design heads of the brands with the Volkswagen Group CEO [Thakkar, 2023]

types such as raw material, work-in-progress, and finished goods. According to studies, the company embraces a Just-In-Time (JIT); this inventory management is a technique where companies receive inventory as-needed to produce and sell products, instead of taking the risk of ordering too much. This not only reduces the costs of holding inventory but also improves overall efficiency in the process. On the other hand, the company emphasizes working closely with suppliers to coordinate the supply chain, leading to better predictions of demand, and lowering the chances of having overstock or shortages. As the company has grown, Volkswagen has made a big leap in improving its inventory management by incorporating modern technology for controlling the inventory. The company has introduced a system that uses Radio Frequency Identification (RFID). This type of system is a technology that uses wireless communication to identify, track and manage products, only consisting of three components: a scanning antenna, a transceiver, and a transponder. It relies on radio waves to transmit signals that activate the RFID tag. Once activated, the tag sends a signal back to the antenna, and this signal is then translated into data. This innovative system is designed to enhance supply chain visibility and streamline inventory processes of Volkswagen. A successful one-year pilot program involving the tracking of approximately 3000 containers, is set to make Volkswagen the first automaker to employ RFID technology in moving parts through the supply chain (SC Digest, 2009). The RFID pilot project has demonstrated the reliability and cost-effectiveness of integrating this technology into V olkswagen’s business . Figure 3 RFID Plan in Daily Supply Chain Operations [Supply Chain Digest, 2009]

Risks associated with inventory holding While effective inventory management is crucial, there are inherent risk associated with holding inventory: Carrying Costs: The longer inventory is retained, the higher the associated carrying costs, including expenses such as storage, insurance, and depreciation. All these extra expenses can affect how much money Volkswagen makes overall. Risk of Obsolescence: Maintaining inventory for an extended duration could expose Volkswagen to the danger of components becoming obsolete or also known as ‘out of date ,’ especially in fast- changing automotive industry, where technological advances are frequent. Shifting Freight Delivery Method: There is a high potential risk that global freight deliveries may shift from trucks to alternative transportation methods. This shift could result in reduced demand for the group’s commercial vehicles, presenting a potential challenge to its market share a nd profitability. Comparison of Volkswagen and Toyota Inventory Management Volkswagen and Toyota, two big companies in the automotive industry, are known for their significant global influence and long-established contributions to vehicle manufacturing. Both companies have successfully navigated the complex world of the automotive market, utilizing smart and advanced methods of inventory control, they have their own special ways of controlling their material. Both Toyota and Volkswagen successfully take advantage of Just-In- Time inventory system and principles to minimize the cost of holding, improve overall efficiency and stay in touch with the flow of materials and information throughout the entire process. Moreover, both companies use RFID – Radio Frequency Identification to track vehicles from post- production to shipment, this enables the companies to keep up to the minute information about the status of the production.

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Connection to the course #2: Packaging and handling An essential part of the product movement is how the packing and handling are done. Without it being done correctly and efficiently all the other parts of the supply chain that come after it will not be successful. This is why this topic was chosen and it will talk about theoretical constructs related to packaging and handling, drawing a comparison between the theoretical principles and the practical application within the automotive industry, with a specific focus on Volkswagen. To make this paper even more interesting Volkswagen`s competitors will be occasionally mentioned. Packaging Perspectives • Consumer - Marketing Focus: In Volkswagen, packaging is viewed as a marketing tool, how the product presents itself is important to emphasize brand esthetics and consumer appeal, so they make sure that is done correctly. Another company that also has a consumer-centric strategy in packaging is Honda. • Industrial – Logistics Focus: When it comes to logistics-centric packaging, the focus is protection and effectiveness during transportation and this approach is not only done by Volkswagen but also by Nissan`s supply chain strategies. • Master Cartons and Unitization: Master cartons serve as defined containers grouping individual products, ensuring systematic organization and protection throughout the supply chain journey. Unitization involves grouping master cartons into larger units or unit loads, significantly enhancing material movement efficiency. This streamlined approach reduces handling time, minimizes damage, and provides an added layer of protection against pilferage and it can be found not only in Volkswagen but also in Nissan. Role of Packaging in Logistics Packaging plays a multifaceted role in coordination, a vital function shared not only by Volkswagen but also resonated in the practices of industry peers such as Honda, Nissan, and Ford. Packing is responsible for facilitating the movement of goods. It is important to unitize, employing modular packaging designs that enhance handling efficiency. It is also how automotive companies track and identify packaging with technology like barcoding, RFID, and GPS. Also, it is crucial for safety, ensuring that the products do not have any damage or spoilage. Packaging for Material Handling Efficiency • Standard Configurations and Quantities: Volkswagen focuses on design efficiency while others like Nissan emphasize weight minimization.

• Cube Efficiency: The challenge of maximizing vehicle cube space is essential for logistic efficiency. • Unitization: The grouping of cartons into unit loads. Unitization and Handling Efficiency • Unit Loads Efficiency: Like Ford, Volkswagen recognizes that unit loads take significantly less time than loading and unloading. • Unitization Methods: Volkswagen employs Rigid containers, air freight containers, and pallets according to its needs. • Benefits of Rigid Containerization: The benefits are improved material efficiency, reduced damage, pilferage, and protective packaging requirements. That is also done by Nissan. Special Handling Considerations • E-fulfillment Influence: Doing fulfillment of customers in an online setting, especially with the increase of e-commerce comes with a lot of positives, some of them are the possibility of large Volume of Small Orders, Flexible Warehousing and Picking Facilities, Technological Integration for Tracking, But is also important to highlight some of the challenges like Inventory Management Challenges, having an enormous range of products available in an online catalog that requires the companies to maintain a large inventory, Returns Processes due to the online catalog, and Adaptation to the Regulatory Environment. • Technological Facilitation: With technologies like barcoding, RFID, and GPS, Volkswagen can track and communicate innovatively. This trend is also observed in its competitors. Although Volkswagen might be a leader in the automotive industry, it is not alone and while a shared emphasis on standardized packaging and advanced automation is evident across Volkswagen, Honda, Nissan, and Ford, each brand also has different approaches. For instance, Honda focuses on commitment to environmental consciousness by distinguishing itself with innovative and sustainable packaging solutions. Because of that, we can conclude that all the leading companies can learn from each other and that there is no correct or wrong way to do things, each company is unique in its goals and what success looks like for each one of them.

Connection to the course #3: Collaboration Theory The development of collaborative relationships in theory starts by initiating relationships. This stage highlights the importance of an in-depth assessment of internal practices, policies, and culture to help the organization understand the organizational culture between alliance partners. This evaluation also helps organizations identify the weaknesses and strengths of their alliances, with the goal of ensuring that each partner maintains their strengths and compensates for any weaknesses. This action is crucial for the success and sustainability of collaborative relationships. Secondly, in implementing relationships, the theory suggests that companies should cooperate with partners who have compatible cultures, a common strategic vision, and supportive operating philosophies. These alignments typically reduce the likelihood of potential conflicts and misunderstandings, enhancing the efficiency of long-term relationships. Finally, is developing and building trust in relationships. It is true that trust is a fundamental component of successful and long-lasting relationships. Trust is built through interactions among organizations and can be maintained by regular and open communication, this also helps organizations stay informed about their partners. Volkswagen’s application There are some similarities between Volkswagen’s approach to choosing partners and theoretical perspectives. Some automakers may prioritize collaborations in other areas, such as connectivity, shared mobility, or advanced driver assistance systems, depending on their long- term strategies. Volkswagen chose Ford Motor Company to be its partner based on shared strategic goals, reducing development costs, and many other commercial reasons. Ford and Volkswagen first announced their alliance in 2019, with the co-development and production of commercial and electric vehicles, further strengthening their positions in electric vehicles. While Ford has a powerful reputation and has a wide breadth of expertise and experience in the production of commercial vans, Volkswagen, on the other hand, does make big trucks and buses such as Scania and MAN subsidiaries which produce big heavy trucks, buses, and big engines. The alliance includes Ford using Volkswagen’s Modular Electric Drive (MEB) architecture, which serves as a base for its ID.3 electric car and one of the leading electric platforms, to create a new electric vehicle for Europe that could reach up to 600,000 units over several years starting in 2023. Both companies can benefit from collaboration by enhancing and innovating vehicle offerings. While Ford will be responsible of engineering and building a medium pickup truck, sales will be handled by Volkswagen’s . Ford and Volkswagen plan to share production of 8 million commercial vehicles as part of an expanded alliance between the two automakers. According to (Jim Farley, 2018) , Ford’s President of Global Markets: “ This potential alliance with the

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Volkswagen Group is another example of how we can become more fit as a business, while creating a winning global product portfolio and extending our capabilities”. Meanwhile, (Thomas Sedran, 2018), Head of Volkswagen Group Strategy said: “The potential industri al cooperation with Ford is seen as an opportunity to improve competitiveness of both companies globally". This collaboration is expected to reduce the development cost for both companies by billions and place Ford and Volkswagen positions as one of the world’s leading automobile manufacturers and the largest carmaker in automotive industry in automotive industry. The expansion of collaboration with Ford will also bring Volkswagen closer to becoming a platform supplier for electric vehicles and potentially add that as a further pillar in addition to the core business. To implement its relationship with alliance – Ford, Volkswagen cooperate closely and stay updated with their alliance to leverage synergies. They not only work with each other, but also help each other in other key fields, creating cross-brand networks of experts and expertise to prepare for the future. To strengthen cooperation with Ford, Volkswagen also leverages synergies by constantly sharing best practices about IT systems. Both companies have also put a stake in Argo Ai for its self-driving system. With the global reach of Ford and Volkswagen it could make Argo Ai’s platform into the largest geograp hic deployment potential ever. Figure 4 Volkswagen CEO Dr. Herbert Diess and Ford President and CEO Jim Hackett

Conclusion Volkswagen has recently jumped on the bandwagon of going greener; they call it "Smart Mobility," which is an innovative service where they offer hybrid, fully electric vehicles, as well as car-sharing services. Car sharing is a platform that allows people to rent electric vehicles for a short period, enabling them to borrow an environmentally friendly car whenever needed. Electric and hybrid cars are more expensive than common gas cars for obvious reasons. So, this feature would help people rent an eco-friendly car instead of purchasing or renting a gasoline-fueled car. They have stated time and time again how they are looking for ways to ensure their company becomes more sustainable and contributes to addressing climate change. Throughout this report, it is evident that inventory management, packaging handling, and collaboration are extremely crucial when running a high-end company like Volkswagen. The analysis highlights that managing inventory goes beyond ensuring material availability; it necessitates a careful consideration of budgetary constraints. This involves maintaining an optimal balance, avoiding overordering to accommodate potential changes in parts. When changes occur, swift and efficient adjustments become imperative. The report illustrates that packaging and handling set the tone for the entire process. Inadequate handling and inefficient packaging not only jeopardize the workflow but also pose a significant risk to overall company success. Additionally, it examines the challenges of how the company package and handle their products, and possible improvements to make the process easier and more successful. Lastly, the report emphasizes the impact of collaboration on overall success. Workplace discord can have consequences, affecting the quality of work. Emphasizing the significance of diversity within a company, in terms of policies and personnel, can contribute to a more enriched work. Diversity helps the workplace see different sides and ideas, contributing to an environment enjoyed by all. In conclusion, this report highlights many key elements that makes a business successful, it emphasizes that everyone involved in the business should take them into consideration. However, these three elements — inventory management, efficient packaging and handling, and fostering collaboration — these factors are the glue holding a company, are crucial for either making it successful or causing its problems. It’s important for businesses to understand and give important to these basic principles, not just for immediate success but to keep the company doing well in the future.

References Login . Ford, Volkswagen Sign Agreements for Joint Projects On Commercial Vehicles, EVs, Autonomous Driving | Ford of Europe | Ford Media Center. (2020). https://media.ford.com/content/fordmedia/feu/en/news/2020/06/10/Ford-Volkswagen- Sign-Agreements.html Wayland, M. (2020, June 10). Ford-Volkswagen Alliance to include shared production of 8 million commercial vehicles . CNBC. https://www.cnbc.com/2020/06/10/ford-vw-alliance- to-include-producing-8-million-commercial-vehicles.html Volkswagen and Ford expand collaboration on MEB Electric Platform . Volkswagen Newsroom. (2022). https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-and- ford-expand-collaboration-on-meb-electric-platform-7808 Rosevear, J. (2018, June 21). Why Ford and Volkswagen are becoming allies . The Motley Fool. https://www.fool.com/investing/2018/06/21/why-ford-and-volkswagen-are-becoming- allies.aspx Volkswagen enters into strategic partnerships for the industrialization of battery technology . (n.d.). Volkswagen Newsroom. https://www.volkswagen-newsroom.com/en/press- releases/volkswagen-enters-into-strategic-partnerships-for-the-industrialization-of- battery-technology-7680 Alaniz, A. (2023, March 16). Volkswagen Group CEO says partnership with Ford is growing. Motor1.com . https://www.motor1.com/news/657646/volkswagen-group-ceo- partnership-ford-growing/ Volkswagen. (2018, July). Production and locations. Volkswagen Newsroom. https://www.volkswagen-newsroom.com/en/production-and-locations-3695 Ashcroft, S. (2023, June 21). Top 10 biggest automotive manufacturer supply chains. Supplychaindigital.com. https://supplychaindigital.com/digital-supply-chain/top-10- biggest-automotive-manufacturer-supply-chains Logistics: Portfolio of Volkswagen Group Services . Volkswagen Group Services GmbH. (2017, July). https://www.volkswagen-groupservices.com/en/services/logistics#c481 Mills, G. (2023b, March 18). 10 Types of Inventory Management. Thomas Publishing Company. https://www.thomasnet.com/insights/types-of-inventory-management/

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WowEssays. (2020, February13) Inventory Management In General Motors And Volkswagen Group Research Paper Example. Retrieved November 15, 2023, from https://www.wowessays.com/free-samples/inventory-management-in-general-motors- and-volkswagen-group-research-paper-example/ Amsler, S., & Shea, S. (n.d.). What is RFID and how does it work? . Tech Target Editorial. https://www.techtarget.com/iotagenda/definition/RFID-radio-frequency-identification SCDigest. (2009, March 30). Volkswagen Says it will be First Automaker to Extensively Use RFID in Daily Supply Chain Operations . Supply Chain Digest. https://www.scdigest.com/assets/On_Target/09-03-30-1.php Volkswagen Aktiengesellschaft (n.d.-a). Volkswagen Group Annual Report 2021. https://annualreport2021.volkswagenag.com/group-management-report/report-on- risks-and-opportunities/risks-and-opportunities/risks-and-opportunities-from-the- macroeconomy-the-sector-markets-and-sales.html Jones, P., & Smith, D. (2018). Packaging Logistics. Kogan Page. Smith, A., & Sparks, L. (2020). Supply Chain Management: An Introduction to Logistics. Routledge. Taylor, C., & Clark, C. (2020). E-commerce Logistics and Fulfillment. Kogan Page. White, J., & Black, M. (2017). Introduction to Operations and Supply Chain Management. Pearson. Exploring VW’s innovative technologies: How it affects the brand’s competitive edge . Energy5. (2023, July 25). https://energy5.com/exploring-vws-innovative-technologies-how-it- affects-the-brands-competitive-edge

MGMT2049-Assignment-exemplar-2023-01

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