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Productivity of Volkswagen plants to increase 30 percent

Volkswagen has set itself ambitious goals with its new TRANSFORM.TOGETHER production strategy. The Board of Management sees efficiency potential of EUR 2.6 billion by 2025.

It was a memorable day for Volkswagen Production – and, in strategic terms, the most important one for many years. The topic up for debate was nothing less than “a new era in Production for the Volkswagen Passenger Cars brand” and a “paradigm shift from a product-oriented company to a production- and process-oriented company”, said Dr. Andreas Tostmann, the Volkswagen Brand Board Member for Production, speaking at the Berlin Motorenwerk location. 500 managers from Volkswagen’s 17 vehicle manufacturing plants around the world had gathered here to discuss the new TRANSFORM.TOGETHER production strategy. This strategy targets a 30 percent increase in productivity worldwide by 2025 compared to 2018. The reason why this goal is so necessary and fundamental for the company’s success today was one of the main topics on this extraordinary Thursday.

TRANSFORM.TOGETHER: Production managers from all over the world are discussing measures for the new strategy’s implementation.

“For a volume manufacturer like Volkswagen, production is by far the most important means of increasing profitability,” Tostmann explained in his opening speech.“There are two reasons for this. In 2017 the Volkswagen brand produced more than 6.3 million vehicles i.e. by far the largest share of the almost 11 million cars produced by the Group. Vehicle construction accounted for around 2/3 of the brand's total capital investments. It also accounts for around 1/3 of the workforce – and that’s only in Germany. At our VW sites abroad, the share of vehicle construction tends to be even higher. This is why one of the biggest efficiency levers for the brand is in the production division. An efficient production network makes a significant contribution to increasing the value of the company - a comparison with our competitors shows this.”

Concerning profitablity, Volkswagen has already made significant progress in the last two years – and production itself has made a major contribution At its German sites, productivity has been improved by an average 7,7%, the brand’s global return on sales turned up to 5%, exceeding all expectations. Volkswagen has identified the biggest optimization potential to lie in the production structures and processes, considered to be far too complicated in many places. “And there is also room for improvement in standardizing our global production network”, Tostmann explained. “That is why we are now introducing uniform structures at all factories along with uniform and comparable key performance indicators. In production alone, we have efficiency potential of EUR 2.6 billion through 2025,” Tostmann added. The brand has targeted a 45 percent improvement in environmental KPIs at its sites compared to the reference year of 2010.

The eight action areas in TRANSFORM.TOGETHER

The new TRANSFORM.TOGETHER production strategy lays down the roadmap for leveraging existing efficiency potential and achieving a sustained increase in productivity. In order to realize these ambitious goals, Volkswagen Production has defined eight main action areas containing concrete measures to drive the progress of the production strategy at all Volkswagen sites.

At the all-day Berlin workshop, participants discussed roundabout 2500 efficiency improvement ideas altogether. Each participant had been asked to submit five ideas in advance – given the fact that experts themselves at the worldwide sites know best in which fields major optimization potentials are hidden. Ideas were presented in various agile teams, practical measures were discussed. Among the main topics were the factory costs per vehicle, investments in new resources and products, as well as hours per unit, i.e. the number of hours spent by production and non-production-related units on building a vehicle.

Productive atmosphere: concrete proposals are being developed in the eight action areas

The initial results from the one-day workshop were considered extremely positive by the Board Member for Production. “We are turning Volkswagen Production from a cost driver into a success factor for the entire company so as to safeguard today’s jobs tomorrow and beyond. For Production, that means our department will be more important than ever going forward,” said Tostmann. “My colleagues are perfectly aware of what a unique opportunity this is. And they are highly motivated to take it.”