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How Volkswagen can benefit from small start-ups

Illuminating supply chains down to the last link, helping workers around the world to find a voice – those are concepts from start-ups that were featured in the hackathon at the DRIVE. Volkswagen Group Forum in Berlin.

Where exactly does this or that raw material come from? How trustworthy is this or that supplier? What is the situation like for the local workers? These and other questions are posed not only by consumers, but also corporations. Technological developments help with understanding this complex system somewhat better, for transparent supply chains are becoming increasingly important.

Bringing sustainability and digitalization together

Marco Philippi, Corporate Director, Strategy Group Procurement, at the hackathon

“Sustainability is an incredibly important area that plays a major role in our customers’ purchasing decisions now and will do so even more in the future. As a large Group, we also have a great responsibility in regard to this subject, and moreover the market is also moving strongly in this direction. Investors, for example, are asking more and more specifically about how a certain business practice is sustainable as well,” says Marco Philippi, Corporate Director, Strategy Group Procurement. And goes on to say: “Sustainability and supply chain transparency are inseparably linked. Digitalization provides completely new possibilities in this regard. And the hackathon brings both worlds, sustainability and digitalization, together.”

  • BOX HACKATHON

    Hackathon is a neologism created by combining “hack” and “marathon.” The aim is to find solutions to largely IT-based problems as a group in a short, predefined period of time. Teamwork, creativity and a lot of caffeine all play an important role in the process. A hackathon can last anywhere from several hours to several days. Ideally, the teams are formed in such a way that specialists from various disciplines work together.

Human rights and environmental protection

Around 100 participants from Volkswagen, adidas, Zalando and Deutsche Bahn as well as five start-ups met for a hackathon at the Berlin Startupnight at the DRIVE. Volkswagen Group Forum. The aim was to develop digital solutions to make it easier to monitor compliance with human rights and environmental protection standards along deeply staggered supply chains.

  • Transparency in the supply chain

    Emelie Bergus, Transparency-One Product Manager at the hackathon

    Transparency in the supply chain is a hot, cross-industry topic that especially affects the automobile industry. In this context, the transition to e-mobility poses technological and infrastructural challenges to the Volkswagen Group: in order to ensure sustainable mobility, the responsible procurement of raw materials, especially of cobalt, lithium, nickel, lead and rare earths, has the highest priority.

Software is becoming increasingly important

The start-ups selected for the Hackathon 2019 from among 230 applicants from five continents are called Chemycal, Open Apparel Registry, TrueTrace, Ulula and Transparency-One. They adopt different approaches to creating a transparent supply chain, and during the hackathon they worked intensively over a period of one day with various participants from the Groups to find solutions to specific problems. Numerous top-level volunteers – for example, six software specialists from the Volkswagen IT Service India – were able to use their expertise to help find technical solutions. “Software solutions are becoming increasingly important, for the Volkswagen Group as well,” says Sidharth Yadav, Managing Director Volkswagen IT Services India.

A voice for the workers

Vera Belazelkoska, Director of Programs at Ulula

One example of how software combined with a high sustainability standard can provide new solutions is the start-up Ulula from Toronto and New York City. “For us it’s about responsible supply chains,” says Vera Belazelkoska, Director of Programs at Ulula, “and especially about making the voice of the workers in the world audible.” This should work by, for example, giving a seamstress in Bangladesh who has neither smartphone nor internet access, and is also illiterate, the possibility of evaluating her employer and her working conditions. Once a sufficient number of worker evaluations are collected, the workers’ treatment by this or that supplier or manufacturer is made transparent, independent of certificates and spot checks.

Bottom-up approach

“Regardless of whether on plantations or in fields, factories or mines, we make inquiries about people’s working conditions there. It involves communicating in different languages using chatbots via telephone or, if someone is able to write, then also via text message,” says Vera Belazelkoska. The goal is to provide companies around the world with the data they need to make decisions that respect human rights. On that subject Marco Philippi says: “In the case of supply chains, you often rely on a top-down approach, so the bottom-up approach from Ulula is all the more interesting.”

Transparency from one source

Tobias Streich, Director of Business Development at Transparency-One

“We have more than 40,000 suppliers in our databases at the Volkswagen Group – if you then look behind the suppliers of our suppliers, all the way down to the manufacturers at the end of the supply chain, there are many, many stations in the supply chain that you have to keep an eye on – and they also keep changing and constantly have to be re-evaluated in terms of sustainability,” according to Philippi. The start-up Transparency-One, which is represented in both Europe as well as the United States in Paris and Boston, pursues a promising approach here.

Blockchain alone is not enough

Speaking with Marco Philippi, Corporate Director, Strategy Group Procurement

Complex supply chains can be located, evaluated and visualized by means of blockchain technology that links the company with other processes. “We provide everything from one source,” says Tobias Streich, Director of Business Development at Transparency-One. “Blockchain alone isn’t enough for that, as it’s only a digital depiction – it has to be linked to audits, certificates, the advising of suppliers on generating the data and the like.” In addition, the complexity of such processes has to be presented in such a way that the decision maker in a corporation also understands it. “That type of smart, big-data approach could work,” says Philippi.

Depicting and managing complex supply chains digitally

“Volkswagen is very interested in developing a system that digitally depicts, illuminates and manages complex supply chains. Start-ups can help develop new ideas in these types of projects,” says Philippi. The Volkswagen Group is still on the way to becoming a software company with a focus on mobility. One used to think much more in product-related four-year cycles – start-ups are more flexible in developing new concepts and can therefore furnish useful extras. “Start-ups are quick, pragmatic, goal-oriented and have the courage to take risks; a large corporation has, of course, a different structure with more bureaucracy.” Here they can benefit from one another – the supertanker and the agile speedboats.