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  6. “The lights are now set on green for most suppliers”

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“The lights are now set on green for most suppliers”

Production has restarted – not only at Volkswagen, but also at thousands of suppliers who supply the car factories with components. In Europe, companies from the two countries that were particularly hard hit by the corona crisis play an important role: Italy and Spain.

Especially in the northern regions of both countries, the component supply industry is one of the most significant sectors of the economy – for example in the Lombardy region and around Barcelona. “In total, we procure components from more than 1,000 Italian and Spanish companies,” says Nico Feirer, Head of Global Production Control at Volkswagen Group Procurement. However, it is not only the direct contractual partners, the so-called Tier 1 suppliers, that are important. The many other companies along the supply chain are just as important. “Even the failure of what at first glance appears to be a small and insignificant company can lead to problems,” says Feirer.

Since the beginning of the pandemic, Feirer’s team has had a particularly close eye on the complex supplier network. “25 experts from the various countries of the global procurement organization provide us with fresh on-site information on the current situation several times a week,” he says. During the crisis, Volkswagen organized systematic corona monitoring for more than 30 countries. “We want to know immediately in case there is a threat of problems somewhere.”

Nico Feirer: “25 experts provide us with on-site information on the current situation.”

Especially with small suppliers, continuous sales and thus turnover is important for financial stability, says Feirer. “In several cases, we have therefore continued to purchase goods in excess of our short-term requirements in order to help the suppliers directly.”

In Italy and Spain, such support was out of the question for a long time, because given the high infection rates, automotive suppliers were banned from production until well into April. “Volkswagen used this time to jointly prepare the restart with strict health regulations,” says Feirer. One pillar was the comprehensive protection concept that Volkswagen made available to more than 40,000 suppliers and service providers worldwide in various languages on the supplier platform. “This was an important help for many partners. Not every company has enough experts to develop such a package in just a few weeks.” The concept also includes the 100 measures applicable to the Group – from the wearing of face masks to the contactless handover of goods. The documents were downloaded more than 120,000 times – a sign of the great interest.

Frank Müller: “For many companies, existence depends on business recovering quickly.”

In the meantime, the government ban on production in Italy and Spain has been lifted. With the new start at Volkswagen, the suppliers are increasing their production volumes. “At present, we are not aware of any partner in Spain and Italy whose operations have come to a standstill due to the corona pandemic,” reports Frank Müller, Head of Capacity Management in Procurement. “This is good news. For many companies, their existence depends on business recovering quickly.”

In close cooperation with logistics, Nico Feirer’s team works to keep the worldwide supply chains stable – but there is no guarantee. “The lights are now set on green for most suppliers. However, we have to reckon with the possibility that the situation in individual countries could deteriorate again at any time,” says Feirer. If that happens, rapid action is called for. “When the pandemic broke out in China, there was still cargo on the ships for several weeks. A truck, on the other hand, only takes two days to get from Italy to Germany. That is our lead time,” explains Müller. As long as the pandemic lasts, the team will keep an eye on all the important automotive supplier countries – from South America to Asia.  

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