NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGAMES

-------------------------------

GROUP ASSIGNMENT
GLOBAL SUPPLY CHAIN MANAGEMENT

TOPIC: ANALYZE GLOBAL SUPPLY CHAIN OF VOLVO CARS

GROUP 4
CLASS: International Business Administration EEP 60B

Hanoi –2021
Members of group 4:
1. Nguyễn Thùy Linh - 11182839
2. Lê Thị Nhung - 11183872
3. Nguyễn Thị Ngọc Anh - 11180359
4. Nguyễn Phương Anh - 11180310
5. Trương Mai Chi - 11180804

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Contents
I. INTRODUCTION OF VOLVO CARS.........................................................................................2
1. Overview about The Volvo Cars................................................................................................2
2. Product lines of Volvo Cars overview.......................................................................................4
II. VOLVO CAR BUSINESS MODEL AND PRODUCT CHARACTERS......................................5
1. Volvo Car Business Model And Product Characters.................................................................5
2. Volvo Cars Supply Chain Overview..........................................................................................9
III. MOTIVATIONS TO ESTABLISH GLOBAL SUPPLY CHAIN OF VOLVO CARS...........13
1. Lower cost...............................................................................................................................13
2. Improves Customer Service and Satisfaction...........................................................................13
3. Improving quality and capability.............................................................................................13
4. Sustainability...........................................................................................................................13
IV. Analyse the factors/drivers affecting the decisions of enterprises in implementing the functions
of supply chain management...............................................................................................................15
1. Market Globalization Drivers..................................................................................................16
2. Cost Globalization Drivers.......................................................................................................17
3. Government Globalization Drivers..........................................................................................18
4. Competitive Globalization Drivers..........................................................................................19
V. ANALYZE THE GLOBAL SUPPLY CHAIN MANAGEMENT ACTIVITIES........................19
1. Analyse global supply chain of Volvo Cars.............................................................................20
2. Strength and Weakness............................................................................................................30
3. Volvo Cars after acquired by Geely.........................................................................................30
VI. RECOMMENDATION...........................................................................................................31

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I. INTRODUCTION OF VOLVO CARS
1. Overview about The Volvo Cars
Volvo Cars is a Swedish automotive manufacturer of luxury vehicles headquartered in
Gothenburg, Sweden.
Volvo Cars was founded in 1927, was originally a subsidiary of bearing manufacturer SKF.
Automobile manufacturer Volvo Cars was part of AB Volvo until 1999, when it was acquired
by Ford Motor Company and became part of Premier Automotive Group. Since that time, the
heavy truck and construction equipment conglomerate AB Volvo and Volvo Cars have been
independent companies. Since 2010 Volvo Cars has been owned by the Chinese
multinational automotive company Geely Holding Group. Both AB Volvo and Volvo Cars
share the Volvo logo and cooperate in running the Volvo Museum in Sweden.
Volvo operates production facilities in several countries and markets its products worldwide.
Volvo's main markets are China, the United States, Sweden, United Kingdom and Germany.
Volvo Cars has been a leader in the field of car safety for decades. The company has been at
the forefront of ensuring driver and passenger safety in their cars ever since they invented the
3 point safety belt, which, later on, became standard on all cars. Later on, Volvo continued to
develop other safety technologies such as Rearward-facing child seat (then developed to
integrated booster cushion), Blind Spot Information System (BLIS), City safe system, etc. All
of Volvo’s innovations in the domain of road safety can in large part be attributed to the
company’s state of the art crash testing facilities. Needless to say, Volvo takes the safety of
its cars very seriously.
Mission
“We have made it our mission to make life easier, better and safer for everyone. For a better
future. We want to provide you with the freedom to move in a personal, sustainable and safe
way.”
Personal. With new models of car ownership and attractive services whenever and wherever
you need, they aim to make your life less complicated.
Sustainable. To protect the world we share, they must do more than merely electrify their
cars. They are committed to rethinking sustainability in our operations, in their cars and in
society.
Safe. They make cars for people who care about other people. So when it comes to safety,
they think just as much about your surroundings as they do about you and your passengers.
Vision
“We want to lead in safety, core computing, electrification, autonomous drive technology
and direct customer relations”
Safety

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Volvo Cars will continue to focus on developing the next level of safety and autonomous
drive standards. Their future models will benefit from core computing power and over-the-air
upgrades of software, 50 per cent of which should be developed in-house by mid-decade. In
addition to in-house development of technology and software, they will continue to build
existing and new strategic partnerships with global technology leaders.
Sustainability
Sustainability is as important to Volvo Cars as safety. By working towards climate-neutrality,
embracing the circular economy and conducting our business operations responsibly, they
help protect the planet and contribute to a fairer society. Volvo Cars has a comprehensive
climate plan which addresses carbon emissions across all its operations and products, towards
its ambition to become a climate-neutral company by 2040. The plan goes beyond addressing
tailpipe emissions through electrification; the company will also tackle carbon emissions in
its manufacturing network and wider operations, its supply chain and through recycling and
reuse of materials. As a first tangible step towards its 2040 vision, the company aims to
reduce its lifecycle carbon footprint per car by 40 per cent between 2018 and 2025.
Core values
“Today, we’re still as focused as ever on our three core values: safety, quality and care for
the environment”
Safety
The unfortunate truth is that motor accidents are one of the primary causes of death each
year. In light of this distressing fact, Volvo is placing a greater emphasis on safety with their
newer vehicle lineups. Their engineers are dedicated to not only improving the architecture of
their models to reduce injury in the event of a collision but to creating innovative
technologies that will prevent them as well.
Quality
Volvo knows that most drivers spend a significant portion of their day on the road. That is
why they aim to produce high-quality vehicle. Designed with sophisticated artistry and
constructed with the utmost craftsmanship, every model encapsulates Scandinavian ingenuity
at its finest. Profound performance and captivating good-looks are what make driving
worthwhile, after all.
Environment
With respect to environmental concerns, Volvo plans to shift its platform to a more
sustainable one. Acting as the foundation for their inner business workings, product
development, and services offered, it will provide a more environmentally-conscious option.
In turn, the hope is to encourage a conversation about related issues and plausible
countermeasures.
2. Product lines of Volvo Cars overview
Volvo Cars sells premium-segment car models in three segments: sedans (S60, S90), versatile
estates (V60, V90) and SUVs (XC40, XC60, XC90).

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Sport utility vehicles (SUVs)
Volvo's most famous model is the SUV. For more than a decade, the XC60 model has been
ever-present in the top tier of one of the most competitive segments on the market. It has been
Volvo Cars’ top seller since 2009, and up until 2020, it has reached over 1.68 million units
sold worldwide. In 2020 alone, the XC60 reached almost 200,000 units sold and accounted
for nearly 29 percent of Volvo Cars’ total sales. In terms of market share, it was the most
popular car in the European mid-size premium SUV segment and took its place in the top five
in the same segment globally.
In 2016, Volvo Cars presented several new safety features with the launch of the new XC60.
A steer support functionality has been added to Volvo’s City Safety autonomous emergency
braking system, while a new system, Oncoming Lane Mitigation, uses steer assist to help
mitigate head-on collisions. Volvo’s Blind Spot Information System (BLIS) has also been
updated with a steer assist function to reduce the risk of lane-changing collisions.
In 2020, in terms of safety upgrades, the XC60 now comes equipped with Volvo Cars’ latest
Advanced Driver Assistance Systems (ADAS) sensor platform, a modern, scalable active
safety system that consists of an array of radars, cameras and ultrasonic sensors. This
platform enables the development and deployment of active safety systems in the XC60, such
as the detection of other road users, automatic braking and collision avoidance. It also allows
for gentle driver support from standstill up to highway speeds, through the Pilot Assist
function.
Besides the popular model XC60, last year, Volvo Cars launched its first fully electric car,
the XC40 Recharge, in markets around the globe. The XC40 Recharge and the Recharge car
line are tangible proof points that represent concrete actions supports Volvo Cars’ ambition to
become a climate-neutral company by 2040.
The XC40 Recharge is everything customers expect from a Volvo, with the addition of a
state-of-the-art, fully electric all-wheel drive powertrain that offers a range of over 400 km
(WLTP) on a single charge and output of 408hp. The battery charges to 80 % of its capacity
in 40 mins on a fast-charger system.
The Android-powered infotainment system is fully integrated with Volvo On Call, the
company’s digital connected services platform. Via Volvo On Call plug-in hybrid drivers can
track how much time they spend driving on electric power.
While three models of Volvo SUV differ in size, power, and features; they share true
crossover convenience, upscale interior accommodations, and the inspiring Scandinavian
design and craftsmanship that Volvo is famous for.

II. VOLVO CAR BUSINESS MODEL AND PRODUCT CHARACTERS

1. Volvo Car Business Model And Product Characters
a. Business Model

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Volvo Cars Corporation: Shifting from a B2B to a “B2B+B2C” Business Model: Creating direct
customer relationships through new businesses: The transition to an integrated online-offline
sales approach, whereby Volvo Cars create direct customer relationships through online sales,
builds on the strengths of both their retail partners and themselves. The continued collaboration
is a prerequisite for this to be successful, capturing business opportunities together.
Volvo is undertaking a deep transformation in its business model leveraging four digital
technologies: mobility, social media, analytics and smart embedded devices. The intent is to
develop a more direct relationship with the end-customer without disrupting the relationship
dealers have with their customers.
The integration of circular economic processes into their operations increased, with a
strengthened focus on resource efficiency, recycled materials, and remanufacturing.
Investments in designing, developing, and producing electric motors in-house Volvo Cars
opened a new e-motor lab in Shanghai for the development and testing of electric car
components. It will also assemble e-motors at our powertrain plant in Skövde, Sweden, and plan
to establish a complete in-house e-motor production by mid-decade.
Volvo Cars and Geely intend to merge existing combustion engine operations to maximize
economies of scale and reduce the fixed cost base as Volvo Cars as capital employed. Improve
their performance by synergies from collaboration with companies within Geely Holding. By
jointly developing new technologies, Volvo Cars can deploy them faster and bring about quicker
development cycles. Working together with their sister brands is also expected to generate Volvo
Cars procurement costs, shared development costs, and other economies of scale.

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Creating value with strong partnerships: Together with Geely, as Volvo Cars as with companies
outside the broader Geely Group explore new areas of cooperation and ways to achieve
synergies and deliver long-term value.
• Strategic affiliates Polestar and Lynk & Co to create competitiveness and strong
synergies
• Joint development and investments in next-generation scalable platforms and
manufacturing
• Partnerships within the areas of charging infrastructure, connectivity, safety, and
autonomous driving
b. Product Characters
Sustainability
Volvo has already taken some steps to reduce emissions in its supply chain. This includes greater
use of sustainable materials in their cars, such as recycled plastics, and lowering the carbon
intensity of their major materials, including steel and aluminum. They are also putting
requirements on some of their direct suppliers to use renewable energy in their production, as
they have with two of their battery suppliers, LG Chem and CATL. They have set the ambitious
goal of reducing their supply chain emissions by 25 per cent per car by 2025.
They commit to the highest standard of sustainability in mobility to protect the world we share.
They are authentic, responsible change-makers. Their commitment to responsible business
conduct and our ethical values run through everything we do.
2020 marked the beginning of their journey towards full electrification of their model portfolio.
Electric Volvos deliver on everything that customers expect from a Volvo, with the bonus of
zero tailpipe emissions. By investing in electrification, they are investing in growth. Whereas
other parts of the market are in decline or show very limited growth, demand for electrified cars
is strong in the premium segment. That demand growth applies to both fully electric cars as well
as plug-in hybrid models, or as we prefer to call them: parttime electric cars. They continue to
invest in more fully electric models, new vehicle platforms designed for electrification, as well
as in-house electric motor, design development and production. Their EU fleet average CO2
emissions fell from 132 g/km in 2019 to 111 g/km in 2020, mainly due to increased sales of our
plug-in hybrids. That also helped us to exceed our individual EU emissions target in 2020.

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Safety
Volvo Cars commit to pioneering the safest, most intelligent technology solutions in mobility
and everyday life to protect what is important to people.
● Driver assistance systems
In addition to occupant protection features such as airbags and crumple zones, they have added
driver assistance systems that can help avoid and mitigate collisions. These systems also support
you with manoeuvring or parking.
● Speed cap
To send a strong signal about the dangers of speeding, it reduced the top speed of all our new
cars to 180 km/h in 2020. They are also looking at how smart speed control and geofencing
technology could automatically limit speeds near schools and hospitals in the future.
● Highway pilot
With support from LiDAR sensors, the next generation of Volvo cars will be hardware-ready for
autonomous drive. And over time, they push out over-the-air software updates to provide fully
autonomous highway driving.
● Driver monitoring cameras
To help address intoxication and distraction in traffic, they are working on new in-car solutions.
Driver monitoring cameras, together with other sensors, will allow the car to intervene when a
clearly intoxicated or distracted driver risks serious injury or death.
● Care Key

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They’ve recently introduced the Care Key, aimed at addressing speeding. With the Care Key,
Volvo car owners can put a speed cap on the car when lending it to a younger family member or
less experienced driver as a way of ensuring a safer ride.
With such technologies, if a clearly distracted (or intoxicated) driver does not respond to
warning signals and risks a serious, potentially lethal accident, the car could intervene as a last
resort by actively slowing down and stopping the car
Example: XC40 Recharge serves as a blueprint for designing safe, fully electric cars, as our
safety engineers performed a comprehensive review of requirements for a car without an internal
combustion engine and with a lithium-ion battery. The result is still one of the safest cars on the
market, but with safety technology adapted to a new powertrain.
Personal
They commit to developing and building the most personal solutions in mobility: to make life
less complicated and to protect your freedom to spend time and energy on the things that matter
most. Their products and services are personalised, familiar and luxurious.
● Open architecture Android based in-car infotainment services
Team up with Google on an infotainment system powered by Android Automotive, with popular
Google services built-in. Address human behaviour and use technology as a support to make
people better. In recent years, for example, the rise of smartphones and touch screens inside cars
has sparked a growing debate around the dangers of distraction behind the wheel. But their
safety experts say that distraction is a fact of life, and that technology should be used to support
people in their daily communication.
● Convenient connected services provided via Volvo Cars’ mobile app
Volvo Cars is the first traditional car maker to announce a shift to all-out electrification. It would
be a gradual shift, driven by customer demand.
● Simplified online product offering with care package as standard
Starting in 2021, all our fully electric cars will be offered online only, through a completely
revamped online sales channel. A renewed volvocars.com will be an addition to our other sales
channels such as retail partners and inner-city studio concepts, making sure that customers can
access a Volvo where and how they want.
At the same time, we will reduce the complexity of our offer and make more cars available for
quick delivery. And for those buying online, we will enhance the offer to add convenience and
include insurance and service – all for a nationally, pre-negotiated price where legally possible.

2. Volvo Cars Supply Chain Overview

a. BTO Supply Chain Model
With the traditional wholesale model, Volvo Cars produce both built-to-order (BTO) and build-
to-stock (BTS) and the distribution volume differs between markets. According to Volvo, in the
European market, there is a high rate of BTO cars because customers prefer to modify their cars

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and decide on more premium features and specifications than in the US for example. This means
that the customer modifies the car to their needs but also that the lead time increases. The order
is specifically customized for the customer right from the start until the car it is built. The BTO
cars flow through Volvo´s supply chain and are required to arrive at the dealer at the right time,
at the right quality and quantity in order to meet customers’ expectations regarding delivery
promise.
Volvo Cars and suppliers are interdependent on each other. Volvo Cars are dependent on
suppliers for the components to assemble ordered cars, and suppliers are not only dependent on
Volvo Cars for orders but also for the timely and accurate information.
The main obligation for Volvo towards its suppliers is to provide them with right information
and continuously update. For BTO production such ICT systems should be pre-requisite, to carry
out operations efficiently and effectively. The ICT system increases the elements of
responsiveness and flexibility in the operations, which is healthy for BTO supply chain. With
such system in place there are fewer chances of mistakes by the actors. So, suppliers and Volvo
works closely to deliver the vehicle for the orders they received with the support of ICT system.
The BTS cars usually have more standard features specific to a particular market than BTO cars
which means that Volvo can offer shorter lead times on these cars. The BTS cars have been
configured to a forecasted demand but can be adjusted by the dealer to specific customer
requirements with aftersales modifications. In the US market, many customers prefer going to
the dealership and buying a car off the shelf because they want their car with a short lead time
(Volvo Cars, 2021). When it comes to the distribution of BTS cars they are allocated to the
customer later down the pipeline in the supply chain and these cars are either shipped to the
dealer or kept in the stock location for some time. While at a stock location there is a need to
perform maintenance on stocked cars to keep the right level of quality and charging level with
electric vehicles before receiving an order for the car from the dealer.
Volvo partners with other actors to perform activities like sales and transportation through their
dealer network and collaboration with Logistic service providers (LSP). The LSP’s help Volvo
to transport their cars to the dealers through road, railway, and by sea globally but also perform
smaller services as PDI at the stock locations and is a vital partner in accordance with (Banks &
Hajibashi, 2021). The dealers in the next step are now performing all the handover parts and
have a vital role in handling the interaction with the customers, providing them with information
and handling after-sales regarding maintenance, services, and representing Volvo Cars as a
brand. Additionally, dealers handle all the activity of test driving when customers visit the
dealership and have direct contact with the customer. This is the actual physical interaction
between the brand and the customers, representing last-mile delivery which makes this an
important touchpoint for the dealers to perform professional handovers and provide the customer
with a premium experience. Volvo Cars state that a satisfied customer will spread the word to
their friends and families and directly affect the brand image and future sales which is in line
with Yavorsky et al.

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The customer or dealer places the order in virtual order bank (VOB), which coordinates all the
requirements placed upon the system, which are:
● Feasibility check
● Order booking
● Order status information
The customer and dealer are external actors in this supply chain, who produce the order load
within the system. In the production network, the actors are final assembly plants (FAPs),
external assembly service provider (EASPs), BTO suppliers and build to stock (BTS) suppliers,
and for these actors, customer and dealer, the following requirements were identified by the Ost
& Mandel (2008):
● Car configuration
● Order configuration

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 ● Order tracking
The sequencing is the result of the interaction between the actors of production network and the
VOB. This figure gives the basic understanding to the readers about the order arrival, order
processing, production at suppliers end and final assembly of the vehicle.
b. Block chain
Volvo Cars will become the first carmaker to implement global traceability of cobalt used in its
batteries by applying blockchain technology. Volvo Cars has now reached an agreement with its
two global battery suppliers, CATL of China and LG Chem of South Korea, and leading global
blockchain technology firms to implement traceability of cobalt starting this year.
Technology firms Circulor and Oracle operate the blockchain technology across CATL’s supply
chain following a successful pilot earlier this summer, while the Responsible Sourcing
Blockchain Network (RSBN), together with responsible sourcing specialists RCS Global and
IBM, is rolling out the technology in LG Chem’s supply chain.
Traceability of raw materials used in the production of lithium ion batteries, such as cobalt, is
one of the main sustainability challenges faced by car makers. Volvo Cars is committed to full
traceability, ensuring that customers can drive electrified Volvos knowing the material for the
batteries has been sourced responsibly.
Circulor’s blockchain technology is today used throughout Volvo Cars’ battery supply chain,
which will achieve 100 per cent traceability of cobalt used in the XC40 Recharge P8, its first
fully electric car. Production of the XC40 Recharge P8 will start later this year in Ghent,
Belgium.
In this particular case, data in the blockchain include the cobalt’s origin, attributes such as weight
and size, the chain of custody and information establishing that participants’ behavior is
consistent with OECD supply chain guidelines. Blockchain technology, which establishes a
transparent and reliable shared data network, significantly boosts transparency of the raw
material supply chain as the information about the material’s origin cannot be changed
undetected.
“We have always been committed to an ethical supply chain for our raw materials,” said
Martina Buchhauser, head of procurement at Volvo Cars. “With blockchain technology we
can take the next step towards ensuring full traceability of our supply chain and minimising
any related risks, in close collaboration with our suppliers.”
The investment in Circulor by Volvo Cars allows both companies to expand their focus
beyond cobalt, for example by looking at increasing traceability of mica, a mineral used as
isolation material in the battery pack of electric Volvos.
Volvo Cars and Circulor are also investigating the possibility to expand their blockchain
technology cooperation to other areas, for example tracking and reducing CO2 footprints,
helping Circulor to potentially set standards for ethical sourcing in automotive and other
industries.

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III. MOTIVATIONS TO ESTABLISH GLOBAL SUPPLY CHAIN OF VOLVO
CARS
1. Lower cost
Developing global Volvo’s manufacturers network and outsourcing means taking advantage
of the differences in national factor costs between developed and developing countries, such
as wage patterns and level of technology and labor skills. Moreover, global inventory and
transportation management help exploit economies of scale.
For example, Volvo has outsourced its IT operations to HCL Technologies, along with 2,500
staff from 11 countries that comprised part of its IT team.The five-year outsourcing
agreement marks a dramatic shift for Volvo, from providing its IT largely in-house to relying
on the Indian outsourcer to deliver its technology roadmap. Thus, taking advantage of highly
specialized experts in information technology and low labor costs in India will help Volvo
reduce a lot of costs in terms of labor, social insurance, taxes, etc. ..
Furthermore, the global supplier networks increase material and components availability,
resulting lower-price finished products.Finally, establishing cost-efficient distribution centers,
inventory management systems, and transportation options helps Volvo minimize its total
cost.
2. Improves Customer Service and Satisfaction
Volvo with established supply chains will make better quality products due to the efficiency
of their production processes. When Volvo organizes their operations and has an effective
supply chain, the ultimate benefit is that it improves their ability to serve and satisfy their
customers.
For example, Volvo partnered with Nvidia for self-driving technology in cars. They will use
technology company Nvidia's new Drive Orin processor to power their self-driving
technology. The brand will also use Nvidia's Drive Xavier chip to power functions such as
the firmware, power management system and driver assistance technology. Volvo says this
change to a centralized computing system (managed by two main chips) will make its cars
safer. Currently, Volvo is already one of the safest cars in the world, but to make customers
more satisfied with their products, they continuously improve from the design to the
functions in the car through third-party.
3. Improving quality and capability
Volvo's automotive cars can learn from other suppliers. External supply chain partners bring
capabilities, solutions and expertise that will take the company several years and significant
capital outlay to develop in-house. The expertise they bring to the table can be extremely
valuable, especially if they specialize in your region, industry and vertical. They also leverage
operational excellence tools that help to boost efficiency and productivity in business
operations.

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 4. Sustainability
Volvo focus on using sustainable materials, using solar panels, heat and cooling to
manufacture cars. They aim for 25 per cent CO2 reduction from 2020 to 2025, which is to
roll it out globally. Because they recognise the benefits of minimising the need to extract
finite resources, efficiently use resources make eliminate wastage and help reduce their
overall carbon emissions. Thus Volvo cars are moving away from the linear economic model
and applying circular economic principles in order to secure future availability of materials,
as well as ensure efficient raw material usage. Volvo cars recently became a Member of the
Ellen MacArthur Foundation (EMF), the world’s leading organisation driving the transition
to a circular economy.
Volvo Car Corporation and Siemens jointly advance the technical development of electric
cars through extensive strategic cooperation. By 2030 Volvo has an ambition of reducing
their emissions and the goal of having fully electric cars. Therefore, Volvos' LSPs need to
invest in their electric vehicle fleet to match Volvo's sustainability vision and demands of
reducing emissions. Modern yards with electrical charging stations are also vital. They should
be located close to cities to minimize transportation distance and cost for the last-mile
delivery to dealers or direct to consumers.
Sustainability of products is promoted which makes Volvo Cars' global supply chain
currently.

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IV. Analyse the factors/drivers affecting the decisions of enterprises in implementing
the functions of supply chain management

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 1. Market Globalization Drivers
a. Lifestyle
COMMERCIAL OFFERS IN TRANSITION 
The challenges around the technology shift are transforming the traditional cars business
model as Volvo Cars know it. The transition from the traditional 'Cars-as-a-Product' business,
to also include the new 'Cars-as-a-Service' business, is focusing not only on selling cars, but
also providing full and flexible automotive mobility services. Volvo Cars embrace the new
landscape and are acting rapidly to capture the additional opportunities that direct
relationships with consumers provide. 
This change in customers’ minds leads to the change in how the company accesses
customers, not only sells the products but also sells service.

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 b. Rising population
BROAD-SCALE MOBILITY 
In an increasingly urbanizing world, cities are facing several issues related to traffic and the
environment; think of problems around air quality, congestion, and traffic safety. As they
tackle these issues via, for example, diesel bans, congestion taxes, and incentive schemes for
Cars/ride-sharing, the nature of urban mobility are changing and new models of access to cars
emerge.
c. Sustainability at Customer Levels
ENVIRONMENTAL INDUSTRY DRIVERS 
The automotive industry is moving towards electrification, driven by environmental concerns
and regulatory restrictions on CO2 and NOX emissions. These aim to tackle the emissions
that come from the lifecycle of a car, manufacturing, logistics, and tailpipe emissions. Yet
with the emergence of electrification, additional challenges have emerged. Cars makers now
need to consider the second life of lithium-ion batteries as Volvo Cars responsible supply
chains.

2. Cost Globalization Drivers

a. Product Development
Commercializing technologies with disruptive new business models will help them reach this
goal. Autonomous, electric, and connected solutions come with multiple opportunities for
saving costs, lives, and resolves through sustainable transport. 
As a start, Volvo Cars have set the highest engine class restrictions for purchased transports
in each market and Volvo Cars target to reduce CO2 emissions from transports per produced
unit by 30% by 2025, with 2018 as the base year.
b. Costs of Doing Business
Sharing economy business models, artificial intelligence, and machine learning will optimize
goods flow and lead to a reduction in transport needs and save valuable natural resources 
By developing Volvo Car’s own logistics systems, service solutions and applying new
business models, Volvo Cars believe it is possible to double the productivity of Volvo
systems by 2030.
c. Timing & productivity
Cary by Volvo and Stay Home Store are the benefit of reducing complexity in our offer,
which is demonstrated by customer feedback and usage data in our online car configurator.
The range and flexibility of the offering mean that solutions can be tailor-made for each
customer to maximize uptime and productivity.  That allows it to offer many of our models
on ‘instant’ delivery, whereby waiting times amount to a few weeks rather than several
months for a car built to order. Making this change requires considerable adjustments to our

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commercial and industrial operations. On the other hand, it will allow the company to be
more efficient in its operations and deliver on customer expectations in a much better way. 

3. Government Globalization Drivers

a. Policies and regulations
New or changing laws, regulations, and government policies will affect Volvo’s business.
The number and extent of legal and regulatory requirements to Volvo business are expected
to increase in the future, especially relating to the environment. Currently, the EU fleet
average CO2 emission requirement is one of them. Volvo Cars’ products, services, and
operations are subject to comprehensive and constantly changing laws, regulations, and
policies throughout the world. The has to fulfill corporate fleet requirements regarding
emissions. Changes in corporate and other taxation policies as Volvo Cars as changes in
export/import policies and other restrictions/incentives given by various governments on
tariff policies could also affect Volvo Cars’ results of operations and financial condition.
To comply with the emission requirements that affect the vehicle industry, Volvo Cars is
working through some different activities: 
- Continuously assessing technical capabilities, commercial impact, supply status, and
regulatory updates 
- Balancing road load (Volvo Carsight, aerodynamics, rolling resistance, friction/ losses and
auxiliary loads)
- Market penetration of BEV and PHEV to ensure market compliance 
- Increased focus beyond the 2021 legislation to minimize the negative effect of potential
changes, legal and regulatory awareness and preparedness is established in all areas that
might affect Volvo Cars’ business and financial condition.
b. Tariff barriers
Brexit has an impact on Volvo Cars. Volvo will be forced to scale back its UK model line-up
if Britain significantly diverges from EU rules after Brexit, the Cars maker’s chief executive
has warned.
British Cars have the same standards as EU vehicles but if UK rules change significantly
after Brexit, Carmakers will be forced to pay for additional crash tests and customized
emissions systems to make them compliant, something that would potentially cost each
company millions and make them question the viability of servicing the UK market.
Volvo has plants in Europe, China, and the US, and was forced to reallocate some of its
products in response to the trade war between the US and China.
Countries or trading blocs that impose tariffs on imported vehicles to protect their industries
Volvo Cars “not very smart”, singling out China and Europe for imposing levies on foreign-
built vehicles.

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While the EU charges 10 percent on Cars coming in and China’s tariffs are 25 percent, the
US levies are much smaller at 2.5 percent.
“The US is a more open market,” Mr. Samuelsson, CEO of Volvo, added. “Volvo Cars
should not go in the direction of 25 percent but in the direction of 2.5 percent or, even better,
zero.”

4. Competitive Globalization Drivers

a. Talent
For years, Volvo was a brand stuck in a rock and a hard place. Its cars didn’t match up with
those of top luxury brands like Mercedes, BMW, and Audi, yet the company could not
compete with mass-market leaders like Toyota and GM. Under new ownership (Volvo was
sold to China’s Geely by Ford in 2010), the Volvo Cars automaker decided to transform its
product line by becoming a premium player. “Once, you needed mechanical engineers.
Today, there’s a greater need for software engineers because Cars are computers more than
anything else.” Sallstrom had a second reason for looking outside the company: He and
Jacoby believed that only an infusion of fresh talent could transform Volvo’s culture into an
entrepreneurial one. Volvo took three critical steps to ensure that its outside-in transformation
would work. 
b. Strategic alliance
To adapt to the new competitive scenario in the global automotive industry. Thinking that it
was too small to survive alone, Volvo entered into a complex alliance and industrial
agreement. At the time of acquisition, both partners had their respective strengths and
weaknesses. Volvo had a global reputation and brand recognition, high technology, and
innovation strength, whereas Geely had a mass-market, rationalization and cost control, and
adaptability to fluctuating markets, as China is a price-sensitive market. Volvo Cars, the two
s also had structural Volvo Cars weaknesses. At first glance, this cooperation seemed to be
very risky, also because after spending money on the acquisition, Geely was at a dangerously
high debt-asset ratio. 
For Volvo, the acquisition not only created an opportunity for the Volvo Carmaker to expand
in the growing Chinese market in the premium sector but also enabled the firm to seek new
markets with middle- to high-income customers, thanks to the competitive advantage of
Volvo brands combined with the cost-cutting solutions offered by Geely. During the
acquisition process, Geely already Volvo Cars its strong attention to the core value of Volvo
assets, especially regarding the intellectual property (IP) rights.
In the following years, Volvo invested in the same provinces and municipalities, in Chengdu,
Daqing, and Shanghai, creating new greenfield factories and an R&D center. This choice by
local governments could be interpreted as an instrument of regional and industrial
development policy, attracting in their territories a new huge automotive investor, able to
create skilled jobs and multiple local linkages promoting growth. It was a sort of a new type
of public-private partnership.

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V. ANALYZE THE GLOBAL SUPPLY CHAIN MANAGEMENT ACTIVITIES
Collecting customers’ insight and ordering
Volvo Cars demonstrates its investment in Market Research through the establishment of an
AI application research center in Sweden.
After understanding what customers want and need, in order to meet them, Volvo Cars in
recent years has strongly invested in R&D to produce competitive products in terms of fuel
economy, safety, and safety. safety, care about the environment ... satisfy the needs of
customers.
Starting in 2021, all their fully electric cars will be offered online only, through a completely
revamped online sales channel. A renewed volvocars.com will be an addition to their other
sales channels such as retail partners and inner-city studio concepts, making sure that
customers can access a Volvo where and how they want.
At the same time, they will reduce the complexity of their offer and make more cars available
for quick delivery. And for those buying online, they will enhance the offer to add
convenience and include insurance and service – all for a nationally, pre-negotiated price
where legally possible.
The lessons drawn from products like Care by Volvo and initiatives such as the Stay Home
Store will help during the ongoing commercial transformation. While new insights are
constantly used in ongoing product development, some stand out more than others.
One example is the benefit of reducing complexity in their offer, which is demonstrated by
customer feedback and usage data in their online car configurator. Clearly, some customers
still prefer the ability to specify every single option on their new Volvo. But adding the
option of choosing from a selection of pre-configured, yet well-equipped models has proven
to be a great success. In several markets, conversion rates increased when adding more pre-
configured cars and simplifying the configurator on volvocars.com. The same adjustments
will now be rolled out on a much broader scale.
That allows it to offer many of our models on ‘instant’ delivery, whereby waiting times
amount to a few weeks rather than several months for a car built to order. Making this change
requires considerable adjustments to our commercial and industrial operations. On the other
hand, it will allow the company to be more efficient in its operations and deliver on customer
expectations in a much better way.
Their commercial transformation also entails changes to the relation with the customer and
the role of their retail partners around the world. As customers are becoming more used to
buying online, they want more convenience and transparency, and they want less complexity.
This new commercial era will happen together with our retail partners, but their role will
change.

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 1. Analyse global supply chain of Volvo Cars
a. Planning Process
Beginning in 2011 and extending into 2015, Volvo plans to invest $10 billion globally in an
aggressive product plan. The goal is to achieve sales of 800,000 cars by 2020 through a two-
pronged strategy. One part of the strategy is to establish China as the company’s second
largest market behind the United States.
The other part of Volvo’s growth strategy is to operate flexible assembly lines that support
multiple car models. Teamcenter and Tecnomatix process-development software help Volvo
achieve that manufacturing flexibility. Teamcenter allows Volvo’s product developers and
manufacturing engineers to collaborate and plan complex assembly lines. The software
enables developers and engineers to easily manage data related to product variants, parts,
users, product changes and process changes.
Volvo likes that Teamcenter links parts to tools and assembly processes, handles incremental
changes and provides users with the latest product data. These capabilities enable Volvo to
determine the impact of product and process changes across numerous car models.Volvo uses
several Teamcenter applications in the product-development process, including engineering
process management, life cycle visualization and requirements management. Tecnomatix
enables Volvo to transfer a large amount of manufacturing knowledge to its Chinese
operations. The software features several tools, such as Process Simulate and Robcad, which
let Volvo manage, plan and simulate production processes. At Torslanda, Process Simulate
and Robcad are used to plan and simulate the body-in-white, final assembly and paint lines.
Both tools feature a user-friendly interface. With Process Simulate, Volvo can accurately
simulate various scenarios within each robotic welding station on the body-in-white line—
then download the programs to the actual robots.Tecnomatix enables Volvo to assess the cost
of a new assembly line early in the design process. This capability helps the program
manager identify the most suitable design concept for meeting Volvo’s quality, capacity and
cost targets. The software also allows Volvo to easily change current assembly lines. For
example, at the company’s plant in Ghent, Belgium, a battery insertion workstation had to be
added to the final assembly line to produce an electric version of the C30 vehicle.
Tecnomatix enabled Volvo to make the change quickly and cost-effectively.

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 b. Procurement
Materials
Recent reports reflect Volvo Cars' own vision for the future of materials. They are
moving towards eco-friendly materials and sustainable solutions. In the coming years,
Volvo Cars will launch a whole new line of electric vehicles, and by 2030 it aims to
offer only all-electric cars - all free of leather.
They are moving away from the linear economic model and applying circular economic
principles in order to meet their climate ambitions, secure future availability of materials, as
well as ensure efficient raw material usage and waste management practices. This means that
they are transforming the way their products are designed, produced and used, and that they
support SDG 12 and SDG 13. Volvo Cars has the ambition to be a Circular Business by
2040. From 2025, their aim is that their adoption of the circular economy generates annual
cost avings of MSEK 1,000 and carbon emission reductions of 2.5 million tonnes (2018
baseline). This will be done by:
• Using 25 per cent recycled and bio-based materials in their cars by 2025, and by using the
most sustainable options when selecting materials such as wool and wood
• Increasing resource utilisation and minimising waste, including through reducing
production related waste by 20 per cent per produced unit between 2018 and 2025
• Retaining component value, including through reusing, refurbishing and remanufacturing
parts
• Developing new business opportunities which optimise the efficient lifecycle of their
products and components Volvo Cars recently became a Member of the Ellen MacArthur
Foundation (EMF), the world’s leading organisation driving the transition to a circular
economy. This will help both drive their internal adoption of the circular economy, as well as
promote wider adoption within industry.
In addition, they use sustainable materials such as recycled plastic, sustainable
aluminum and steel …
Volvo Cars’ remanufacturing programme restores replaced parts to their original
specifications to realise both environmental and financial savings. A remanufactured part
requires up to 85 percent less raw materials and 80 percent less energy compared to a new
part. In 2020, the programme saved approximately 271 tonnes of steel and 126 tonnes of
aluminium. The energy saved corresponds to a carbon dioxide emission reduction of 4,116
tonnes per year.
Sourcing Process
The process of developing a car is highly complex and involves many different departments
within the company, as well as external actors such as suppliers. The purchasing function is
involved almost from the beginning to the end through the activities: Sourcing, Ordering and
Product Quality Assurance. It is also common for suppliers to be involved early in the
development stages. Research and development (R&D) define the technical specifications,

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including for example functional and appearance requirements. Suppliers are then selected
during the sourcing activity, which starts with a request for information where suppliers
provide general information about their company and its products or services. Based on this
information Volvo Cars invites suppliers to place bids on e.g. the component to be
produced/outsourced through a RFQ. Included in the RFQ are the demands on the component
as well as what requirements the suppliers themselves will need to fulfil in order to become
business partners. Volvo Cars uses the supplier evaluation model and manufacturing site
assessment to evaluate its potentially new and current suppliers. The supplier evaluation
model is implemented during the selection process. The MSA is a tool that supplier quality
management (SQM) uses to evaluate potentially new and existing suppliers on site (i.e. an
audit). After evaluating the answer from the RFQ, Sourcing Committees decide which
supplier(s) to select.
Supplier
Volvo Cars has approximately 700 business partners delivering production materials and
roughly 3,500 preferred suppliers delivering indirect products and services.
Volvo Cars’ cooperation with their suppliers is vital not only in terms of business continuity
and effectiveness but also in managing sustainability. The majority of the components used in
their vehicles are manufactured by suppliers, therefore their environmental and social
responsibility footprint is very important to Volvo Cars. The foundation of Volvo Cars
Procurement operations strategy is to incorporate and adapt sustainability activities into
Procurement’s day-to-day processes and tools. The Senior Vice President Procurement is
responsible for supporting and managing environmental and social responsibility related to
the supply chain.
2010, Volvo intends to minimize the number of activities which are not directly connected to
the development and assembly of the car.
Volvo‘s Torslanda plant, which is the main production facility of Volvo cars, the other is in
Belgium. Production at Torslanda is highly dependent on the suppliers, which are spread
across the close proximity of the plant. There are about 170 suppliers surrounding the plant,
which supplies different components and parts to the plant. The in-house production units
account for approximately 25% of the value of the components and systems in a car, whereas
external vendor‘s supplies sum for 75%.
Volvo Cars is committed to ensure that they only use metals and minerals whose extraction,
processing, trade and transportation have not directly or indirectly resulted in human rights
abuses, unethical business conduct, severe environmental harm or provided funding to
conflicts. As part of this commitment, they fully support the OECD Guidance for
Responsible Supply Chains of Minerals from Conflict-Affected and HighRisk Areas and
strive to continuously improve their responsible sourcing practices. Their Procurement
Position on Metal and Mineral Stheircing and Code of Conduct for Business Partners are
examples of key policy documents expressing Volvo Cars’ expectations and requirements
towards suppliers.

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To secure full transparency and traceability of 3TG materials (Tin, Tantalum, Tungsten and
Gold), they conduct annual conflict mineral supply chain investigations. The data collected in
this process is used to identify, assess and mitigate risks which in turn improves supply chain
performance from a responsible sourcing perspective. They request 3TG suppliers to declare
their due diligence measures and disclose the smelters used in their supply chain in a
company level Conflict Minerals Reporting Template (CMRT) provided by the Responsible
Minerals Initiative (RMI). As a member of the RMI, they also gain access to additional data
on upstream actors’ supply chain responsibility as well as tools to execute stheircing
decisions that improve regulatory compliance and support responsible sourcing from conflict-
affected and high-risk areas. By tracing the minerals in their supply chain and only buying
material from smelters and refiners validated to be conformant with the Responsible Minerals
Assurance Process (RMAP) – RMI’s third-party verification of smelter and refiner
management systems and stheircing practices – they can secure responsible sourcing in line
with global standards. The aggregated information creates the foundation of their due
diligence process for conflict minerals where they identify potential discrepancies, select
suppliers for independent OECD-aligned audits and follow-up on risk mitigation action plans
to address adverse impacts.
Volvo Cars’ target is to have 100 percent RMI approved 3TG smelters by the end of 2020. In
2017, they aligned with their suppliers and started to investigate the smelter's conformance
level with RMI requirements. 133 suppliers participated in this year’s conflict mineral supply
chain investigation. After evaluating the reported data, they conclude that the current level of
conformant smelters in the supply chain is 71.0 per cent. Volvo Cars may not have achieved
the ambition to become ‘conflict free’ yet, but they are strengthened in their conviction that
they must continue to work closely together with suppliers and sub-suppliers to prevent
human rights abuses and improve lifes upstream in the value chain. They recognise that due
diligence is an ongoing, proactive and reactive process. Information, due diligence practices
and risk monitoring systems will progressively be enhanced over time as a result of
constructive engagement with suppliers and other stakeholders.
Volvo Cars has signed long-term agreements with leading battery makers CATL and LG
Chem to ensure the global supply of lithium-ion batteries. Moreover, Volvo Cars is the first
carmaker to implement global traceability of cobalt used in their batteries by applying
blockchain technology. Technology firms Circulor and Oracle operate the blockchain
technology across CATL’s and LG Chem’s supply chain. Circulor’s blockchain technology is
today used to achieve 100 per cent traceability of cobalt used in the XC40 Recharge. In 2020,
Volvo Cars invested in Circulor through the Volvo Cars Tech Fund. The investment will
allow both companies to expand their focus beyond cobalt, for example by looking at
increasing traceability of other critical raw materials in batteries.
During the year, blockchain traceability has been expanded to include mica insulation sheets
and they have decided to increase the traceability of all critical raw materials in batteries, as
well as include CO2 consumption for the battery production.
To support the continuous improvement of working conditions on artisanal and small-scale
mining (ASM) sites, Volvo Cars collaborates with Better Mining. This ASM assurance and

24
impact programme, led by RCS Global, translates digital sustainability and due diligence data
into direct improvements on and around the sites. Trained monitoring agents are permanently
deployed to mining sites, where they record information on risks and incidents. The
information collected is verified by a team of experts who ensure completeness and follow up
with agents on any red flags or data anomalies. Monthly corrective action plans (CAP) are
issued through workshops with local stakeholders and implementation is overseen by the
agents. Volvo Cars receives communication on CAP implementation progress every quarter.
The monitoring programme, which at its peak this year included 16 sites, has so far been
focused on Cobalt, Tin, Tantalum and Tungsten in the Democratic Republic of the Congo
(DRC) and Rwanda. Volvo Cars engagement in Better Mining allows for upstream risk
mitigation, greater market access for responsibly ASM-produced minerals as well as a
tangible contribution to positive and quantifiable socio-economic impacts in mining
communities.
Since 2012, Volvo Cars has used the Volvo Cars Quality Excellence process (VQE) to
monitor suppliers’ performance in relation to their requirements and expectations, such as
delivery performance and quality. An award is given to acknowledge suppliers that are
successful in all evaluated sets of quality, manufacturing and delivery performance
disciplines. Since 2018, sustainability is a new separate element in the VQE evaluation,
showing that high sustainability performance is an absolute criteria to become an awarded
supplier. The VQE sustainability element is based on the SAQ, with a Volvo Cars unique
rating.
c. Production department
• Distribution Center: a large distribution center equipped with a high-tech management
system conveniently located to facilitate easy transportation access and enable Volvo cars to
be efficiently delivered to customers and distributors across the region.
• Pre-Delivery Service (PDS): this service provides Volvo vehicle condition inspection
services that meet our stringent world-class standards, with a software station for ensuring
that all software and systems are in perfect condition before the car leaves for delivery and is
the first of its kind to be launched in Thailand. This dedicated software program has been
developed specifically for Volvo cars only, ensuring each and every car that leaves the center
is in perfect conditions, this adds an additional level of confidence for distributors and
customers across the region.
• Parts Distribution Center: providing the management and distribution of Volvo car parts and
accessories supported by the latest in warehouse technology so as to enhance the efficiency of
both before and after-sales services as well as supporting the lifetime warranty for Volvo
parts and accessories (Customer Lifetime Parts Warranty).
• Training Center: the new Volvo mechanic and sales consultant training center, operated by
a team of experienced professionals from Volvo Cars (Thailand) Co., Ltd. The training center
has been transformed into a modern new workshop under the concept of Volvo Personal
Service (VPS) with an atmosphere that is elegant, airy, and resplendent in Scandinavian style,
reflecting the aesthetic found at all Volvo car centers throughout the country.

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• Press Car Center: developed specifically for the testing and performance of Volvo cars for
the press, all coordinated under the supervision of the PDS Center (Pre-Delivery Service
Center) and the Press Car staff, so as to provide Volvo car test drives for the media. With
VCT CDTC's extensive space, there is ample private parking space for the press with a 24-
hour a day security system, including a lounge area, and Volvo staff on hand to give
professional and informed advice on all cars and services.
Volvo Cars always prioritize the customer experience and know it is one of the most
important factors when it comes to owning a Volvo and as such makes every aspect of
Volvo's operations, from warehouse to showroom, align with this concept.
Manufacturing
Volvo Cars Manufacturing System (VCMS) is a global production system established by
Volvo Cars. Its goal is to pursue customer satisfaction. The VCMS mode of production
requires organizing production "with unified standards and sharing global resources". It
means that all of Volvo's global vehicle factories use core components and technologies that
share a unified design process, a unified manufacturing process, a unified testing process, and
a unified testing process. Unified after-sales service feedback process. Thus, the production
process will achieve excellent quality.
Volvo Cars is a multinational company with plants located in China, Sweden, and the U.S.A.
For most global markets, all Volvo cars are produced and assembled in Sweden. The plant in
South Carolina currently produces the Volvo S60. The company's main car production plants
are located in Gothenburg (Sweden), Ghent (Belgium), South Carolina (US), Chengdu and
Daqing (China).
In 2013, Volvo Cars started production at its manufacturing plant in Chengdu, China. This
plant produces Volvo cars for the Chinese and US markets. A second manufacturing plant in
Daqing, China started production in 2014, while Volvo Cars also has an engine factory in
Zhangjiakou, China. In the US, Volvo Cars is building a manufacturing facility in Berkeley
County, South Carolina, which opens in 2018.
Volvo Cars’ remanufacturing programme restores replaced parts to their original
specifications to realise both environmental and financial savings. A remanufactured part
requires up to 85 percent less raw materials and 80 percent less energy compared to a new
part. In 2020, the programme saved approximately 271 tonnes of steel and 126 tonnes of
aluminium.
Warehouse
Volvo Cars' centre distribution network is located in Gothenburg, Sweden. Nearly all of the
goods flowing in the network are being routed through this warehouse, with exceptions being
goods that are assigned for a specific car, for example a key or a painted bumper. Warehouses
are situated in all regions of the world to supply the best possible service to the customers. It
is however not possible to justify warehouses in all countries since the lack of customers in
some areas would make such a strategy very expensive. The large central warehouse in
Gothenburg has served a couple of support distribution centers (SDC) located strategically in
regions across the globe. In Volvo Cars, national distribution centers (NDC) are used which

26
work in a similar way as SDCs, the main difference being that they are more geographically
dispersed and serving one specific country with spare parts.
Example:
Volvo Cars Thailand officially launches an exciting and innovative new dedicated Volvo
warehouse for the first time in Thailand. The “VOLVO CAR THAILAND CENTRAL
DISTRIBUTION & TRAINING CENTER” (VCT CDTC) on Bangna-Trad Road Km 23,
Samut Prakan Province, spread over an area of 23,331 square meters, is set to become
Volvo’s one-stop hub in ASEAN and is the result of an investment of over 1 billion baht. The
warehouse can store up to 550 Volvo cars with efficient spare parts management. There is
also a comprehensive vehicle condition inspection department with world-class technology
ensuring that every Volvo delivered to dealers across the region, and for direct delivery to
customers, is in perfect condition. In addition, there is an international training center and a
dedicated performance-testing center for the press. This warehouse has been developed to
support future growth and expansion for Volvo's business in Thailand and is in line with
Volvo's strategic plan and vision of becoming a regional leader in the premium car business.
VCT CDTC warehouse, is specially designed for Volvo Cars Thailand, in collaboration with
their partners, the WHA Group. It is equipped with cutting-edge technology to manage
warehouse and spare parts stock and has been designed to support their long-term strategic
plans for Thailand. They focus on quality; all their new cars undergo a thorough quality
check and steps before being delivered to their retailers and customers. This level of care and
attention ensures every vehicle that leaves the warehouse is in perfect condition for the
customer. They have also planned ahead and installed a new battery charger for recharging
the electric cars they will be launching next year. They are confident that this new warehouse
will play a major role in moving Volvo's business forward in the future.
d. Logistic
VOLVO reserves the right to change the transport pick up days and frequency during the life
of the product without changes to the part price.
VOLVO considers suppliers with a transport lead-time above 72 hours as long distance
suppliers. VOLVO requires long distance suppliers to ship from a delivery point within 72
hours transport lead- time. For rush transports, maximum accepted lead time is 24 hours.
VOLVO has two solutions for deliveries depending on supplier footprint. If the supplier has
an existing delivery point within the required transport distance, this delivery point shall be
used (according to section 16). If a supplier does not have an existing delivery point, VOLVO
will provide a delivery point.
- Logistics Evaluation, MMOG/LE
The Global MMOG/LE is an industry-standardized tool used by VOLVO to assess business
partners’ conditions for a flexible, reliable, and cost-effective supply chain, and to guide
towards logistics excellence. Training is available on the tool from Odette/AIAG/JAMA.
Volvo Cars starts a revolution on rails

27
With growing sales and revenues in the global market for premium automobiles, Volvo Cars
has used sophisticated optimization measures and innovative logistics solutions to streamline
operations in China. After being acquired by the Geely Group in 2010, the 4flow
collaboration partner set ambitious goals for its future, including three key objectives:
reducing the number of accident-related deaths to zero by 2020, putting one million
electrified (hybrid or full electric) vehicles on the road by 2025, and making significant
improvements to Volvo owners’ quality of life through technological improvements like
autonomous driving and Care by Volvo, an alternative to owning or leasing a car.
In order to fund the measures needed to achieve these goals, operations in other areas of
Volvo Cars’ business needed to be streamlined in order to generate flow and to realize cost
savings. One prime focus was supply chain optimization between Volvo Cars’ plants and its
customers in Europe and China.
Previously, Volvo Cars had used rail transportation on a limited basis, and primarily as a
compromise between fast, expensive air freight and slow, inexpensive sea freight. In 2017,
the company ran its first pilot project dedicated to a full focus on rail transportation. As
opposed to shipping single containers or using proportional capacities on shared trains, Volvo
Cars ran full trains with three cars per container and 41 containers per train. The results were
impressive: damage rates for the shipped vehicles dropped to nearly zero, and lead times
were 36–40 days shorter than with sea freight. “The reduction in working capital we have
achieved on account of our rail initiative is significant,” said David Pansinger, Vice President
Supply Chain Management APAC at Volvo Cars.
The revolution on rails shows no signs of stopping – Volvo Cars has since extended its full-
train concept to further routes, including those that will allow them to import cars into China
from Europe. The vehicle manufacturer continues to see outstanding ROI on the initiative,
and it is planning for even more widespread use of rail transportation in its global future.
DHL Supply Chain, the global leader in contract logistics, was chosen by Volvo Cars Brazil
to take over the logistics management of the aftermarket business of spare parts for the
Swedish premium car manufacturer in Brazil. DHL Supply Chain collects the spare parts -
the vast majority imported from Europe - and transports them to 36 dealerships across the
country. More than 7.5 thousand SKUs and 26 thousand lines are managed annually. Despite
the pandemic, the automotive market has been recovering gradually and with an even greater
speed in the used car segment - which demands large amounts of spare parts. In September,
Volvo Cars reached the 2nd position in the premium car segment in Brazil for the first time,
with an 18.1% share. The manufacturer also stands out in the electric vehicle field, being a
leader in the plug-in hybrid segment with more than 1,800 vehicles sold in 2020 and a 60%
share.
From Gothenburg to Ghent and from Ghent to Italy, Austria and even China. The Volvo Cars
supply chain, from factory to user, covers sea, rail and sometimes road. A new train terminal
in the port of Ghent - a collaboration between Volvo Cars, Lineas and DFDS Seaways –
forms its central hub. Annually, it takes 5,000 trucks off Flemish roads. The new terminal
brings water, rail and road together and makes the Volvo Cars logistics chain faster, more
sustainable and cost-efficient. The turnaround time from factory to final destination is

28
therefore unprecedented. In addition, rail is a reliable transport solution that emits 9 times less
CO2 and 8 times less air pollution than road transport.
In the beginning of 2020, a major change in our European transport network was
implemented. This change from a point-to-point road network to a truly intermodal concept
using rail, sea transports and road transports with trucks running on renewable fuels, has
proven its capability of being flexible and stable, even under challenging pandemic
conditions. Each week, 5 trains leave the Czech Republic for the Port of Rostock where the
trailers are shipped on sea vessels to the Port of Trelleborg. In addition to the environmental
benefits of distributing more of the cars by train, this also means they reach their final
destination faster. Using various transport modes can reduce the time from factory to final
destination by up to 30 per cent. Furthermore, production materials are transported by rail
between Ghent and Sweden on a daily basis.
DHL Supply Chain and Volvo Cars have similar partnerships in Mexico, China, and Europe,
which also helped to bring the companies closer together. “We are adopting practices in
Brazil, such as satisfaction surveys and an exclusive online platform that enables real time
monitoring of the invoice issuance process and delivery lead times at the dealerships - those
are rare features in the Brazilian market, which helps a lot in the relationship with these
players,” explains the Director at DHL Supply Chain.
Another differential of this operation is the integration with the national distribution network
of DHL Supply Chain in Brazil. Currently, there are more than 2 thousand vehicles, 7
distribution centre and 14 branches being operated. Deliveries are made by road - and air, in
case of emergency deliveries - and DHL is responsible for planning the routes, handling the
cargoes, and transferring the spare parts along the whole route. In Capital cities, the massive
trucks of DHL Supply Chain are used for deliveries. To ensure end-to-end visibility of
operations, a control tower tracks and monitors each and every step of the process. The
logistics operator is also responsible for other aftermarket business in the automotive segment
in Brazil, which enables the safe sharing of freight and infrastructure. A recent DHL Supply
Chain survey showed that in 22 of the Capital cities in the country, 70% of dealers are located
within a radius of up to 4 km. This project also comprises deliveries to the marketing
department, such as free gifts and other actions aimed at strengthening the relationship with
various stakeholders.
The collaborative approach in the automotive aftermarket logistics enables many gains,
mainly in costs, frequency of delivery and standard of services. As a result, they have also
reduced the number of vehicles circulating in urban centers, thereby reducing the emission of
greenhouse gases.
e. Sales/Distribution Network
Volvo Cars has 2,300 dealers globally, all of whom are contributing towards their year on
year sales growth for the last four years. In 2018 they sold 642,253 cars in more than 100
countries.
In 2017, Volvo Cars sold 571,577 cars, the company's fourth consecutive year of record
sales. Relative to the strength of the brand, Volvo Cars is a small producer, with a global

29
market share of 1-2 percent. The largest market, China, represented some 20 percent of the
total sales volume in 2017, followed by the United States (14%), Sweden (13%), the United
Kingdom (8%) and Germany (7%).
According to Volvo, customers still visit the dealer before their car purchase, both for getting
the expertise and information from the seller and the physical interaction. However, many
dealers are only offering the possibility of purchasing a car in the physical store without
digital interactions. According to Volvo, the downside of only selling cars through dealers is
that customers often get biased information and negotiating with a seller can be stressful for
the customer and more inconvenient than the customer wants. Customers are getting more
used to buying products online, where the impact of covid-19 has been an enabling factor.
The online distribution offers short delivery lead times, and the delivery options are plentiful
to meet every customers’ needs. The online segment also provides a broader segment that
enables the customer to do their research more quickly and efficiently than the process would
be if interaction with different brands and models in physical interaction. Due to that, more
customers now have more access to all information through digital channels twenty-four
hours of the day. This increases the urges for OEMs and dealers to improve their online
channels to reach out to their customers.

2. Strength and Weakness

a. Strength
Currently, Volvo has the digital and operational capabilities to meet the customer demand of
the traditional wholesale model, including dealer network, premium product, platforms, and
professional handovers. Volvo is seen as an OEM with a very successful operating business
and has excellent strengths on all levels. However, the transformation to the direct sales
strategy requires an extended development on all these levels to meet the requirements when
establishing the last-mile delivery to end- consumers. Volvo ś affiliates Polestar and
Lynk&Co in addition to their subscription model, Care by Volvo, and their mobility and car
sharing service, M, are operating more towards what Volvo Cars strive for operating in the
future but are still in an early stage with several levels to improve their way of working
regarding last-mile logistics. These affiliates, subscription models and car sharing models are
strengths for Volvo to target different customer segments and are operating as disruptive
companies to take additional market shares but also for Volvo to understand customer
behavior in the future.
After acquisition with Geely, Volvo Cars' distribution network appeared densely in the
Chinese market. This has made the car company's revenue on the top in recent years.
b. Weakness
Moving from the traditional wholesale model towards their new direct-to-consumer strategy,
one can identify Volvos platforms, IT systems, and indirect customer data collection as their
weakness.

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 3. Volvo Cars after acquired by Geely
To keep the high value of the Volvo brand is a very challenging task after Volvo was bought
by Geely. The reason is simple: the Geely brand is very weak, and Geely is unknown to the
people in industrial nations, and in China, Geely is regarded as a low-cost and low-quality
product. This kind of owner does not increase the value of the Volvo brand. In addition,
Geely is totally different from Volvo’s previous owner Ford, where Ford itself has a good
reputation even though it is not regarded as the luxury brand. The customers have a lot of
reasons to worry about the brand of Volvo after the taking over by Geely:
• Volvo is now under the control of the Chinese community party, which is still regarded as
dictator. This damages the brand of Volvo already to some extent, particularly for those
customers in North America and Europe, where democracy is a part of the value of this life.
• Production might be moved from Sweden to China. While the quality of Volvo is associated
with Sweden, China does not represent a good quality, particularly for the luxury brand.
• The design might be moved from Sweden to China too. This will strongly damage the
origin of Volvo: the Scandinavian design of elegance.
• Volvo might possibly try to reduce the cost by sharing the cheap components from Geely.
This will damage the quality of Volvo, particularly for the safety reputation.
• Volvo might lose the moral value either by accepting the dictator leadership from Geely, or
being forced to use the workforce with bad working conditions from Geely. If this happens, it
will damage the value of Volvo significantly in Europe and North America.
• Volvo is going to use Geely’s supply chain in China, at least look at the possibility.
According to a recent interview of the CEO Stefan Jacoby, Volvo is looking at Geely's
supply chain very carefully. It is a sign that Volvo wants to use Geely’s supply chain as a
platform to increase its purchasing in China and thus reduce the product cost.
To be successful in the Chinese market, local manufacturing is very important. In fact, it is
almost a ‘must’ for the automobile business in China. The main advantages are as follows:
• Cost reduction by using a lot of locally produced cheap components.
• Cost reduction because of the cheap labor cost.
• Avoid the high cost of transportation from abroad to China
• Avoid the import tax of approximately 25%.

VI. RECOMMENDATION
As analyzed above, Volvo's weakness is information technology and indirect customer data
collection. In order to solve this problem, Volvo needs to develop their platforms to be able to
analyze customers' behavior and integrate it into their CRM system. 
Next, producing the same car models in multiple continents puts even tougher requirements
to manufacture within specifications in order to have the same output globally. Volvo Cars
needs to set even higher demands on their own manufacturing processes and suppliers.

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Since the global setting is putting higher demands on coordination, a higher degree of
standardization is needed.
Volvo Cars’ global part management is today not fully coordinated and standardized. By
acknowledging the current situation that the global expansion is causing, Volvo Cars need to
reconfigure their practices.
Recommendation when moves their manufactories to Vietnam 
When setting up a factory in Vietnam, this could be an opportunity for Volvo when Vietnam
has cheap labor. In addition, if the factory is located in Vietnam, which is close to Volvo
factories in China and Thailand, it will create an opportunity to lower transportation costs.
However, Volvo also needs to ensure that the information system between manufacturers is
synchronized. Second, they need to invest in developing the electric system. Finally, Volvo
should promote its marketing activities. In particular, developing a showroom system in
Vietnam is necessary.

REFERENCES

https://investors.volvocars.com/annualreport2020/assets/pdf/VCG_ENG_2020_web_20210317.pdf
https://odr.chalmers.se/bitstream/20.500.12380/302499/1/E2021_034.pdf
https://www.volvocars.com/intl/v/sustainability/highlights
https://www.grin.com/document/191668
http://hj.diva-portal.org/smash/get/diva2:349840/FULLTEXT01?fbclid=IwAR2stev0gnDkwxHtQ2K-
L_CZ7ClOH2JWvp_xW-QyUECiSQl_W_pQymFvZqU
https://www.researchgate.net/publication/43940053_Linking_corporate_strategy_and_supply_chain_
management
https://www.volvo.com/content/dam/volvo/volvo-/markets/global/en-en/investors/reports-and-
presentations/annual-reports/annual-and-sustainability-report-2020.pdf
https://www.imp.org/uploads/dissertations/dissertation_58.pdf

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