Is What's Good for Volvo Good for Its Suppliers?

In an interview in the IFPSM ezine, Bernt Ejbyfeldt, senior vice president of purchasing at Volvo Car Corporation, was asked whether Volvo planned to provide financial assistance to help its struggling suppliers. Ejbyfeldt said that Volvo wasn’t in a financial position to make loans to help its suppliers. So he suggested that suppliers help themselves by helping Volvo¬†provide new technology to Volvo for customers. In other words, help yourselves by helping Volvo. And, while you’re at it, buy and drive a Volvo, too, said Ejbyfeldt. This exhortation is in the context of Volvo’s recent announcement that it’s planning to shed 10% of its supply base.

If I were a Volvo supplier, I’m not sure I’d know how to interpret these actions and statements, other than as a polite way of saying “every supplier for himself/herself”. ¬†Not that I can’t understand where Volvo is coming from. Its sales have tanked along with the rest of the auto industry. Ford has put Volvo up for sale, and its future is less certain at the moment. Volvo suppliers have expressed disappointment in the Ford acquisition of the company. And now the worsening conditions for Volvo suppliers are being felt in the Volvo supply chain in Sweden.

But look at this from another angle. Not every supplier is a product development supplier. That is, not every supplier is focused on new product development and particularly collaborative product development with its customers. And even those who may have innovations or better ideas for Volvo need to be able to work closely with Volvo to develop the trust and working relationship necessary to develop new products, product enhancements and value engineering suggestions for Volvo. Using suppliers for product innovations and improvements enables competitive advantage for both customer and supplier. The payback is huge. And Volvo may already have developed such relationships with some suppliers. But this is a rather vague and not very actionable overall suggestion for suppliers. Collaborating with suppliers for product development is one of the trickier aspects of customer-supplier partnerships, requiring skills and mutual trust that need to be developed over time, not overnight.

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