VOLKSWAGEN BUILDS A DIFFERENT KIND OF ASSEMBLY PLANT IN BRAZIL
In November 1996, Volkswagen began operations at its new truck and bus assembly plant in Re•sende, Brazil. Unlike any other automotive assembly plant in the world, this facility has suppliers' personnel working side by side with VW's workers. This latest advancement in supply chain management is the concept of Jose Ignacio Lopez de Arriortua, who is in charge of purchasing for View. As a result, only 200 out of a total workforce of 1 ,GOO are VW
employees. The remaining workers are employed by the major subcontractors such as MWM-Cummins, which produces the engines and transmissions, and Rochelle, which produces the suspension systems. With this revolutionary approach to automotive asset bly, VW hopes to increase both productivity and quality. At the same time, VW is sharing the risk of this new'venture with its major suppliers, who have to shoulder a large percentage of the fixed operating costs of the plant. In exchange for this risk, these subcontractors hope to develop and maintain a long and profitable relationship with View. Sources: Edvalclo Pereira Lima, "VW's Revolutionary Idea." Industry Week, March 17, 1997, and OianaJ. Schema. "ls VW's New Plant Lean, or Just Mean?" New York Times,_November 19, 1996.
VW's Canning Co-op
Like Tom Sawyer and his fence-painting project, Jose L6pez de Arriortua designed Volkswagen's new truck plant in Resende, Brazil, around work done for Volkswagen's benefit by others. Major suppliers are assigned space in the plant and supply their own workers to add components to trucks rolling down the assembly line. Volkswagen's employees, a minority in the plant, supervise the work and : finished trucks; only when they pass are the suppliers paid.
Individual Strengths of Organizations
If a firm enters into a long-term relationship with a vendor. then it i in that firm's be. t Internet t that the vendor remain in business for a long period of time. Thu a good customer will work with a vendor to ensure that it is profitable and that it remains financially strong. The selection of proper vendors is also important. Thu . in addition to financial strengths, each vendor should have some unique operational or engineering strengths with respect t the products it makes and delivers. This permits the firm to incorporate these strengths into its own products, which then provides an added advantage in the marketplace.