Procurement focused its work in the reporting period on safeguarding new vehicle start-ups, developing new procurement markets and ensuring continuity of supply to production.

Procurement strategy

Procurement makes an important contribution to the implementation of the Group Strategy 2018 with its procurement strategy. It continues to pursue four goals derived from the Group strategy: first, to provide market-centric premium quality and innovations at competitive prices; second, to meet cost targets and ensure the profitability of our products over their entire lifecycle; third, to safeguard our global volume growth through the permanent availability and consistently high quality of procured components; and fourth, to continue to raise employee satisfaction and the attractiveness of the procurement function.

We have assigned action areas to each of these goals. Each action area has concrete programs comprising precisely defined measures and responsibilities. These strategic elements are standardized and implemented throughout the Group, which enables us to take advantage of opportunities across all brands and all regions, pool strengths and minimize weaknesses and risks at the same time.

Procurement’s process optimization program

Continuous process optimization has become a core component of the global procurement organization. In 2013, our experts also continued work on improving and standardizing a large number of workflows worldwide as part of our process optimization program, in particular at the interface with processes in other functions. This enables us to reduce frictional losses and create synergies. For example, we improved requirements planning for equipment variants, enabling capacity for procured components to be planned significantly more precisely.

In 2013, we also began benchmarking the indicators, comparing them across all of the procurement organizations. This enables us to more quickly recognize and take advantage of best practice processes and areas for improvement.

Supply situation for procured components and raw materials

The supply situation in 2013 was dominated by the continued growth of vehicle sales in China, the steady increase in demand for vehicles based on the Modular Transverse Toolkit (MQB) and the ongoing trend toward vehicles with high-quality equipment levels. This in turn drove up our need for procured components. However, in cooperation with our suppliers, we made available the capacities needed to supply the component and vehicle plants.

Unplanned events in 2013, for example fires in China, also led to production shortfalls at our suppliers. Together with suppliers, our established cross-business area task force helped to guarantee the security of supplies at all times.

We also added additional suppliers to our INCA integrated capacity management system, which we use to safeguard our supply. 4,100 suppliers already manage their capacities in the Group online, which gives them an insight into the requirements forecasts for their parts for a planning horizon of up to 24 months.

In 2013, the global economy continued to grow, albeit at a slower pace year-on-year. The prices for most input and raw materials fell slightly on the spot markets. This was attributable to the sluggish demand from the industrialized nations and the relatively moderate growth in China. Crude oil prices remained volatile and reacted strongly to speculation and political uncertainty.

Economic effects also impacted prices for iron ore, coking coal and rare earths. The prices for these input materials are at a low level compared with the record highs in 2011; compared with 2012, the 2013 prices were similarly volatile and at a comparable level. China did not come close to exhausting its 2013 export quotas for rare earths set by the government; nevertheless, there were no supply shortages for components containing rare earths.

Procured component and supplier management assure quality within the supply process

Procured components management is firmly established in the Volkswagen Group’s global procurement organizations in the brands and regions. Tool and process experts support new vehicle start-ups around the world using Group-wide standards. As the automotive industry becomes more complex, we have helped suppliers secure parts for our series production.

Enhancing procured components management in the engines and transmissions areas is a particular focus for implementing the Group-wide growth strategy. Procured component management will strengthen its activities in this action area in the future.

In addition, the “Quality in Growth” program is focused on safeguarding start-ups in the context of internationalization and on managing the subcontractor structure. We hold cross-business area discussions with suppliers on best practices and lessons learned.

Other tools for preventive safeguarding of vehicle start-ups include simulated series production at the suppliers as part of preliminary series production and a multi-step performance test across all business areas. This enables us to identify supplier problems related to volume and quality in good time and to counteract any potential risks.

Developing new procurement markets

In order to achieve the cost targets derived from the Group Strategy 2018, we are developing affordable procurement markets under the C3 Sourcing (Cost-Competitive Country Sourcing) program.

In the reporting period, we took additional measures to integrate these activities in the markets. These include common sourcing – bundling volumes between different procurement markets. These common market-wide requests for the same or similar components will generate synergies for the participating locations and projects. This type of transregional awarding strategy is a win-win situation for Volkswagen and its business partners, as the latter can thus offer more affordable prices because of higher volumes and can become established competitors in new regions.

One example of targeted volume bundling and integration with local procurement markets and structures is our common sourcing activities in China: we achieved our cost targets by bundling request volumes. At the same time, we integrated 700 new suppliers into our systems environment. In the future, they will participate in global tenders and thus have the opportunity to export their products outside local markets.

Sustainability in supplier relationships

Since 2006, procurement has followed the requirements of the “sustainability in supplier relationships” concept, supporting our goal to become the most sustainable automobile company in the world by 2018. This concept helps secure the global volume flows as it avoids situations in which suppliers fail to deliver.

The “requirements for sustainability in relations with business partners” are a key component of the concept we use to expect and promote sustainability efforts from our suppliers. This takes into account both social and environmental standards.

In the reporting period, we again deepened our relationships with suppliers in order to supportively monitor sustainability requirements and to minimize sustainability risk: we surveyed them in detail on the current status of their implementation of our requirements and remedied any deficits together. We also provided more in-depth training in 2013 via our Internet-based training module.

Consistently implementing the “sustainability in supplier relationships” concept as well as providing intensive training for our own employees enables us to systematically reduce both procurement-relevant sustainability and supplier risk and to meet customer and capital market requirements.

Purchasing volume

The Volkswagen Group’s purchasing volume mainly comprises production materials, services and investments. In the reporting period – including the Chinese joint venture companies – it saw an increase of 4.9% to €135.0 billion. Suppliers in Germany account for a share of 37.3% (38.8%).





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Audi includes Lamborghini and Ducati (from August 2012).


Porsche from August 2012.

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Volkswagen Commercial Vehicles





















Volkswagen Group







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South America