Word: volvo
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Dates: during 1990-1999
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...fact, one of the reasons Volvo, which makes only 400,000 cars a year, was able to survive as an independent car assembler until this year was its innovative and extensive use of systems suppliers in previous years. A few years back, Volvo's engineers teamed up with Autoliv to develop safety systems that incorporated side air bags, and safety-minded Volvo got a one-year exclusive deal to use the systems. Going modular helped Volvo offer more flexibility on a limited range of basic models. "With the traditional assembly process, you can usually manufacture just one car per assembly...
...which includes the cooler, headlights and crash box. German plastics, chemical and industrial-ceramics company Dynamit Nobel snaps on plastic body panels and the whole vehicle is done in four hours--down from the 20 or so it takes a traditional car manufacturer. "It's an admirable experiment," says Volvo's Franzen. "They've gone and outsourced the assembly line itself. The entire industry is looking at it with interest and, I must admit, skepticism because assembly is also a core competency...
Even such proprietary items as engines and overall design may be up for grabs. Volvo and Renault supply each other with engines for some models, and the high-performance British motorcar company Lotus says 10% of new cars made in Europe will carry engines of Lotus design next year. Lotus spokesman Alastair Florance says the company's new modular V-8 motor can be dismantled, reconfigured, expanded or contracted to fit virtually any car. Lotus, which is owned by Malaysian carmaker Proton, earned more money advising other carmakers last year than it did selling its own legendary road burners...
Outsourcing of entire systems does more than save money. It gives customers unprecedented freedom of choice. "The new S80 is built 100% to customer order, and virtually every car is different," says Volvo's Franzen, who credits systems suppliers, and their willingness to provide finished modules in sequence, with making that practicable. "Just think of something as simple as door panels," says Franzen. "There are four to five basic colors per car line, plus various internal surfaces such as textile, leather or wood trim, and then there are electric and mechanical mirrors. For just one car model, 3,000 variants...
...that the chopping happens close to home, which reduces outsourcing costs and keeps jobs nearby. Volvo, based in Goteborg, Sweden, has turned an old shipyard in the nearby town of Arendal into a supplier village, where nine supplier partners construct components and subsystems and line them up in the proper order before shipping them to the assembly plant. It all happens in double-quick time. "We give them eight days' notice to get the quantities together, and then we give them four hours' notice to do the sequencing," Franzen says...