INNOVATION

VOLVO DO BRASIL AND THE CONTEXT OF THE BRAZILIAN AUTOMOTIVE SECTOR

BRAZILIAN COMMERCIAL VEHICLE SECTOR

ABC - SAO PAULO

SCANIA MERCEDES (Plus Cars) FORD (Plus Cars) GM (Light Commercials, Cars)
Toyota parts; VW Cars

CURITIBA

VOLVO + Renault Cars and Vans + VW/Audi SETE LAGOAS IVECO RESENDE VW

SHARE OF BRAZILIAN MARKET

16 TONNES PLUS MERCEDES 31.4 VOLVO 13.5 SCANIA 11.4 VW 26.5 7.5 TONNES PLUS MERCEDES 31.00% VOLVO 7.14% SCANIA 7.00% VW 30.30% FORD 20.00%

PLANT INTEGRATION
SCANIA Axle, Engine, Cab, Final Assembly of Trucks and Buses Mercedes Axle, Engine, Cab, Transmission, Final Assembly of Trucks and Buses. Volvo Engine, Cab, Final Assembly of Trucks and Buses (Renault and Volvo)

VW RESENDE - LAYOUT

MODULAR CONSORTIUM
7 Miniplants with Volkswagens partners

Delga : Assembly of the cabin; Eisenmann : paint of the cabin; VDO : Interior trim of the cabin; Iochpe- Maxion : Assembly of the frame; Rockwell : Preparation and assembly of axles and suspension; MWM/Cummins : Preparation and assembly of Dashboard pre-assy
Logistics and delivery is direct to each supplier Just-in-Time

Final inspection is by Volkswagen, defect units are delivered back to the root of the defect
The suppliers had to invest their own money in order to equip their mini plants. Volkswagen is going to pay for final delivered products By purchasing the final products of its suppliers / partners, Volkswagen also incrementally purchases their facilities. VW is mainly in the role of a supervisor, especially for quality and provides the interface to the market.

ANALYSIS
Stakeholders argue it is successful

However Limited flexibility/ Lower wages Less requirement for skills and training 20 months to reach maximum competence Problems of Health and Safety (44 hours per week) Competes at lower end of market Regional manufacturer Development costs (could not answer question) Low % of Women in production

ANALYSIS
Local Projects Social programmes

Food wastage
Positive Discrimination Disabled Under privileged backgrounds Low unemployment in Resende

We have no secrets here

MERCEDES
Line production standard layout Brazilians from all continents, different races and religions

work together to be simply the best axle manufacturers in the world.

It is easier here to implement principles such as

Kanban, lower inventories; JIT in Germany than in ABC Trade Unions - It is our major problem I would say because every time we have a claim the company says well we have VW in Resende they pay much less than you they have a work time 10% higher than you It is hours and the level of wages is lower

MERCEDES HR
It is based on the history of Don Quixote and Sancho Panchez the Cervantes play. It is a creativity based programme. They have to go through the divergence way and the convergence way. The divergence way is the creativity process the Don Quixote and then they go on to one based upon the profile of Sancho Panchez the reality of Sancho Panchez. So they have this multi-functional worker. Each worker has a different approach one comes from finance, one comes from production etc and so they have different approaches to understand the process and to the project they create the idea to make this project.

SCANIA SOUTH AMERICA

Least Interesting

Duplicates Swedish Plants Standard Layout Modular production Vertical integration Projects Education and Training Least accommodating Best Hospitality.

VOLVO DO BRASIL INNOVATION

Regional/National Context
Collaboarative inter-organisational learning processes Lean Organisation University of Parana Networks Benchmarking

Firm Specific Context

Lean Production + Work Organisation + Brazilian Context

Hybridization
Toyota Production System + Volvo Work Organisation Lean = Re-organising Time and Space (Pot Plants) Work Organisation = Re-organising Labour (EAGs)

VOLVO DO BRASIL
Culture a culture open to change and an attitude to innovation totally different from that of its Swedish parent organization. The apparent fearless approach to the change process amongst blue-collar workers is linked to the economic climate in Brazil with its constant changes in inflation rates, fluctuating exchange rates and the regularity of negotiating and renegotiating blue-collar wage rates in the factory.

VOLVO DO BRASIL HYBRIDIZATION

Best of Toyota + Best of Volvo

Borrowed ideas from Lean Institute

Benchmarking (The Tugger)

Sweden - EAGs Rotating TL Competence Pay Employee Involvement Uneven application

Lean Production Brazilain Style

They began the process in August 2001 after the

Production Manager had attended Lean Seminars organized through the Brazilian Lean Enterprise Institute (BLEI). They began by restructuring the material supply process and in so doing realized that the process, almost as a by-product, released significant areas of space. As the project developed it became increasingly organized around the triple axes of reductions in tied-up capital; lead-time reductions and the releasing of areas for new product lines.

PARTS FEEDING FOR TRUCK LINE

MOBILE KIT PER CHASSIS

KITS FEEDING FOR CAB LINE

SEAT KIT DASHBOARD KIT

KITS FEEDING FOR TRUCK LINE

KIT FEEDING AND BUMPER ASSEMBLY ON THE SAME WHEEL RACK

TUGGERS FOR MATERIAL FEEDING

Tuggers made from phased out forklifts by maintenance people

ENGINE FACTORY
BEFORE AFTER

Engine buffer between engine line and truck assembly line

CAB FACTORY-WELDING
BEFORE AFTER

Roof pre-welding station

CAB ASSEMBLY LINE

BEFORE

AFTER

flow

TRUCK ASSEMBLY LINE

BEFORE AFTER

FINAL ASSEMBLY LINE BUILDING

RELEASED AREA = 33%

TOTAL AREA : 11.664 m

QUALITATIVE
BEST MANUFACTURE QUALITY INSIDE VOLVO GROUP/GLOBAL AUDIT SYSTEM CLOSE ZERO LEVEL OF MISSING PARTS

HIGH PRODUCTION FLEXIBILITY

BETTER WORK ENVIRONMENT HIGH TEAMS MOTIVATION BETTER COMUNICATION

TO FINISH INDUSTRIAL AREA TO CONSOLIDATE BASIS

TO FINISH KANBAN WITH SUPPLIERS

TO CONTINUE VISUAL MANAGEMENT TO DEVELOP IMPROVEMENT GROUPS TO INTRODUCE IN ADMINISTRATIVES PROCESSES

ANALYSIS
Sweden
Volvo Philosophy to Volvo Way Emphasis More on lean & less on Work Organisation

Brazil
Here the union is pretty tolerant and you can get away with a lot here that you cannot in in Europe Virgin labour Uneven education levels Lean Production as yet to address issues of Labour

ANALYSIS
Need to integrate into Global Production System

Total TPS would have been A mess

I like to think there is a special Volvo culture.

Everybody is so proud of what they are doing and it is like a huge big family. You have that culture everywhere, but it is more nationalized. In Holland you (have) the Dutch Volvo family, in Belgium the Belgian Volvo family and so on. (Ex Managing Director, Volvo UK)

ANALYSIS
Teamwork and lean thinking ideas gleaned from

competitors, universities and research institutions were taken as the conceptual base by VdoB and (re)structured to suit local conditions in the State of Parana. What becomes clear is a pattern of development in which subsidiary organisations in developing economies make unique contributions to, and in so doing fully establish themselves within, integrated production systems in order to maintain a level of autonomy.

ANALYSIS
To be able to maintain this competitive advantage they also have to have production strategies underpinned by an export-orientated focus and cost- cutting projects in the distributive sphere. It became clear during the research visits to the Curitiba plant, that in order to maintain its position in the global production chain VdoB not only has to be constantly looking to innovate in the production arena, but they also have to be constantly engaging with new market opportunities in China and East Asia and to apply the cost-cutting techniques of lean thinking to post production and delivery areas.