Halving Inventory at Volvo Powertrain

Manufacturer already seeing payoff from collaborative supply chain execution solution

Manufacturer already seeing payoff from collaborative supply chain execution solution

Philadelphia — November 24, 2003 — Volvo Powertrain has used a collaborative supply chain execution (SCE) solution from PipeChain to cut its inventory in half, the solution provider reported this week.

With 8,000 employees and operations in Sweden, France and the Americas, Volvo Powertrain is one of the world's top manufacturers of heavy diesel engines and transmissions.

When the company began the project to implement PipeChain's SCE system in December 2002, its aim was to reduce its stock levels and lead times and to increase its service levels. In the year since, the investment has already paid for itself, according to Lena Palm Sandin, head of Volvo Powertrain's logistics project.

"We cut our stock by half and increased our service level," Sandin said. "It was our most profitable investment this year."

The project was due to be completed in December 2003, with all project goals already met, according to Sandin. "After that, there are a lot of possibilities for fine-tuning the parameters in order to obtain even better results," Sandin added.

The project includes deliveries of materials from about 50 suppliers, which together make up about 80 percent of the value of the company's engines and transmissions. To achieve these results, the company created a network in which Volvo Powertrain and its suppliers to work together to achieve the rapid and controlled flow of goods, which helps to reduce the need for stocks.

"Our supply chain management tool has been the Web-based PipeChain solution," Sandin said. "It has been very favorably received by our suppliers, who haven't had to invest a penny to implement the new way of working."

PipeChain's other customers include ABB, Ericsson, Flextronics and IKEA. The provider's headquarters are in Lund, Sweden, with U.S. offices in Philadelphia.