Procurement focused its work in the reporting period on safeguarding new vehicle start-ups, particularly with a view to the Modular Transverse Toolkit (MQB), developing new procurement markets and preemptively assuring quality in the supply chains.

Procurement strategy

The four procurement goals derived from the Group Strategy 2018 were also relevant in the reporting period: 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 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. Currently, 30 programs with precisely defined measures and responsibilities for all brands and regions ensure that these goals are achieved. The uniform procurement strategy that covers all brands and all regions enables us to take advantage of opportunities throughout the Group, pool strengths and minimize weaknesses and risks at the same time.

Expanding the process optimization program

Process optimization has become a core component of work in the procurement function. Experts are working on standardizing processes and continuously improving them in all brands and all regions of the Volkswagen Group. We added the procurement organizations of Volkswagen Group of America, Volkswagen India, Volkswagen Group Rus, Porsche, Scania and MAN to the procurement process optimization program in 2012. The Porsche brand, for example, was integrated with the Group’s core procurement processes within four months. This means that joint decisions about procurement issues were already made in 2012.

We are specifically examining on an ongoing basis whether introducing new or optimizing existing processes will deliver the expected advantages in terms of time and quality. This is how we ensure that the measures taken are effective for the long term.

Stable supply situation for procured components and raw materials

In the reporting period, the supply situation was dominated by growing vehicle sales in China, North and South America, as well as the further increase in demand in all segments for vehicles with high-quality equipment features. Because of this, the need for procured components grew and changed. Supplies to all component and vehicle plants were nevertheless guaranteed at all times. Particularly noteworthy is the fact that we successfully safeguarded new vehicle start-ups based on the Modular Transverse Toolkit (MQB) at the Audi, Volkswagen and SEAT brands.

In addition, there were unplanned events in 2012 that led to production shortfalls at our raw materials suppliers, among other things. The effectiveness of our processes and safety mechanisms that we had installed and embedded as a fundamental part of the organization after the lessons learned from the natural disasters in Japan in 2011 became clear in these situations. In addition to working together with suppliers, a cross-business task force, which is an established part of our crisis management, helps to guarantee the security of supplies at all times.

Continuously integrating our suppliers to the demand and capacity management systems is a key tool for safeguarding supplies. The integrated capacity management system INCA offers the suppliers involved the ability to manage their capacities online. They also receive an insight into the requirement forecasts for their parts for a planning horizon of up to 24 months.

Most input and raw materials saw declining prices on the spot markets in 2012 because of the ongoing crisis in the eurozone. However, despite this trend, prices remained at a high level and were subject to pronounced volatility.

Overall, the markets were very strained and nervous, and crude oil prices in particular were extremely volatile and highly sensitive in relation to political uncertainties and the impact of speculation.

The economic effects also impacted prices for rare earths. In comparison to the historical high prices reached in 2011, they declined on the Chinese-dominated market. However, they remained at a comparatively high level.

Procured component and supplier management to assure quality
within the supply process

As part of our growth strategy, both we and our partners are faced with enormous challenges in the global procurement of components. Procured components management is procurement’s “technical arm”. Tool and process experts on the ground preemptively ensure the preparation of tools and the development of suppliers’ new production sites for new vehicle start-ups. Procured components management also supports line procurement to safeguard the supply of components. New technological fields have been added to the functional portfolio to reflect the volatile environment and technical complexity. Against this background, procured components management is a core component for safeguarding global volumes.

Subcontractors are a particular focus for procured components management. Volkswagen’s direct suppliers normally use a high number of subcontractors, whose value creation processes represent an additional challenge. For this reason, the entire value creation process is already analyzed shortly before contracting in a goal agreement discussion with the supplier by looking at all business areas and adapted accordingly.

Developing new procurement markets

We defined measures to achieve the cost targets set as part of the Group Strategy 2018, and these were also systematically implemented in 2012. One of these measures is implementing the C3 Sourcing (Cost-Competitive Country Sourc- ing) program to develop affordable procurement markets. The objective of this program is to use competitive procurement markets to not only produce localized vehicle projects there, but also to use them for vehicle projects in other countries. Components from the C3 regions are also being exported without us having to lower our quality standards.

We further developed our regional offices worldwide at a cross-business area level so as to guarantee the share of C3 contracts in the flow of goods for the long term. These offices identify new suppliers and guide them until the contract award decision, while procured components management at the regional offices subsequently ensures the ability of the suppliers to deliver.

Southeast Asia is one example of where we have successfully developed new markets. Via the regional office in Kuala Lumpur, which opened in 2010, more than 250 suppliers from the whole of Southeast Asia have already been linked to the Volkswagen systems environment. These local suppliers have been awarded a significant purchasing volume.

Sustainability in supplier relationships

Since 2006, the “sustainability in supplier relationships” concept has ensured that our business partners are also complying with the environmental and social standards that apply throughout the Group. The concept’s main pillars are: the sustainability standards signed by the member of the Group Board of Management responsible for Procurement and by the Group Chief Compliance Officer, an early warning system to minimize risks, transparency in the procurement process, and supplier monitoring and development. Optimizing sustainability aspects together with our business partners and safeguarding our volume flows for the long term are at the forefront here.

We intensified and stabilized our suppliers’ cooperation with the Group’s brands and regions in the reporting period. Among other things, we held a large number of information events and made an Internet-based training module available on the Group Business Platform. All suppliers who are registered on the platform have been asked to complete this training module with a final performance review. The tool can also be used by all of Volkswagen’s procurement employees in order to expand their knowledge of sustainability in supplier relationships.

Furthermore, all business partners have been asked to fill out a questionnaire on our sustainability standards. A central Group office is monitoring the results in order to develop areas for improvement and action plans for these measures together with our suppliers. In the reporting period, this resulted not only in increased awareness at our suppliers, but also in optimization in the value chain, for example, by minimizing supply risks.

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 16.8% to €128.7 billion. The proportion attributable to German suppliers was 38.8% (39.3%).





€ billion








Audi includes Lamborghini and Ducati (from August 2012).


Porsche from August 2012, MAN from November 2011.

Volkswagen Passenger Cars








































Volkswagen Commercial Vehicles





















Volkswagen Group







Europe/Remaining markets







North America







South America














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