Volkswagen realigns its procurement after the chip crisis and wants to buy important semiconductors directly from the manufacturers in the future. This will reduce the power of the suppliers: from now on, Volkswagen will tell them which electronic components they want to install in central components. VW Board Member for Procurement Dirk Große-Loheide and his Skoda counterpart Karsten Schnake are hoping for more transparency in the supply chain. This, in turn, should ensure that global demand and the availability of the components can be better estimated, the board members explained on Wednesday at a conference call with journalists.
Procurement is supported by risk management that extends down to the level of individual electronic components. This should help to identify bottlenecks at an early stage in order to be able to take countermeasures with technical alternatives in good time. To this end, Volkswagen is setting up a newly created “Semiconductor Sourcing Committee” under Schnake’s leadership. The Škoda Board of Management had already managed the group’s semiconductor task force, which involved more than 1,000 employees from various departments. The new, approximately 40-strong committee is now to advise the existing “Corporate Sourcing Committee” under the leadership of Grosse-Loheide on semiconductor issues.
In the past it was so-called Tier 1 suppliers like Bosch, Continental or ZF Friedrichshafen largely up to you which components you use. “Before 2022, we bought control units as black boxes for decades,” admits Große-Loheide. In the meantime, Volkswagen is taking matters into its own hands when it comes to purchasing chips that are of central importance. “We no longer rely solely on Tier 1 suppliers,” emphasized Skoda Board Member Schnake, “we do more ourselves. And we will continue to expand.”
There are agreements with several semiconductor manufacturers, the “who’s who of the industry”, including Infineon, NXP and the Taiwanese chip giant TSMC. A few years ago, Große-Loheide’s predecessor, Murat Aksel, complained that he could hardly get appointments with the chip giants. “That has changed,” said Große-Loheide on Wednesday. “We sit together every few weeks in Taiwan, Amsterdam or Wolfsburg.”
Volkswagen also wants to absorb short-term bottlenecks in the production of semiconductors by increasing stock levels. The large number of chip variants that are in a car should be reduced in order to streamline the software required for control. This theoretically reduces costs. But this is not the driving force, VW made clear. “We don’t measure the number of semiconductors we buy directly ourselves,” said Schnake. “The only thing that matters is how critical the chips are for us.”
Volkswagen does not even want to get involved in chip production. “We do that together with the partners who have been able to do this for a long time,” emphasized Große-Loheide.
The global shortage of semiconductors had made things difficult for Wolfsburg – like the industry as a whole – in recent years. Due to missing parts, the production lines had to be stopped and employees had to be put on short-time work. Thousands of semi-finished cars were stored in parking lots until the necessary chips were delivered. “When the first impacts came in January 2021, we first had to build up know-how,” said Große-Loheide. Today, Volkswagen knows the products better and is able “to initiate preventive measures if something goes wrong”.
In the meantime, the situation has eased and production is running smoothly again. But the shortage will probably not disappear completely next year either. The semiconductor crisis can only be solved in the medium to long term, even if significantly more chip factories went into operation in Europe, Audi’s procurement manager Renate Vachenauer had recently told a newspaper.