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Portals Power VW

Volkswagen AG relies on a procurement portal and a suppliers' portal to produce five million cars a year at 40 factories in 16 countries.
Two major portals--one internal and one external--are helping Volkswagen AG manage the production of five million cars a year at 40 factories in 16 countries. "This is a core element of our borderless enterprise," Meike-Uta Hansen, director of eSupply Chain Integration and Services, said Tuesday at the InformationWeek Spring Conference.

Implementing an internal portal for procurement and an external business-to-business portal for suppliers wasn't easy. There were skeptical questions and some resistance from employees and suppliers. But the initiative had strong support from VW's board of managers, which believed the company could improve its processes "by delivering the right information to the right person at the right time," Hansen said.

Meike-Uta Hansen, director of eSupply Chain Integration and Services

Meike-Uta Hansen, director of eSupply Chain Integration and Services

Photo by Sacha Lecca
VW procurement employees were spending 70% of their time looking for information on parts, and the company wanted a process to deliver the data they needed faster. The automaker created the Integrated Purchasing Agent's Desk portal, known as iPAD. "In the past, purchasers looked for data; now the information comes in to the purchaser," Hansen said. The portal is being used by purchasing agents in most parts of the company, including research and development, quality assurance, logistics and production, and finance. "It provides 360-degree views of suppliers, parts, and projects," Hansen said.

VW also collaborates more closely with suppliers through its business-to-business portal that features 30 applications, links to 16,000 supplier sites, and has 55,000 users. "It's now a deep-seated part of all of our business processes," Hansen said. Suppliers get personalized views of the information they need to track VW projects and procurement needs, and they receive event-driven alerts to keep them up-to-date on changes.

VW needed to overcome initial resistance from employees, who feared losing their jobs, and from suppliers, who couldn't see the benefit of a portal to their business. In both cases, "we involved the users early on in the process," she said. The portals let VW reduce the time involved in launching new car models, which typically takes about five years.

VW managers knew the effort would fail if they used the portals to replace normal channels of communications. "They weren't designed to replace real communications, but to make more time available for more and deeper communications," Hansen said. VW also trained suppliers and employees to ensure they understood how to use the portals.

When the company considered launching the portals, Hansen said, there were no examples in Europe to follow. "We were successful because we used the American way," she said. "We looked worldwide for the best technology and best practices."