Essay: The strategic change in supplier network design of Volvo

Sample Essay

Before the acquisition of Volvo, Ford feared the credibility issues among its top suppliers as china bid for Volvo. This created a severe panic in Ford’s business as it presumably loses its status as a top customer for suppliers. One of the reasons why Geely wanted Volvo’s establishments to remain in Sweden was to diversify in terms of suppliers and later building another plant in China while having plenty of supply options (Magnusson, Kinnander, 2009).

Later after the acquisition of Volvo, the company focused more on centralized network of suppliers. The strategic change in supplier network design was made right after the acquisition when Geely attempted to reduce the number of suppliers from 450 to 300. This reduction comprises of many small European suppliers not in-line with the global strategy of Geely Volvo. Geely had top 20 suppliers present in the market that cover over seventy percent of its total supplies. This is how cost reduction in supplier selection strategy is made (Busch, 2010).

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