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Volkswagen: We Have Never Had Supply Chain Shortages Like Today

Volkswagen is entering into direct purchase agreements in unprecedented areas to tackle the worst supply chain shortages the company has seen, its purchasing chief Murat Aksel said on Tuesday.

The carmaker was also building a database to help predict geopolitical, natural and supply chain risks ahead of time, as it did for financial risks after the 2008 financial crisis, Aksel added.

“We never used to talk to mining operators – now we know their business model,” Aksel told a conference in Berlin. “It is no longer enough to rely on Tier 1 suppliers – we need to look behind the curtains ourselves.”

Volkswagen was experiencing a shift in power from a buyer’s market to one where the carmaker was increasingly a smaller and less powerful customer for suppliers in newly important areas, such as software, Aksel said in his speech at the Automobilwoche Kongress conference.

Other companies would order a million chips a week or day where the carmaker was looking for a million a year, he said, dampening its negotiation power.

“For the software providers, we’re the small player, not the big one,” he said.

Asked how he viewed the chip supply situation at present, Aksel said he expected some easing next year but that the company was still unable to keep up with demand, with some brands sold out for 2023.

Source: U.S News