Volvo Ab Class A · OMXSTO:VOLV_A
Volvo Ab Class A — Investor Day (March 2015)
44 slides from Volvo Ab Class A's investor day presentation, Mar 5, 2015
Slide 1: Capital Market Day 2015 – Closing the Gap
CAPITAL MARKET DAY 2015 CLOSING THE GAP Welcome! Volvo Group Headquarters
Slide 2: Agenda
Agenda 10.45 Welcome & introduction - Olof Persson, CEO Focus on Group Trucks Operations - Mikael Bratt, EVP GTO - Olivier Vidal, SVP EMEA Cab & Vehicle - Kamel Sid, VP Gent plant 12.00 Lunch 13.00 Plant tour 15.00 Break 15.30 - Group Trucks Sales, Joachim Rosenberg, EVP - Volvo CE, Martin Weissburg
Slide 3: Olof Persson, CEO Volvo Group
CAPITAL MARKET DAY 2015 CLOSING THE GAP Olof Persson CEO Volvo Group Volvo Group Headquarters
Slide 4: Today's focus
Today’s focus We have strong assets to build on – are well invested for the future Right-sizing the structural cost-base – program on track and delivering Addressing specific improvements – focusing on product and market priorities Transforming the Volvo Group – to profitability driven by or
Slide 5: Main focus 2013-2015 to reduce the overall structural cost level
Main focus 2013-2015 to reduce the overall structural cost level across the Group… 2012 STRUCTURAL COST LEVEL 0.1 bn in 2013 GENERAL REDUCTIONS IN: SUPPORTING Manufacturing/logistics PROPORTIONALLY 10 bn 3.3 bn in 2014 IMPROVED R&D Selling expenses PROFITABILITY Administrative expenses ACROS
Slide 6: Shifting focus to targeted and selective activities
… gradually shifting focus to targeted & selective activities to address specific performance priorities NORTH SOUTH EMEA APAC FY 2014 AMERICA AMERICA Align product, industrial and commercial strategies n/a Low volume Align governance and responsibility n/a Low volume Low volume structure to sup
Slide 7: Group Trucks Operations – Mikael Bratt
CAPITAL MARKET DAY 2015 CLOSING THE GAP Group Trucks Operations Mikael Bratt EVP Volvo Group Volvo Group Headquarters CAPITAL MARKET DAY 2015 7
Slide 8: Group Trucks Operations has a global, modern and well-invested footprint
Group Trucks Operations has a global, modern and well-invested footprint Production 2014 Trucks 177,800 KD kits 13,800 Engines 214,700 Transmissions 139,000 Remanufactured 192,000 components New spare parts 633,000 Logistics ~ 32 million 34,000 employees in 36 countries 43 plants 54 distribution cen
Slide 9: Our responsibility throughout operations spans across the Group
Our responsibility throughout operations spans across the Group TRUCKS VOLVO VOLVO FINANCIAL BUSES VOLVO CE PENTA SERVICES GROUP Manufacturing of cabs and trucks TRUCKS OPERATIONS Manufacturing of engines and transmissions Remanufacturing of components Logistics and aftermarket services Purchasing V
Slide 10: One global system with optimized quality, lead-time and cost efficiency
STRUCTURAL COST REDUCTION We are on our way to one global system with optimized quality, lead-time and cost efficiency FROM SEPARATE SILOS TO UNLOCKED SYNERGIES European Global operations - regional adaptation Brand designated footprint Common market footprint Brand designated capacity Common market
Slide 11: Our main focus is on fixed and variable cost reduction
STRUCTURAL COST REDUCTION Our main focus is on fixed and variable cost reduction FIXED COST VARIABLE COST Global presence, in proximity to our customers Manufacturing Modern and well invested systems and facilities Logistics Focus on fixed and variable cost reduction, but also to – Increase in
Slide 12: Cost reduction activities cross functions are on track and delivering
STRUCTURAL COST REDUCTION Cost reduction activities cross functions are on track and delivering 8 plants closed and 2 outsourced 2 new plants installed in growth markets MANUFACTURING Re-enforced continuous improvements Systematically rolled out best practices cross plants 10 logistics ce
Slide 13: Restructuring of our network is on track
STRUCTURAL COST REDUCTION Restructuring of our network is on track and will continue with high pace Remanufacturing Cross docks and packaging Distribution centers Eslöv, Eskilstuna Memphis, Dallas, Atlanta Göteborg, Gent, Lyon, Wroclaw Distribution center CKD packaging Göteborg Jacksonville Plants G
Slide 14: Japan restructuring reduces headcount by 50%
STRUCTURAL COST REDUCTION Japan restructuring activities reduce Group Trucks Operations headcount by 50% Main restructuring activities Tochigi • 10 sites closed - operations consolidated into Ageo plant Gunma Hanyu plant – to be closed and Gunma distribution center Gunma main distribution center Iba
Slide 15: Re-enforced continuous improvement activities
STRUCTURAL COST REDUCTION We have re-enforced continuous improvement activities to ensure productivity development WHAT WE HAVE DONE IMPACT Continues improvements Number of implemented ideas reinforced Number, # Selected plants with high cost 300,000 base in focus +280% 190,000 Central expert
Slide 16: Substantial impact on productivity
STRUCTURAL COST REDUCTION Restructuring and continuous improvement have had substantial impact on productivity TRUCKS PER WHITE COLLAR Structural white and blue collar reduction in +30% +52% progress according to plan Trucks per white collar increased with 30%, with additional 22% to TRUCKS PER BL
Slide 17: Focus shifts towards continuous improvement and process harmonization
FOCUS GOING FORWARD: CONTINUOUS IMPROVEMENT As we deliver, focus shifts towards continuous improvement and process harmonization Structural cost reductions Supply chain optimization 100 Process 80 harmonization 60 Continuous 40 improvement Structural 20 changes 0 2012 2015 2018 Productivity challeng
Slide 18: Leverage best practice and gain efficiency across operations
FOCUS GOING FORWARD: CONTINUOUS IMPROVEMENT In addition, we leverage best practice and gain efficiency cross our operations CAPTURED SYNERGIES POTENTIAL Engines Transmissions Sourcing Aftermarket logistics Manufacturing logistics Processes and IT systems Truck production commonality Synergy work in
Slide 19: Synergies to be captured from engine and transmission footprint
FOCUS GOING FORWARD: CONTINUOUS IMPROVEMENT Still synergies to be captured from the existing engine and transmission footprint POWERTRAIN EXAMPLE 2001 - 2011 2012 - 2015 Full engine and Global engine and Further optimization of existing transmission transmission engine and transmission footp
Slide 20: Synergies in aftermarket and manufacturing logistics
FOCUS GOING FORWARD: CONTINUOUS IMPROVEMENT Additional synergies to be captured within Group aftermarket and manufacturing logistics Historic phases: 2012 - 2015 Group consolidation and optimization of aftermarket and manufacturing logistics – footprint, organization, ways of working 2001 Full log
Slide 21: End-to-end optimization of the entire supply chain
Group Trucks Operations set up enables end- to-end optimization of the entire supply chain Purchasing – Manufacturing – Logistics Services QUALITY LEAD TIME COST EFFICIENCY Volvo Group Headquarters CAPITAL MARKET DAY 2015 21
Slide 22: Optimization of our European operations
Let’s get into more details on optimization of our European operations Volvo Group Headquarters CAPITAL MARKET DAY 2015 22
Slide 23: Optimizing European manufacturing – Olivier Vidal
CAPITAL MARKET DAY 2015 CLOSING THE GAP Optimizing European manufacturing Olivier Vidal SVP Volvo Group Volvo Group Headquarters
Slide 24: Optimization of the European truck footprint 2014-15
GROUP TRUCKS OPERATIONS EUROPE Stepwise structural changes and optimization of the European truck footprint 2014-15 From 6 to 5 assembly lines in 3 heavy-duty truck plants Kaluga – new market HD Move cab trim from Umeå to Tuve truck plant Move medium duty truck assembly from Umeå – high volume
Slide 25: Common architecture allows multi brand assembly for medium duty trucks
GROUP TRUCKS OPERATIONS EUROPE The Renault D range/Volvo FL/Volvo FE in Blainville Common architecture allows cost efficient multi brand assembly for medium duty trucks Consolidation of medium duty trucks to one line in six months ENABLERS Same truck platform Same supply chain Common manufactu
Slide 26: Tuve and Gent twin plants optimized for heavy duty trucks
GROUP TRUCKS OPERATIONS EUROPE Tuve and Gent twin plants optimized for Volvo heavy duty trucks assembly 90% commonalities targeted on assembly and logistics processes Volvo Operations Concept fully applied Full involvement of our people through continuous improvement activities Process perfo
Slide 27: Commonality will improve performance
GROUP TRUCKS OPERATIONS EUROPE Gent and Tuve twin plants Commonality will improve performance New engine line Gent From a restricted commonality… Tooling Packaging … to a result oriented commonality Same equipment suppliers Border of line New engine line Tuve Fish bone logistics Cab trim
Slide 28: Lean assembly in all four European truck plants by 2015
GROUP TRUCKS OPERATIONS EUROPE By 2015 we will have lean assembly in all the four European truck plants Volvo Operational Concept in Gent, TARGET 2015 Tuve, Bourg, Blainville Material availability 98% Best practice assembly and Delivery precision 95% logistics processes Continuous improvement
Slide 29: Summary
GROUP TRUCKS OPERATIONS EUROPE Optimizing our European manufacturing Summary We are confident to reach our targets We are defining a new standard to assemble trucks We are building on people skills and engagement We are building a common strong industrial culture Volvo Group Headquarters CAP
Slide 30: Focus on the changes in Gent
GROUP TRUCKS OPERATIONS EUROPE Stepwise structural changes and optimization of the European truck footprint 2014-15 – Let’s focus on the changes in Gent From 6 to 5 assembly lines in 3 heavy-duty truck plants Move cab trim from Umeå to Tuve GENT Move medium duty truck assembly from Gent and co
Slide 31: Gent site – Kamel Sid
CAPITAL MARKET DAY 2015 CLOSING THE GAP Gent site Kamel Sid VP Gent plant Volvo Group Headquarters CAPITAL MARKET DAY 2015 31
Slide 32: Cab and Vehicle Assembly, Gent
GROUP TRUCKS OPERATIONS GENT Cab and Vehicle Assembly, Gent 2,553 people 9% WC 91% BC Production figures 34,000 Trucks 32,000 Cabs 470,000 Tires Logistics Services, Gent 800 people 32% WC 68% BC Logistics figures 6,800,000 Aftermarket order lines 35,500 Trucks delivered Volvo Group Headquarters CAPI
Slide 33: Major structural steps of the Gent site transformation
GROUP TRUCKS OPERATIONS GENT The major structural steps of the Gent site transformation 2012- 2013 Largest product renewal ever in Gent 2014 European Optimization Program Efficiency program at distribution center Continuous improvement reinforcement initiative 2015 Full speed in both site optimizati
Slide 34: European Optimization Program – a big change for the Gent truck plant
GROUP TRUCKS OPERATIONS GENT European Optimization Program – a big change for the Gent truck plant Kaluga – new market HD truck Medium-duty line in Gent closed and plant transferred to Blainville, France Effective June 2014 Umeå – high volume HD cab manufacturing plant 200 fixed positions remo
Slide 35: Major logistics upgrade of truck assembly and cab trim lines
GROUP TRUCKS OPERATIONS GENT Major logistics upgrade of the truck assembly and cab trim lines – productivity is improving Cab trim line Truck assembly line Shelter New cabe North intake Dashboar d line New Goods warehouse New engine Receiving lines New Axle lines New shelter Follow Lead Kitting New
Slide 36: Performance has improved in the Gent plant
GROUP TRUCKS OPERATIONS GENT Performance has improved in the Gent plant - main KPI’s are moving in the right direction *2016 Target 02/2014 02/2015 QUALITY Q4/2015 First time through, new FH 68% 75% 80% / 90%* LEAD TIME Factory delivery precision 81% 93% 95% Part availability at point of use 87% 94%
Slide 37: New ways of working result in major product quality steps
GROUP TRUCKS OPERATIONS GENT New ways of working has resulted in major product quality steps Operators can stop the line by Andon calls Prioritization and daily problem solving on the shopfloor Standardized work as foundation for basis training and production method confirmation Fault frequency re
Slide 38: Production leveling has stabilized the assembly flow
GROUP TRUCKS OPERATIONS GENT Production leveling has stabilized the assembly flow and improved the lead time significantly Heavy variant spread out More stability into the supply chain Work load better balanced Delivery precision > 93% Volvo Group Headquarters CAPITAL MARKET DAY 2015 38
Slide 39: Continuous improvement accelerating – kaizen events and savings
GROUP TRUCKS OPERATIONS GENT Continuous improvement are accelerating – higher number of kaizen events and amount of savings KAIZEN EVENTS Speed increase in executing kaizen activities 600 Kaizens in 2014 1000 Kaizens in 2015 identified and planned 150 MSEK savings already achieved (Ref 2012)
Slide 40: Total assembly time from 93 to 72 hours per unit
GROUP TRUCKS OPERATIONS GENT Total assembly time (truck & cab) from 93 to 72 hours per unit Cost deployment to identify “waste” and prioritize improvement activities Hours per unit breakdown Trucks and Cabs 93 86 Autonomous & professional Maintenance Material availability 72 3M Kaizen event to elimi
Slide 41: Expansion of the central distribution center in Gent
GROUP TRUCKS OPERATIONS GENT Expansion of the central distribution center in Gent to include Volvo CE parts and get synergies EXPANSION + 15,000 m² warehouse space + 1,000,000 order lines + 1.8 BSEK sales + 75,000 part numbers Consolidation of brands into a leaner structure & integration of transp
Slide 42: Site visit
CAPITAL MARKET DAY 2015 Site visit Volvo Group Headquarters CAPITAL MARKET DAY 2015 42
Slide 43: Site visit stops
GROUP TRUCKS OPERATIONS GENT Let’s look for ourselves at 8 site visit stops THE GENT TRUCK PLANT New cab dashboard line New cab logistics New side member intake New axle line New engine line Production leveling THE GENT DISTRIBUTION CENTER Logistics Services efficiency program Produc
Slide 44: Practical matters
GROUP TRUCKS OPERATIONS GENT Practical matters Divided into 8 groups Groups = color on your name badge 1 guide per group For your own safety: - safety jacket - do not walk in the middle of the gangways Headsets will be handed out Volvo Group Headquarters CAPITAL MARKET DAY 2015 44