Volvo CE president Pat Olney told the Russian media recently that the company expects to eventually source more than 50 percent of supplies for its new Kaluga, Russia, excavator plant from within the country, the Moscow Times reported. While the new facility is starting out mostly sourcing from Sweden and South Korea, Olney said Volvo will be developing its Russian supply chain not to cut import duties but to build support for the local after-market and to cut lead times.
Olney said that in the past, manufacturing philosophy was to create one product in a global plant and then ship it around the world, a philosophy that no longer works. Olney said to ship a product for weeks on the ocean adds to lead times and expense. Also, he pointed out, manufacturing a product close to its intended customer base enables local input and customer needs to play a role in designing and developing the products.
Olney said he has already met with a number of Russian suppliers and has promised Volvo’s support for their efforts.
