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Volkswagen's Lean Production Advantage

Volkswagen has used Lean production techniques like ergonomic workstations to become more competitive. This allows higher productivity and lower costs in the short term, and cost savings in the long term through reduced training times. However, Lean production is just one aspect - Volkswagen also uses product differentiation through a range of vehicles to attract different customer segments. To remain competitive requires meeting goals for promotion, price, and technology while continuously adapting to changes in production methods over time.

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Sumeth Daluwatta
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50 views1 page

Volkswagen's Lean Production Advantage

Volkswagen has used Lean production techniques like ergonomic workstations to become more competitive. This allows higher productivity and lower costs in the short term, and cost savings in the long term through reduced training times. However, Lean production is just one aspect - Volkswagen also uses product differentiation through a range of vehicles to attract different customer segments. To remain competitive requires meeting goals for promotion, price, and technology while continuously adapting to changes in production methods over time.

Uploaded by

Sumeth Daluwatta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

To what extent has Lean production allowed Volkswagen to become more competitive in the car

industry? [15]

Lean production is an approach to management that focus of cutting out waste whilst
ensuring quality. One way that Volkswagen use Lean production is through the use of ergonomics.
For example, through the “ergonomic assembly seats and tools that are perfectly designed for the
particular job”. This will allow Volkswagen to become more competitive as it will cause minimum
amount of time wasted with the equipment. In the short-term, it will allow Volkswagen to have a
higher productivity rate and a higher production output allowing them to become more competitive.
In the long-term it will also help to save costs and therefore allowing them to become more
competitive. Furthermore, with the use of ergonomics, it also means that Employees “won’t have to
learn new work steps” at different stations. Because of this, it also saves time for training in the
short-term for the employees and in the long-term also helps reduces total costs for the business,
and therefore helps maximise total output for Volkswagen. It will further allow them to achieve
economies of scale which will further help reduce costs per unit, therefore increasing their profit
levels. Therefore, making them competitive.

However, it could also be argued that Volkswagen use Porter’s Generic Strategies of
Differentiation to gain a competitive advantage. For example, one way Volkswagen has achieved
this, is through different elements of their marketing mix. For example, Volkswagen ability to
produce different types of vehicles (their products) such as: “Gold, Tiguan, Touran” and more
recently the “Seat Tarraco”. This has allowed Volkswagen to be able to meat the wants and needs to
different consumers. Therefore, increasing their chance of sales and therefore being able to
compete more competitively in the car market. However, this mainly depends on their other factors
of their marketing mix. Volkswagen need to ensure that they also meet their criteria for promotion,
place and price to ensure that they can stay competitive within the car industry. Furthermore, to
stay competitive, Volkswagen need to ensure they have the same level or better technology within
their car models compared to competitors. This will enhance Volkswagen ability to survive and
therefore will help them stay competitive within the car industry.

Overall, Lean Production is only a small aspect of why Volkswagen has gained a competitive
advantage in the car industry. Volkswagen have used Lean Production to become competitive in
both the long-term and short-term. It has allowed them to reduce their production times and
therefore reducing customer wait times, therefore building a positive customer experience and also
producing a positive brand image, and a stronger competitive position. However, in the long-term it
is hard to say if Volkswagen will stay competitive because we don’t know what type of new
technology will come out for lean production. Therefore, it will be hard to say if Volkswagen will be
able to stay as competitive in the car industry. Furthermore, in the short-term there are many
implications, for example installing the ergonomic machinery for employees, therefore making the
total implementation difficult. However, in the long-term, by Volkswagen becoming ‘lean’, it will
enhance its ability to survive and prosper and therefore more competitive. However, Volkswagen
need to ensure that all their areas within their business and also working competitively. Without
this, Volkswagen may not be able to gain any sales and therefore won’t be able to compete
competitively within the car market. In the long-term it will be hard to say if they will Volkswagen
will stay competitive because we don’t know what might happen. However, in the short-term,
Volkswagen will be able to compete competitively if they carry on doing what they do.

Common questions

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In the short-term, implementing ergonomic machinery poses challenges in installation, making total implementation difficult but crucial for increased productivity and competitiveness . This initiative saves training time and reduces total costs, helping Volkswagen maximize output and remain competitive .

Lean production at Volkswagen contributes to its competitive advantage by using ergonomics, such as 'ergonomic assembly seats and tools designed for particular jobs,' leading to minimized time wastage and higher productivity, thus increasing competitiveness in the short term . In the long term, it helps in cost-saving and achieving economies of scale, reducing the cost per unit and increasing profit levels . However, maintaining this advantage may be challenging with technological changes .

The future competitiveness of Volkswagen is uncertain due to potential advancements in lean production technologies that may outpace their current adaptations. Additionally, the overall competitive dynamics in the car industry and technological innovations beyond lean production could also challenge Volkswagen's sustained competitive edge .

Volkswagen strategically balances Lean production with technological innovations to sustain competitiveness by streamlining processes and reducing waste while also keeping pace with technological advancements. This dual approach helps them maintain efficiency and quality while addressing the evolving technological landscape and consumer expectations. However, reliance on future technology advancements poses a risk in predicting long-term stability .

New technologies in Lean production could potentially threaten Volkswagen's competitive advantage by making their current ergonomics and production techniques obsolete. Should competitors adopt more advanced technologies quicker, Volkswagen may face increased pressure to adapt or risk falling behind in competitive terms .

By focusing on quality and waste reduction through Lean production, Volkswagen reduces production times and customer wait times, enhancing customer experience and building a positive brand image. These improvements contribute to a stronger competitive position by fostering a favorable perception among customers and promoting repeat business .

Volkswagen's competitive strategy through differentiation is supported by their marketing mix, notably their diverse product range including models like 'Golf, Tiguan, Touran,' and more recently 'Seat Tarraco,' which meet various consumer needs . This increases sales potential and competitiveness, although success also depends on promotional, place, and price strategies .

Economies of scale allow Volkswagen to reduce costs per unit, enhancing profit levels and long-term competitiveness. As Volkswagen increases its output through efficient production methods, it benefits from cost reductions that enhance its ability to price competitively and invest in further innovations .

Volkswagen applies Porter’s Generic Strategies of Differentiation by offering a diverse range of products that cater to different consumer needs, increasing sales opportunities and competitiveness. The effectiveness of this strategy also hinges on their ability to maintain competitive elements in the marketing mix, such as promotion, place, and pricing .

By producing diverse vehicles such as 'Golf, Tiguan, and Touran,' Volkswagen meets varying consumer needs, enhancing sales potential and market competitiveness. This adaptability allows Volkswagen to capture a wider audience and build strong market presence, which is essential for sustainable competitive advantage .

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