External interface

safeguards a dynamic standardization-related dialogue in the organization, which finally enables close interrelation of the various efforts.

standardization work, Volvo endeavors to promote precisely those specifications that best suit its products and strategies.

Manager B: “We need to be able to source materials, and we need suppliers worldwide to fulfill our requirements in the cheapest possible way, without endangering quality. Which means that if these requirements are spread internationally, or even become … international standards, it makes it much easier for us. We don’t have to change... competitors need to change! So, it’s about following the standards or setting the standards.”

Manager F: “[referring to a Volvo employee] who is the chairman in the ISO group, and then we say that we are making our drawings that way in Volvo. And then the rest of the world are doing it that way. We can have an advantage from that, because then every company can read our drawings and understand them.

This is very beneficial when we go to a supplier, with our Volvo standard.”

Manager F: “If you are second in the market it is very difficult to take the lead. If you are first out there and you show what you are doing, you don’t need to hide what you have. I think that is exactly how you can see standardization: make it open and be first, then you can take [the] lead.”

Manager D: “As I said, that's my experience also from the European work. That the ones who are participating are very knowledgeable. I really think it's about knowledge. If you don't know an area, you have nothing to say about the standard.”

Hence, Volvo aims to proceed with its preferred specifications and adjustments (introducing them early) in order to effectively deploy its assertive approach, since being able to act quickly within the standardization game increases the company’s chances of successfully launching them.

Specifically, precedence is important when a company pursues an assertive standardization strategy—that is, a strategy of promoting particular technological specifications. Offering a technological solution quickly to an emerging problem or challenge during an external standardization process considerably increases the chances of “locking in” that solution—that is, the company’s favored solution.

6.8.2 Cultivation of buying coalitions

Finally, a major reason why Volvo wishes to lead formal standardization and is willing to commit a great amount of resources to this goal is its need to source materials, and hence access suppliers who are able to deliver them.

Manager F, Corporate standards: “We buy a lot of components outside the Volvo Group, because we basically design the trucks and we assemble them, but all the components, or 90% of them, are made outside Volvo. Maybe we make the engines, but even then, most of the components used are also bought from suppliers.”

Manager B, Corporate standards: “Sourcing suppliers. It’s easier to find suppliers that can fulfill our requirements. That's one of the benefits.”

Particularly for Volvo, which (1) manufactures and delivers hundreds of thousands of products every year (approximately 250,000 units per year, rendering Volvo Group the third largest trucks and buses manufacturer in the world as of 2015 [Carr, 2015]), (2) operates in a number of countries (production facilities in 19 countries, as of 2014, [Volvo Group, 2014]), and (3) places great emphasis on quality assurance and safety (core values [Volvo Group Annual Report, 2014]), it becomes even more important to communicate effectively with a large base of suppliers, who are also familiar with Volvo’s requirements and can deliver on them reliably.

Manager F, Corporate standards: “…because if we are working as a group company in many, many countries in the world, that means we have thousands of suppliers in different areas. Of course the suppliers need to know how we make our drawings, how we weld … they have to understand how the parts have been weld[ed] to understand Volvo's requirements, because otherwise they can't support us.”

Manager C: “[That is a need for us] to develop a standard in this way, to be able to purchase from several different suppliers.”

As Volvo standardization personnel and management see it, a secure and efficient way to ensure that a broad range of suppliers are familiar with specific requirements is having those requirements and conditions specified in standards, which the majority of industry players then uses in their transactions with suppliers—that is, formal standards that have resulted from consensus formal standardization processes.

Specialist B: “Since we have the same supplier base, and if the suppliers and we—

as the suppliers’ customers—have the same view on the standard, everything is much, much easier.”

Manager F, Corporate Standards: “[Since] we have the same supplier as Scania or Mercedes, it is better for all companies to have the same processes outside to make it cheaper.”

Specialist B: “And we want to harmonize, to get the benefits of one common process and interface the suppliers.”

In other words, through its assertive standardization management approach, Volvo tries hard to cultivate buying coalitions—that is, coalitions of customers (including Volvo and its competitors) who use the same formal standards—and in that sense train their suppliers to serve the various customers effectively and efficiently. For some companies (like Volvo), this is more important than for others, which justifies why the former would push harder for it, as well as why Volvo prefers its internal specifications to be pushed into formal standards.

Manager F, Corporate Standards: “[We need standardization] because the other way is that we have to describe for every supplier what is the way that we make drawings, [weld], what are the dimensions [and] tolerances, etc. Through standards we show the way of working; if the supplier wants to support Volvo with a part, they need to follow the standard in every area.”

Manager C: “But the standard could define the basic requirements and by that we can purchase sensors from many different suppliers and we can take one supplier and if we want to change we can take another one, because they are fulfilling the same standard when it comes to the base requirements.”

Manager B, Corporate Standards: “We need to be able to source materials, and we need suppliers worldwide to fulfill our requirements in the cheapest possible way, without endangering quality. Which means that if these requirements are spread internationally, or even become an international standard, it makes it much easier for us. We don't have to change... competitors need to change!”

Manager F, Corporate Standards: “We can have an advantage from that, because then every company can read our drawings and understand them. This is very beneficial when we go to a supplier with our Volvo standard.”

The following section will investigate further the specific circumstances within Volvo Group that justify its selection of an assertive standardization management approach.