Audi Global Supply Chain

Introduction
Audi produces luxury brand sedans for consumers around the world. As the manufacturer of premium automobiles with its main production facility in Ingolstadt, Germany, but with plants in Hungary, China, Thailand and Brazil as well, the company relies upon more than 1000 suppliers throughout its global supply chain.
Selecting International Strategy
The six components of global supply chains include: strategy and alignment; supply chain assets and routing; process, procedures and systems; planning and communication; outsourcing; and people and culture. A demand-driven plan and business model derived from information retrieved in real-time is preferable and is one that Audi has developed over the years to enhance its standing in the marketplace. It has developed an adaptive and quick-footed supply chain, particularly in Ingolstadt where it uses a Just-in-Time supply deliver system. Innovation has also been key to managing the company’s success over time, with its vehicles reflecting consumer demand in the luxury brand market. Its supply chain allows it to keep costs low and efficiency high, as an order-to-delivery system is also in place. Audi’s just-in-time strategy facilitates optimum communication; it boasts an in-house delivery system throughout Europe and outsources delivery in Asia; its people and culture is celebrated for promoting a values-based culture that upholds the integrity of the individual at every level.
Global Supply Chain Strategy
Sourcing and distribution are the two main strategic points that Audi focuses on for its global supply chain strategy. As Audi does not “manufacture most of [its] parts, systems, and modules internally” (Diaz, 2006, p. 102), it must rely upon outsourcing to meet its needs—and the nature of the business means it must have parts quickly, which it can do with the JIT strategy. Parts are sent right from the supplier in Guterverteilzentrum to the production line in Ingolstadt in a matter of minutes. In other plants, the process is a little slower as the suppliers are not as centrally located to the production plant, which is why most of the production is done in Germany. Costs are kept low as a result and responsiveness is immediate.
The Elements of Global Supply Chain
Facilities, inventory, transportation, information sharing and procurement are the five elements of the global supply chain that Audi incorporates into its strategy. Its facilities are centralized in Ingolstadt with suppliers and the main production plant literally working side by side. Inventory is cycle-based. Transportation is in-house in Europe and outsourced in China. It uses an order-to-delivery system which allows the company “later production changes and more flexibility for swapping orders in the pipeline” (Ludwig, 2010). Information sharing is accomplished through pull as well as by information integration as Audi provides consumers through its online presence with access to information, ordering, delivery, etc. Forecasting and aggregate planning are accomplished by way of the company’s JIT process and its order-to-delivery system. Both of these facilitate the company’s procurement strategy, which allows distributors and retailers to engage with consumers to obtain vehicles produced at Audi plants and shipped worldwide. Each of these five elements is integrated with one another in the overall strategic process made possible through the JIT and order-to-delivery system of production and distribution in the global supply chain.
The Global Distribution Network Design
Audi uses a Distributor Storage with Carrier Delivery network strategy in combination with a Just-in-Time Delivery (JIT) system. The main production plant in Germany produces the cars which are then sent to distributors/retailers who in turn sell the cars to customers. The JIT strategy allows Audi to maintain a suitable cost vs. efficiency trade-off, as the company’s JIT suppliers are all located virtually right next door to the plant in Ingolstadt in the Guterverteilzentrum complex (Diaz, 2006). This strategy allows inventory to be held by distributors, which means transportation costs are lower for Audi, the information infrastructure is less complex, response time is faster, and the entire order can be aggregated before shipping, which is important for a company that produces customized vehicles. The JIT strategy allows Audi to produce these orders instantly as suppliers are literally right next door and can be counted on to deliver parts at a moment’s notice. This has the added beneficial effect of reducing the amount of cost per space required by the company for storing parts.
Recommendations
Audi should continue to utilize its JIT strategy and increase this model’s usage throughout the globe at all of its production plants. Generating new complexes where suppliers can exist literally right next door to the production plant can help Audi to further streamline its supply chain and create products on-demand as consumers communicate via digital web pages and retailers/distributors to build the products they desire. Order-to-delivery can also be expanded into Asia, where outsourcing is currently required; however, the people and culture component of the supply chain must be approached differently in Asia than it is in Europe to facilitate this aim.
References
Diaz, L. M. (2006). Evaluation of cooperative planning in supply chains. NY: Springer.
Ludwig, C. (2010). Audi: leading the pack for logistics again. Retrieved from
https://automotivelogistics.media/intelligence/audi-leading-the-pack-for-logistics-again