ABSTRACT
This chapter focuses on Volkswagen as the lead firm and explores how the company’s approach to value chain orchestration has changed over time. Following the introduction of a new product architecture, with increased modularization of components and the introduction of globally harmonized vehicle platforms, Volkswagen has changed its approach to procurement and to value chain orchestration. The changes in Volkswagen’s purchasing strategy reshaped the entire value chain of the automotive industry. It is argued that the introduction of several strategies, like the centralization of purchasing, the reduction of supply firms, the local-to-local strategy, and the multiple supplier strategy leads to a deep restructuring of the global automotive industry. Furthermore, the new approach to value chain orchestration impacts the prospects for participation and upgrading for supply firms from both advanced and emerging economies. Through supplier development programs, conscious consolidation of the supply base, and steering of the internationalization of suppliers, Volkswagen proactively facilitates the upgrading processes of some of the most capable suppliers in its value chain while squeezing out redundant supply firms.
