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Driving performance to create value

Our Value Chain

The Volvo Group generates long-term competitiveness by maximizing value creation in every part of the value chain through increased efficiency, quality and performance and by acting responsibly towards business partners, employees and the world around us.

Customers

The customer is at the center of everything we do, and the customer’s voice is present in every part of the value chain. By delivering customer value we deliver value for ourselves and our stakeholders. Our customers contribute to prosperity by transporting people and goods as well as providing societies with infrastructure that advance development. Our aim is to support our customers by providing offers that increase their productivity, secure uptime and increase fuel efficiency, which drive their financial performance and reduce their impact on the environment.

Product development

Fulfilling our customers’ needs and improving their profitability and environmental performance forms the basis of our product and service development. Product development is also influenced by legislation, changes in society and new technologies. There are strong trends such as automation, electromobility and connectivity that need to be balanced with investments in development of current technologies.

Purchasing

Long-term cooperation with suppliers drives efficiency, quality and responsible behavior throughout the value chain. The Volvo Group is aiming for purchasing excellence, placing high demands on ourselves and our supply chain partners. We have both global and local supply chains to deliver components, parts and complete services and systems. When developing a robust supplier base, we look at a wide range of opportunities and risks. During 2020, we continued to prepare supply chain partners for new needs in the transformation towards carbon neutral products and operations. We have also invited suppliers to collaborate for securing sustainable minerals.

Production and logistics

Our global industrial and logistics system efficiently uses continuous improvement to meet internal targets and deliver on customer expectations. The industrial system consists of capital-intensive component factories as well as labor intensive assembly plants. The component factories supply the Group’s needs on a global basis, whereas assembly plants, in most cases, are located close to end-markets to cater for local needs and specifications and shorter delivery time.

Retail and service

Our global network of dealers and service centers staffed by competent and service-oriented personnel are key factors for customer satisfaction and success. The brand organizations within the Volvo Group support customers via efficient dealer workshops, and through service and maintenance agreements. With our service contracts and connected solutions, customers know when their vehicle or machine is due for service and what the cost will be for maintenance and repairs. Customers can bundle their vehicle, financing and other service purchases for a total solution. We work together with our retail organization through continuous improvement and dealer development programs to ensure our customers get the best possible service.

Reuse

We strive to increase material efficiency and reduce energy use. In this work, we incorporate more recycled materials, recover heat and recycle waste. Our waste management is further described on page 158. Extending service life and operational uptime of assets is an important element of increased circularity and resource efficiency. Here, the main elements are to service, maintain and repair to increase the utilization rate of all materials in the products. As we increase our service-based business, the main output is uptime and availability of machines and vehicles. This is a prerequisite to focus even more on recyclability and remanufacturing.

Value creation 

For Customers

Almost 2 million trucks and 100,000 buses, which the Group manufactured in the past ten years, perform transport work worldwide. Construction equipment operate at sites all around the world, us having delivered about 650,000 machines in the last ten years. For our customers, uptime is everything. Regardless if it is a customer that owns one single truck or a fleet of trucks, if they are a public transport provider or a coach owner, a construction entrepreneur or a quarry owner; their performance depends on reliable products and services that meet the needs of their business. The Volvo Group has a long heritage of developing smart solutions to boost their performance.

 

For Society

Our products and services make societies function. Our customers operate bus lines so that people can get to work, they transport food and industrial goods and they build infrastructure such as roads and hospitals. Furthermore, road transport directly creates millions of jobs around the world. We also contribute to the local economy by being a major employer in many communities, providing both direct and indirect employment. In 2020 the Group paid SEK 9,270 M in social costs, SEK 3,631 M in pension costs and SEK 4,927 M in income taxes, in total SEK 17, 828 M. We also pay customs duties as well as property and energy taxes.

 

For Employees

The Group’s almost 100,000 employees are our most important asset. Employee engagement and a performance culture based on customer success, trust and passion are critical for the Group to fulfill its mission. The Group strives to offer competitive employment terms and benefits as well as a stimulating, safe and healthy work environment. In 2020 we paid SEK 40,887 M in salaries and remuneration.

 

For Suppliers

A solid supplier base and professional partnerships are essential for customer success. The Volvo Group provides both income and employment for a large number of companies and in many societies around the world. Purchased goods and services is the Volvo Group’s single largest expense and in 2020 we bought goods and services for SEK 232,861 M.

 

For Creditors

A long-term competitive business requires access to capital to be able to invest. The Volvo Group strives to ensure that the capital is used in the best possible way and to assure debt providers with the financial strength to secure proceeds and repayment. In 2020 the Volvo Group paid its creditors in the Industrial Operations SEK 1,102 M in interest.

 

For Shareholders

The Volvo Group strives to generate value for its shareholders. This is achieved through a positive share price development and payout of dividends. From 2015–2020 the price for the Volvo B share increased by 127%. Shareholders normally receive a certain portion of the retained earnings in the form of a dividend, after consideration has been given to the Group’s need for capital for continued development according to its strategies. For 2020 the Board of Directors proposes an ordinary dividend of SEK 6.00 per share and an extra dividend of SEK 9.00 per share, in total SEK 30,502 M.

 

For the Volvo Group

A significant portion of generated capital is normally transferred back into the business. The capital is used for investments that will strengthen competitiveness and create longterm value for the Group and its stakeholders. In 2020, the Volvo Group invested SEK 16.8 billion in R&D and another SEK 5.7 billion in properties, plants and equipment, in total SEK 22.5 billion.