New agreement brings many benefits

A good agreement is the foundation of a good delivery. When Volvo Powertrain in Göteborg asked Coor to review the agreements between the companies, a hidden savings potential came to light. Today 17 agreements have now become one and benefits include lower service costs, better control, less administration and above all more efficient service.

Volvo Powertrain is part of the Volvo Group and is responsible for developing and manufacturing heavy engines, gearboxes and drive shafts. Volvo Powertrain’s head office in Göteborg was recently refurbished to adapt it to the altered needs of the operation. When Volvo Powertrain was moving into the new premises, it also decided to review the agreements for workplace and production service with Coor. The old agreement structure was muddled and hard to interpret, and above all there were too many agreements. Volvo Powertrain therefore asked Coor to review the way the agreements were drawn up.

“We wanted to review the agreement situation and asked Coor to suggest ways in which we could become more efficient together. It was a task Coor certainly took seriously,” says Jörgen Scribe, CFO at Volvo Powertrain.

Unbiased analysis

Coor carried out an analysis of its entire delivery to Volvo Powertrain in Göteborg, and this led to various suggested changes, such as how the agreements were structured. Once the analysis was complete, a total of 17 agreements had been condensed down into a single all-encompassing agreement. The new agreement encompasses Coor’s total delivery in workplace and production service.

Volvo Powertrain signed the new agreement at the end of 2007 and the effects were noticeable immediately. The agreement also states that the companies will continue to work together to identify other ways in which Coor can help improve Volvo Powertrain’s efficiency.

“One tangible result of the new agreement process is that we’ve been able to move to new, better adapted premises yet remain at the same cost level. This is a direct result of the close collaboration we enjoy with Coor, who brought a lot of professionalism to the task,” Jörgen Scribe explains.

Function rather than person

One major change in the agreement is that Volvo Powertrain now buys a function rather than staffing from Coor. This means that Volvo Powertrain pays for a service performed, rather than for a particular staffing level. In this way the delivery can be better adapted to the current service requirement at Volvo Powertrain. The agreement is based on a pricing model whereby the cost of the function is adjusted in relation to how much office space is used, how many employees Volvo Powertrain has, and how many conference rooms there are, the result being greater flexibility for the client. Furthermore, both parties now enjoy less administration, partly thanks to fewer invoices.
“As a client we have a responsibility to help suppliers improve, especially when it comes to making clear demands. Having a good rapport on a personal level is, of course, important but there also has to be a professional relationship as far as clarity in business agreements is concerned,” says Jörgen Scribe.

Thanks to the new agreement, Volvo Powertrain now has a more cost-effective service delivery, and ways of applying the agreement structure to other parts of the operation are being looked into.

“The agreement review has had an extremely positive effect on Coor’s delivery, and we hope to be able to develop things even further,” Jörgen Scribe concludes.

A goof agreement

About Volvo Powertrain

Volvo Powertrain AB is a business unit of AB Volvo with responsibility for the development and production of engines, gearboxes, shafts and complete driving systems for heavy commercial vehicles and applications for the Volvo, Renault and Mack brands. In global terms, the company is one of the largest in its industry. Volvo Powertrain has approximately 8,000 employees and operations in Sweden, France, the US and Brazil.

About the agreement with Volvo Powertrain in Göteborg

The agreement encompasses services primarily in workplace and production service. It regulates Coor’s function-based commitment for Volvo Powertrain in Göteborg and covers, among other things, workplace services for 1,136 service users spread across 15,745 square metres, as well as 73 conference rooms.