Throughout the past several years of our lives, we, as a cohort, have studied business. From the perspective of marketing and management to that of accounting and finance, we have all been taught to analyze our environments for inefficiencies, problem-solving, and, ultimately, profit. Riding through the Gothenburg Volvo factory as an MBA student, I identified several concepts that were easy to identify and that provided context to our previous courses. These ideas included JIT Inventory, automation, and work-life balance.
The first thing that struck me when we began to drive alongside the Volvo production line was how little was actually in the space. I have previously visited factories in several countries, including the United States, Taiwan, and Japan, and had never before seen an active warehouse that was, for lack of a better word, empty. At the end of the tour, when I asked about it, I was informed that they use a Just-In-Time or JIT inventory system. This essentially means that Volvo is able to make its operation more efficient by keeping its production line empty of access clutter, and it is able to cut costs because it is not paying to store items that it may not need for an extended period of time. While this model is efficient, it made me wonder what the potential downsides of the system are. I wonder if, during COVID, when most supply chains were down, Volvo was unable to produce, not because of the virus itself, but because they were unable to keep up with their JIT inventory from suppliers and did not have enough on hand to keep producing.
The next thing that I noticed in the factory was the lack of automation. I feel like most places in the United States, and even other parts of the EU are taking advantage of automation to cut down on labor costs and human error, especially in the post-COVID era when the risks of relying on humans became apparent to everyone. There are apparently only two steps within the Volvo production process that rely solely on automation. This seems like a missed opportunity for increased efficiency, but I am guessing that because Scandinavians value their human capital above anything else, this is seen as less of a cost.
Keeping with the theme of human capital was the prioritization of work-life balance for all Sweden-based Volvo employees. I had heard of the 4-weeks mandatory summer break in the past, but it stuck with me differently this time. This is likely because I had to do a lot of loops around to be able to take off the 2-weeks necessary for the Business in Scandinavia course. There is a lot of research on how happy employees are more productive and have more company loyalty, so I assume that the same is true of Volvo.
Our visit to the Gothenburg Volvo factory provided a vivid, practical extension of the concepts we’ve studied throughout our business education. Witnessing the implementation of Just-In-Time inventory highlighted the benefits and potential risks of this efficiency-driven approach, particularly in the context of global supply chain disruptions. The minimal use of automation at Volvo contrasted sharply with trends in other regions, underscoring the Scandinavian emphasis on human capital and the inherent value placed on employees. Lastly, the prioritization of work-life balance through mandatory breaks reinforced the connection between employee well-being and productivity. This experience not only solidified our understanding of these business strategies but also prompted us to think critically about their applications and implications in a global context.
