Procurement Central to Volkswagen's Electrification Strategy

Volkswagen operates on a purchasing scale that few other organisations can approach, sourcing a vast range of components from battery minerals to semiconductors through a global network.

In recent years its procurement function has been reorganised to support a group-wide transition to electrification, manage geopolitical risk and integrate sustainability into the core of its contract-awarding decisions.

Under the leadership of Dirk Große-Loheide, Board Member for Procurement, the group has reinforced its due diligence on raw materials, digitised its manufacturing plants and pursued greater supply-chain transparency particularly for electric vehicle batteries.

An automotive trailblazer

Volkswagen Group is a major automotive manufacturer with multiple brand groups spanning the mass market to luxury segments.

It produces millions of vehicles annually across its brands including Volkswagen Passenger Cars, Audi, Škoda and Porsche, supported by more than 100 production sites worldwide.

In recent times, Volkswagen has increased its focus on affordable e-mobility, autonomous driving and its own battery cell production in Germany.

Responsible procurement

Volkswagen now links supplier selection directly to sustainability performance.

Its Raw Material Due Diligence Management System is focused on 18 materials classified as high-risk, applying risk-based measures to identify and mitigate environmental and human-rights risks with specific transparency requirements for battery suppliers. This approach positions sustainability as a factor that influences commercial decisions rather than just a policy statement.

Meanwhile, Volkswagen's Responsible Raw Materials Policy outlines its expectations for upstream due diligence aligned with international standards. This is complemented by programmes such as the recycling of battery materials at its Salzgitter facility which could support long-term security of supply and reduce embedded carbon.

These initiatives address the supply of critical inputs like lithium, nickel and cobalt while developing future streams of secondary materials.

Decarbonisation and digitalisation

In line with Volkswagen's climate commitments, procurement teams are tasked with reducing emissions from suppliers particularly for energy-intensive components and battery materials.

This strategy includes requiring data transparency from partners, encouraging the use of renewable energy and prioritising inputs with a lower carbon footprint to support net-zero goals across its operations.

Procurement also benefits from Volkswagen’s digitised manufacturing footprint. An expanded partnership with Amazon Web Services underpins a factory cloud that connects dozens of plants aiming to improve quality and throughput.

Better data from the plants stands to create steadier demand signals and tighter supplier integration which in turn could support resilience without requiring excess inventory.

Procurement leadership

Dirk Große-Loheide took responsibility for Group Procurement at the beginning of 2023 and joined the Extended Executive Committee as part of a reorganisation to align purchasing functions across the group.

A long-serving Volkswagen employee, Dirk started in machine procurement in Wolfsburg and held senior purchasing roles at SEAT, Volkswagen Commercial Vehicles and Volkswagen de México before assuming the group-wide position.

He is responsible for embedding sustainability into sourcing, increasing transparency in battery supply chains and improving cost and risk control across a complex global supplier base.

After his appointment was confirmed, Oliver Blume, CEO at Volkswagen, said: “In Dirk Große-Loheide, we have won another procurement expert with international experience for this strategic key function in the brand and in the group."

The importance of risk management

With exposure to volatile regions and technologies, Volkswagen continues to rebalance its sourcing, manage semiconductor availability and hedge against geopolitical risk.

The procurement function's role is to maintain supply continuity as electrification accelerates and regional policies change.

The message to Volkswagen’s suppliers is that sustainability performance, verified data and traceability are now prerequisites for doing business. Suppliers that can demonstrate low-carbon production processes, robust due diligence and digital connectivity may find themselves in a favourable position.

Those who can also help Volkswagen de-risk the supply of critical materials and enhance productivity in its connected factories will find a partner prepared for long-term collaboration.