‘Divorce is too bloody expensive’: Volvo’s purchasing chief on vetting and forging effective partnerships

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Linda Lacina, Digital Editor, World Economic Forum

There is no Tinder for business partnerships, no algorithm that can prompt an exec to swipe right on an external business partner with the perfect match of mindsets and capabilities to help get big problems solved twice as fast. Businesses are on their own to vet the relationships that will either propel them forward – or hold them back.

These relationships will be critical in the years to come. Business success will rest on the ability of organizations to find innovative ways to leverage a range of capabilities. Often the fastest way to take advantage of shifting technologies or business models will be through business partnerships.

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But how do you forge great business partnerships? Andrea Fuder, the chief purchasing officer at Volvo Group, has given this question careful thought as her job cuts across a range of industries and sectors and her decisions play a key role in how the company can meet a number of big goals, including countering climate change and protecting human rights.

On the latest Meet the Leader podcast, recorded at the Annual Meeting in Davos Switzerland, Fuder shared the factors she considers crucial to getting the right business partnerships in place. They include:

• Get to know each other
  Fuder invests time in meeting top leadership. These individuals set the tone of the company and will play key roles in the success or failure of your partnership. “I really like to meet them and have a discussion,” said Fuder. “And I ask myself, do I have trust in how this company is led by their top leader?”
• See how they treat people
  Every company will say they value their staff or value inclusivity, but only a careful review can tell you if their values align with yours. When reviewing certain services in certain areas, Fuder and her team consider key things such as fair salaries, meeting freedom of speech and human rights standards.But Fuder also goes a step further when reviews require a site visit: She checks the staff canteen, asking herself “Would I like every day to have my sandwich in this room?” Said Fuder: “It tells me how they value their employees.”
• Know what you want – now and in the long term
  Fuder said that at the forefront of the decisions she makes is one key question that she always asks herself. This question helps ensure that the business partnership can serve current and future needs: “In the decisions we take, do we do enough to safeguard the business of today, but at the same time make us as a company ready for the future requirements?” Said Fuder, the right step will balance the “performance questions of today with transforming questions of tomorrow.”
• Get ready to commit
  Fuder considers sourcing decisions as carefully as marriage proposals. You’ll want a relationship you know that you can build upon. You should also be able to picture yourself working with this organization and its leaders for the long term. For Fuder’s part, this means understanding their quality expectations, technology performance and delivery precision. She said: “When we go together to the altar, it is for a lifetime because, you know, divorce is always so bloody expensive, right?”

Learn more about how Fuder vets business partnerships on the latest Meet The Leader. Read the transcript below.

TRANSCRIPT

Meet The Leader / Linda Lacina: Supply chains have been in disarray and more economic change is around the corner. How can leaders prepare for what’s ahead?

Andrea Fuder: I think what we have seen, Linda, now in the last months and years, is that resilience is definitely something we have to work on to be better prepared.

When we talk about resiliency, there are many definitions. For me, the key of resiliency is really to have diversified supply chains and what we can definitely not accept — that, for some key technologies, we have monopolistic hubs in the world. So, this is something definitely we have to fix.

But I think also what we saw in the pandemic: being prepared for such an event – we have to be more proactively thinking if this will happen again, you know, that we have our checklist ready, the fire brigade can go out and know exactly what to do, and that we don’t lose time to really define the to-do list.

So, I think here this is a key learning for me and where we have to come together now proactively to protect ourselves if we come again into one of these challenging situations.

Meet The Leader / Linda Lacina: Is there one particular crisis that you are keeping top of mind?

Andrea Fuder: If you allow me to be personal. You know, being the chief purchasing officer of such a big group and having been through the corona, having been through so many bottlenecks with semiconductors, transport, name it, for me personally the most dramatic one was the Ukraine war.

You know, I’m German, and I grew up in a divided country. And, you know, I was standing in Berlin on the wall and I thought, this can’t be right. And therefore, one of the happiest days in my life was actually the 9 November, 1989. And I remember exactly where I was sitting when in the news came: the wall is open.

And then to experience the 24th of February this year, was one of the saddest days of my life, because I really have hoped that we have left this behind. So, for sure, on a personal note, this has impacted me most.

Meet The Leader / Linda Lacina: And how so? How are you changed? How is your perspective different?

Andrea Fuder: I think we have to understand that all the values we are used to, they are not coming for free, you know? So, for me, it fostered even more that a value-based leadership is what we need, and that we understand in my daily business with whom do we want to work.

For me now, everything starts from the top. I want to have partners in my supply network who have the same vision, who share the same values. And I will take all my capacity, capabilities to make this happen, to align with the right guys, who are really thinking about protecting climate, but also protecting people, respecting human rights and allowing everyone to grow and to live in a safe and healthy environment.

“

When we go together to the altar, it is for a lifetime because you know, divorce is always so bloody expensive, right?”— Andrea Fuder, Chief Purchasing Officer, Volvo

Meet The Leader / Linda Lacina: How do you do that? What’s your strategy or your approach?

Andrea Fuder: Well, we have been very early out with what we call supply network code of contact, where we are very clear on what we expect and proactively we are making audits.

So, before we make any sourcing decision, this is a key area to check. And sometimes it can be that it is just a questionnaire. But when we are in critical countries, and also talking about critical things we are buying like services, then we go there and make live checks, live audits, that we can be really sure that the partner we are marrying — because every sourcing decision in a way is a wedding, right — is the right one.

Meet The Leader / Linda Lacina: And what are you trying to guard against? What do you want to make sure that you don’t see when you do those live checks?

Andrea Fuder: Of course, it is the basic stuff, you know, fair salaries, freedom of speech, all the human rights what you can expect. So, working times, all these things are checked. Like I said, we have here very clear requirements and I think we are very ambitious and very specific in what we ask for.

Meet The Leader / Linda Lacina: Having this in place, how has this improved both efficiencies and just in general alignment?

Andrea Fuder: Like I said, everything starts with having partners we trust and we think share the same values. And what also has changed now in this crisis is that we don’t think in this very transactional, first tier, relation.

So, what we are now doing much more than before, we think in ‘supply network’. And we really connect to the guys which are important for value creation but who could also be potential risk. So, we are thinking now much broader and we have left this only having a constant dialogue with the first-tier supply partners. And I think that’s something which is now strengthened even more.

Meet The Leader / Linda Lacina: I think it’s interesting how you talk about business partnerships as relationships, right?

Andrea Fuder: Absolutely. And this is what it is, you know. And I made this joke that every sourcing decision is a wedding, but this is a little bit how I see it. So, we put a lot of kind of front-loading work before we really go to sourcing decisions, so that when we go together to the altar, you know, then it is for lifetime because you know, divorce is always so bloody expensive, right?

Meet The Leader / Linda Lacina: And how do you find the right match?

Andrea Fuder: Unfortunately, we have not these fantastic apps, you know.

Meet The Leader / Linda Lacina: There’s no Tinder, unfortunately, for purchasing, for trucks, right?

Andrea Fuder: Perhaps this is something we should think about, right? No, I think it’s a lot about investing time in meeting the top guys, because at the end of the day I think the tone of a company is very much given by the top guys.

So, I really like to meet them and have a discussion. And I ask myself, do I have trust in how this company is led by their top leader?

“

Because 70% of our value is coming from the supply network, we as purchasing officers can use our purchasing power to really make a difference.”— Andrea Fuder, Chief Purchasing Officer, Volvo

Meet The Leader / Linda Lacina: And it’s hard to maybe put a finger on why you trust somebody, but are there ever tells where you say to yourself ‘this just might not be a fit for us?’ What do you look for?

Andrea Fuder: When we decide on partners, we have quite a big piano we play. So, we look to quality expectations. We look to technology performance. We look to delivery precision. We look to code of conduct — how do they treat their people? And just as a story, when I visit a supply partner, you know, what I always check? It is the canteen, just to see how with how much love this canteen is set up. It tells me how they value their employees.

But to continue, of course now a key element of our decisions is of course also sustainability and of course, competitive price. You know, we are in the B2B business, so what we really look for is total cost of ownership. And also, I want to have the right price if you understand what I mean? I’m not at all interested in dumping prices, because they’re not sustainable. I want to have the right price so that we feel everyone is in a win-win situation. Because my definition of partnership, Linda, is creating a win-win situation and then it is robust and it is sustainable and it is long-term.

Meet The Leader / Linda Lacina: When you are looking at those canteens and you think, you know what, they’re not taking care of their kids, right?

Andrea Fuder: Yeah, that’s right. This would be for me, for example, factors that I have no trust in this company.

Meet The Leader / Linda Lacina: And, what are you looking for? What would be an example of a tell that shows a potential gap?

Andrea Fuder: Yeah. You know, the easiest way to find this out is always to ask yourself, would I like every day to have my sandwich in this room, or would I like to choose from what they offer me there, and would I love to have my 45-, 60-minute break, whatever, to spend in this room?

So, it’s easy, it’s simple. And perhaps it sounds a little bit too simple, but I think this is showing basic treatment of the people.

Meet The Leader / Linda Lacina: As Chief Purchasing Officer, you have a very unique perspective into Volvo. Is there something that you that would surprise other people about what’s needed for sustainability or what’s needed for business partnerships? What’s something that only somebody in your position would be able to understand?

Andrea Fuder: You know what, Linda? I love this question and do you know why? I think the purchasing profession is a little bit unknown. Everyone knows what to expect from engineering. Everyone knows what to expect from sales and marketing.

But I think if you want to see something good in this supply crisis, it is really this purchasing profession gets the right attention.

What I love to be in purchasing is that you have to spin so many plates every day. You know everything of today’s business, you know everything of the business of the future, you work with all teams in the company and you have this outside-in view, and inside-out view. This is what I love.

I’m a mechanical engineer and I started my career being a quality engineer and then I went to logistics, but then purchasing. This was for me, then, my final destination, because I just love to be so much a spider in the web.

And also, what I love now in this transformation journey, we can make a difference, because 70% of our value is coming from the supply network. So, I love to think that we as purchasing officers, we can use our purchasing power to really make a difference. The way what we ask from our supply network will be cascaded down so we can really change things and people should be aware of it. So, like I said, I love to be Chief Purchasing Officer.

At the moment, of course, it’s not the easiest job in life, but it is definitely a job which gives you a lot of possibilities to influence the world of tomorrow.

Meet The Leader / Linda Lacina: You said you like to be a spider in the web. What does that mean?

Andrea Fuder: Working with all teams in the company. But also, not getting stuck in this company bubble, because you are always also working with so many partners around you that you really understand what’s going on. Micropolitics, currency, inflation, you have a good understanding of the company, but also of the world, the different countries, you are active in.

Meet The Leader / Linda Lacina: Given the supply crisis, what’s one thing that you remind yourself of, or a question you ask yourself, to stay on the right path?

Andrea Fuder: I ask every day: in the decisions we take, do we do enough to safeguard the business of today, but at the same time make us as a company ready for the future requirements? So, every day you have to balance out performance questions of today with transforming questions of tomorrow.

“

“I take a lot of my time to talk first about the why I would like people to do things. Because when they understand the why, then they will be much more engaged to be with you on the journey.” ”— Andrea Fuder, Chief Purchasing Officer, Volvo

Meet The Leader / Linda Lacina: How do you think that you’ve changed as a leader since the beginning of your career?

Andrea Fuder: I understand now much more that, whatever you want to achieve, you have to take people with you. If you think as a leader, you can just command that things are happening it will actually not happen. I take a lot of my time to talk first about the why I would like people to do things. Because when they understand the why, then they will be much more engaged to be with you on the journey.

I think here I got more mature as a person, to understand that everything starts and ends with people. They are by far the highest value we have in our company. So never forget to take people with you.

“

“Everything starts and ends with people. They are by far the highest value we have in our company.” ”— Andrea Fuder, Chief Purchasing Officer, Volvo

Meet The Leader / Linda Lacina: What’s something you do now to take people with you that maybe wouldn’t have occurred to you at the beginning of your career? Beyond recommending an esteemed colleague for promotion or something, what’s another way that you do that?

Andrea Fuder: Well, what I also think is important that I offer people always opportunity to grow, to develop people also by cross-team mobility. So, I’m very much a fan to also motivate my people to go out from purchasing to other teams to learn new things. To go to engineering, to go to production, to go to sales, so that, with their knowledge, they see other opportunities.

And I also love to bring in colleagues from other teams, because when we talk about growth, permanent constant growth, we should not only think in growing in career, it’s also growing in experience, seeing situations from different angles. This will also make us stronger as a company. So, I’m a big fan of that as well.

Meet The Leader / Linda Lacina: Is there a piece of advice that has really spoken to you and that’s helped you?

Andrea Fuder: Advice perhaps I give to my people? Very often I meet fantastic new colleagues who are just super engaged, super hungry. And perhaps also, you know, are so much on this career path that they tend to do job hopping. And what I always say to them — guys, take your time to really make a difference in the job you have today and to harvest from what you have done. And then when you feel, now, I have made my fingerprint, now I harvest from the hard work, now I’m ready for the next challenge. Then go to the next position, in discussion with your manager. So, don’t think just that through job hopping you can make a career, because at one point in time, knowledge really is important.

When I look to myself, I have worked in quality, I’ve worked in logistics, I’ve been in many different purchasing positions, but now I consider myself to be a leader who can fly high — strategic, but also if needed, I think I have the knowledge to drill deep, especially when something unexpected is happening. And this is only possible because I had in my career always a pace which was healthy. And sometimes I think our youngsters, perhaps, live a little bit over ambitious.

Meet The Leader / Linda Lacina: And maybe don’t realize the power of relationship building and understanding capabilities that can only come with time?

Andrea Fuder: Exactly.

Meet The Leader / Linda Lacina: Be a spider and a web, you know, having all those threads, knowing the threads.

Andrea Fuder: Exactly, fully agree.

Meet The Leader / Linda Lacina: Is there a book you recommend?

Andrea Fuder: Now this is the moment where you want me to be super smart and come with a fantastic recommendation?

Meet The Leader / Linda Lacina: You’ve already been super smart.

Andrea Fuder: Now I should bring up fantastic titles of super top-notch books, right? I would actually take a completely different approach. You know, one book I would still recommend, because I love it since years, is Pippi Longstocking.

Meet The Leader / Linda Lacina: I love it.

Andrea Fuder: And you know why?

Meet The Leader / Linda Lacina: Why?

Andrea Fuder: Because Pippi is still today a role model for many things. Because she is strong, she does not take care about gender specific roles, and she demands, even from the grownups, that she’s treated on eye level. And also, her leadership skills, you know, she was a great leader. She motivated people to follow her by convincing them. So, for me, she is still today a role model of a true leader.