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What Volkswagen’s New Play into The Heavy Truck Market Can Teach Us

Navistar International Truck

If you’ve been paying attention to the latest news, then you already know that Reuters recently reported on Volkswagen taking a stake in heavy vehicle manufacturer Navistar, Inc., in an effort to bolster their presence in the U.S. heavy truck market. Similar to when we talked about how teaming with the right partner to do SEO for your website is key, this move can teach us a bit about how having the right team in your corner can help solve some of the logistical challenges of entering a new space and poising yourself advantageously to tackle a competitive market.

There are hurdles in the form of marketing logistics, order fulfillment, etc., that take time to develop, but can be readily integrated when partnering with an existing entity. Navistar might not be a logistics company, but what they have in place will benefit Volkswagen as it seeks to expand its operations. Volkswagen, in turn, has resources that Navistar is in dire need of.

First, some background. Navistar was facing some troubles after an unwise technology investment. The years of wasted time and money spent trying to develop a new type of diesel engine put the company on a path to certain bankruptcy. Volkswagen agreeing to purchase a stake in the company infuses them with new life. In addition to infusing Navistar with cash to manage its debts and concentrate on getting business moving, the procurement deal gives them access to Volkswagen’s part supply network. This means Navistar can incorporate new technologies into its product line, creating greater quality. Specifically, this will likely mean Volkswagen’s next generation engines being fitted for Navistar trucks. So far, so good for both parties. Navistar gets a chance to turn things around, and Volkswagen gets a U.S. based partner for its truck engines (after failing to do so years ago when their engines failed to receive approval from U.S. regulators).

It is about more than just procuring parts and manufacturing trucks, however. This move could be the first step in a complete merger or Volkswagen buying Navistar outright. What then? Volkswagen will really be able to turn up the heat when it comes to expanding into the North American market. They’ll have more than just a partner to sell engines and parts to; they’ll have access to Navistar’s entire facilities network. This access is substantial, and it means Volkswagen will be able to leverage everything that Navistar has built up to this point. That is where the logistics angle comes into play.

Volkswagen already has the truck technology, the product, if you will. What they lacked was a plan to get that technology into the hands of consumers. Joining forces with Navistar gives them that ability. Navistar has the connections, the logistics operations for suppliers, dealers, etc. They have the warehouse space for storing surplus merchandise, and even some measure of ecommerce order fulfillment for allowing potential dealers make purchases of product online. All of this could easily be integrated and expanded for Volkswagen’s entry into the American market. It’s a brilliant move to take advantage of pre-existing systems and cut cost on trying to develop them independently.

Now, in the case of most smaller organizations, there aren’t ready opportunities for buying up existing businesses with advanced logistics chains that you can seamlessly integrate into your own framework. What does exist, though, are skilled 3rd party logistics companies that can provide cost effective alternatives to trying to juggle a ton of logistics matters for oneself. If you have a product on hand, for example, they can help develop the best strategy for getting that product to paying customers.

Outsourcing logistics like this provides further benefit. Generally speaking, the company you hire for logistics has a great deal of experience in the many facets of the craft. By pairing with a skilled logistics partner, you gain the benefit of their connections. Individuals important to the trade, powerful technologies for conducting business, and, most importantly, the proper techniques for getting your merchandise to where it needs to go. This, of course, is all while you focus on the core of your business, manufacturing your product. Handling the delicate logistics tasks off to a skilled 3rd party frees you up to continue doing what you do best.

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