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A two-year $1.08m (£760,000) implementation of maintenance management software is set to reap Volvo a full return on investment within two years and bring savings of $3.74m over three years.
The improved efficiency is also underpinning a planned increase in capacity of 50% on annual car production by 2004 with only a 15% rise in workforce.
These impressive metrics will be achieved by ensuring that the plant and machinery essential to Volvo's manufacturing operations - the indirect supply chain - is given as much attention as the direct supply chain.
Volvo's direct supply chain is at the leading edge of manufacturing. Each car is built to customer order. The moment the body shell is welded together a small transmitter - the "escort memory" - is attached which contains all the specifications for the finished vehicle. As the car passes along the line the escort memory triggers component inputs and gives instructions to robots and factory workers.
The system works at a "heartbeat" of one car rolling off the production line every 48 seconds. At this rate any production downtime is damaging - machinery breakdown could lead to the loss of the cost of five Volvo cars every four minutes.
The company plans to drive out downtime with a product called Maximo from software supplier MRO. The system gathers information from production equipment - both manually as well as from machine sensors - to develop a programme of preventive maintenance with which it aims to increase production uptime from 93% to 96.4%.
General maintenance manager Hakan Berndtsson said, "The software allows us to model the infrastructure right down to individual spare parts and then track machine behaviour.
"As patterns emerge we can check material flows and direct resources toward the critical asset, ensuring spare parts and labour are readily available," he said.
"For example, we find that electrical component failure is common in the early life of machinery while mechanical failure is more common later on. Knowing this, we can have the correct spares and skills to hand," he added.
To ensure the correct resources are directed to the right place at the right time the Maximo system connects to Volvo's purchasing, financial and production software.
Industry watchers said Volvo's application of IT to the indirect supply chain is at the forefront of manufacturing practice.
Simon Bragg, an analyst with consultancy ARC Consulting, said, "The challenge for IT professionals is to understand how performance by the maintenance management department affects their company's supply chain. Volvo clearly understands this."
Bragg said there are many instances of efficiencies being gained by applying IT solutions to maintenance. BP saved millions through spare parts pooling in the North Sea; multi-site companies are sharing service engineers and best practices across their sites; and equipment providers are delivering maintenance documentation online, tied to e-procurement technology.
"Maintenance has historically been a cinderella operation. It hasn't been good at selling itself, the board does not understand it and, frankly, it hasn't attracted the best management talent, but, there is tremendous scope for efficiency [gains]."
Manufacturing is a sector where the indirect inputs to the business have a critical part to play - production machinery is expensive and complex and the consequence of downtime is costly.