The administration of the recovery of items once they are no longer wanted or cannot be utilized to recover a financial benefit from the recovered products, is known as reverse logistics. In this manner, reverse logistics has developed into a strategic issue that businesses consider when making decisions about the design and growth of their supply chains (Rubio & Jiménez-Parra, 2014). Since the Volkswagen Group is one of the most well-known global automakers, the 2015 emissions scandal led to a significant and expensive recall effort (Five things to know, 2018). Thus, this paper examines how Volkswagen Group handles its reverse logistics procedures in the form of vehicle recalls and evaluates the role of supply chain management.
The term supply chain refers to the series of operations and movements that occur both within and outside a business, between various stages, and combine to satisfy client demands. The supply chain is the arrangement of various businesses that aim to ensure that the final product comes in the minimum time set, in the correct location, and in the right quantities. It refers to the management and tracking of all activities conducted on the good or service, from the raw resources until it is conveyed as a finished product to the customer (Garzón-Agudelo et al., 2018). A key component that enables reconsidering the delocalized manufacturing processes of businesses that strive to provide an effective response to the customer through distribution channels and transport is the supply chain (Garzón-Agudelo et al., 2018). It develops from organizations’ need to organize production operations efficiently.
Another significant possibility for supply chain improvement is provided by reverse logistics. Supply chain management takes the reverse, and the forward movement of items into consideration, and a spike in returns may increase supply chain expenses and reduce profitability. The reverse supply chain is the backward flow of items from vendors, such as damaged goods. Contrary to the traditional supply chain, which moves goods from the manufacturer through the merchant to the customer, this one does not. Reverse logistics is the field that deals with returns as well as what happens to goods when a customer returns them. This involves developing and putting solutions to lower return-related expenses and losses and improve the returns experience.
Volkswagen Group had installed software in its diesel vehicles intended to give misleading results during emissions tests. Although the cars do not directly endanger the safety and cannot cause accidents, they are not ethically produced, do not adhere to applicable laws, and are not ecologically sustainable. Consequently, 11 million automobiles, most of which are in Europe, need to be recalled and rectified (Five things to know, 2018). To resolve the problem over the next three years, crisis management was started immediately. In order to do this, Volkswagen Group started to evaluate its policies, examine its management team, invest in developing new technologies, and regain the confidence of its clients, particularly through vehicle recalls (Welch, 2019). Although scandalous recalls involving Volkswagen Group are rare, the need to remove vehicles is an inevitable aspect of how the automobile business operates. Eventually, customers are encouraged to use an online tool to determine their eligibility, provide contact information to the business, and take advantage of the Goodwill Package benefits. At the same time, they wait for the fix (Welch, 2019). The business believes it is viable to build separate shops to handle the repair, given the recall scale.
The efforts in research and development are significant from the perspective of the two final phases. Equipment that is ecologically friendly and modern could not work with older versions. As a consequence, depending on the vehicle, both software and hardware fixes will be required. It is possible and expected that the hardware components intended for other models would be borrowed, which might lower the repair cost in certain situations. Sometimes a car may not have enough room, and Volkswagen Group plans to replace it if necessary. To make up for the issue and win back the customers’ faith, the firm is postponing non-essential projects, reducing yearly investment, and working to increase liquidity (Welch, 2019). Acting socially or ecologically responsible may provide genuine value, particularly in consumer loyalty and brand awareness. The company’s readiness to be ethically and ecologically responsible is shown by the reverse logistics action plan that has been given. This might help Volkswagen Group win back its consumers’ trust.
Overall, it can be said that Volkswagen Group acknowledges the significance of reverse logistics and recalls and makes use of the effort to gain a competitive edge and restore its reputation. The initiative also enjoys the backing of senior management. Therefore, Volkswagen Group’s campaign can benefit from at least three effective reverse logistics strategies. The role of supply chain management in reverse logistics is significant since the supply chain’s costs might increase with larger returns, which would hurt profitability. This requires coming up with and putting into practice solutions to reduce expenses and losses related to returns.
Furthermore, it could improve the returns experience while decreasing customer happiness. However, the manner the reverse logistics system is being managed under the strain of the crisis is significant and might be interesting for the company’s or the industry’s future operations. It may be inferred that the actions are appropriate given that the business started creating the reverse logistics process immediately following the scandal. The campaign’s effectiveness will be seen in practice, but so far, it seems appropriate for the circumstances.
References
Garzón-Agudelo, P. A., Palacios-Alvarado, W. L. A. M. Y. R., & Medina-Delgado, B. (2021). Diagnosis of physical conditions for implementing a reverse logistics management model in a supply chain. In Journal of Physics: Conference Series (1938 )1.
Five things to know about VW’s ‘dieselgate’ scandal. (2018). Phys.org.
Rubio, S., & Jiménez-Parra, B. (2014). Reverse logistics: Overview and challenges for the supply chain management.International Journal of Engineering Business Management, 6, 12.
Welch, J. (2019). The Volkswagen recovery: Leaving scandal in the dust.Journal of Business Strategy, (40)2, 3-13.