Reverse logistics assessment in the automotive industry: A case study at Volvo Group

Abstract

The world is facing an era of extreme competitiveness regarding business environments. Actors in the Supply Chain networks do not scape to this phenomenon. Firms can no longer compete as individuals to be profitable. To be competitive, the different players within a Supply Chain (i.e. suppliers, manufacturers, dealers) have to share goals and objectives, acting as one player. Supply Chains have the necessity to shift to what is known as Closed- Loop Supply Chain, where the product life is extended even after the selling. The recovery of these products and their further treatments (i.e. remanufacturing, repairing, etc.) play a massive role in firms´ total revenues. In the automotive industry, companies do not seem to be managing their reverse logistics in a proper way, and this constitutes a big problem. Reverse logistics has to be further take into consideration, as it ensure the end-customer satisfaction, as well as it ensure the availability of products in the aftermarket. This thesis was performed in the Logistics Service Development department under the Volvo Group Trucks Operations division, in Gothenburg, Sweden. Volvo Group is a global and multinational company, considered a leading transport solution manufacturer. The firm wanted to study how the reverse logistics were managed, which led to the following aim: assess the reverse logistics systems that are currently being employed in the focal company and suggest improvements. To fulfill the requirements set by the purpose, the actual practices of the company were studied, the key factors influencing the returns were identified and suggestions were provided. Semi-structured interviews both internal (within the company) and external (3PL and Dealers), internal documentation, direct observations and collection of operational data served the author to assess the purpose. The study of the current situation led the author to identify that there was a lack of steering decisions regarding reverse flows, as well as high returns rates and poor systems steering the returns. Five key factors were identified to be the root of the flaws of the current situation: Communication, Dealer´s experiences; Returns planning and policies; Lead times; and Performance measurements. Improvements were suggested regarding these five factors: Enhance communication (e.g. workshops with dealers); Improve Dealer´s Experience through building a new system; Change the returns planning and policies; Improve lead times (e.g. Stabilize lead times, same day deliveries); and Establish performance measurements (e.g. Track and Trace; KPIs). Thus, this case study provides a replicable framework to enhance the performance of the reverse logistics in the automotive industry.