Vehicle recalls are pushing supply chains to the limit.
Every time a vehicle model is recalled, there is a huge knock-on effect. Each defect impacts every part of the supply chain, from communicating the defect to actually repairing it.
While the reasons for the dramatic increase in vehicle recalls are varied - including more complex technology with systems and software which are more likely to go wrong - cause and effect can sometimes overlap. Vehicle owners and governments are also increasingly aware of product defects, leading to concerns and expectations which are often aired vociferously on social media.
With many independent vendors in the extended vehicle manufacture supply chain, there is a greater risk of introducing defects into the process, presenting a huge monitoring challenge to the industry.
The soaring numbers of vehicle recalls puts “stress on the supply chain to produce replacement parts, taxes auto dealerships and used car networks, and further complicates the consumer notification and communication process,” according to Stericycle vice president Mike Rozembajgier.
The absence of communication (sometimes caused by OEM parts data issues) can have serious implications, although many car owners ignore vehicle recalls (sometimes because of "recall fatigue") and either drive their car without having it fixed (with all the risks this implies) or sell it on to another unsuspecting person without communicating the recall.
Vehicle recalls don't just hit the big names in auto manufacturing, according to Rozembajgier. Small companies and the makers of add-on parts represent the vast majority of companies who are affected, although more than a quarter of recalls over the past four years were caused by the top 10 assemblers.
Many of the big players in automotive manufacturing have been hit badly financially, reputationally and in some cases face charges of criminal negligence; for example, the recent General Motors recall, as reported by OATS, led to the dismissal of 15 employees and the need to earmark a $1.7b budget for recalls.