Dive Brief:
- In the past month, Volkswagen has weathered two scandals that shed light on its complex relationship with suppliers and the dominance of relationships in the procurement process.
- The auto-maker suffered a dispute with suppliers, forcing production shortages for some of its clients.
- More recently, the company has been engulfed in an emissions scandal, within which suppliers were not only involved but complicit.
Dive Insight:
The butting of heads over procurement practices began when two of the automaker's suppliers suspended delivering parts for the Golf cars, which halted their production temporarily. The result was Volkswagen cutting the hours of about 27,700 in several of its manufacturing facilities.
The suppliers, Car Trim and ES Automobilguss, part of the Prevent Group, apparently were miffed over the company's cancelations of other contracts without explanation and needed to protect employees.
As procurement appears to be the root cause of the latest woes, it could have been prevented with better communication practices and having more than one supplier on hand. The good news is that apparently all is forgiven and the supplies are back on the conveyor belt on the way to Volkswagen's factories.
The “blame” can be spread around here, and Volkswagen and Prevent Group may want to think about coming to the table before taking action.
