Relationship Value, Trust And Supplier Retention In South African Automotive Supply Chains

Suppliers have a particular role to play in assuring competitiveness in supply chains. This article investigates the relationship between first and second tier suppliers in automotive supply chains in South Africa. Automotive component suppliers (first tier suppliers to assemblers (OEMS) such as Toyota) should make an extra effort to retain their suppliers (second tier), particularly suppliers of strategic parts, to assure the best value adding by the suppliers in the highly competitive supply chain landscape. To assure best value from suppliers they need to be retained in an active trusting, long term, collaborative relationship.  The more the customer trusts the supplier, the higher the perceived value of the relationship and the more likely parties will work together to retain the business relationship. The aim of this quantitative study amongst first tier suppliers is to obtain more insight into the relationships and the hierarchical correlation between the relationship value, trust and supplier retention in automotive supply chains in South Africa. With a regression analysis it was found that both trust and relationship value are substantial predictors of supplier retention, but trust is more important for supplier retention

In Chains? Automotive Suppliers and Their Product Development Activities

A conceptual framework is developed and tested in which supplier downstream position in the supply chain, supplier innovation strategy and customer development commitment are seen as the antecedents of supplier product development activity. Using partial least squares (PLS), we analyze the results of a survey of 161 Swedish automotive suppliers and test a series of nested models to test our hypotheses. We demonstrate that the position of the supplier in the supply chain and its strategic focus on innovation not only have a direct impact on (actual) supplier product development activity, but that there is also an interaction effect, implying that the effects of strategy are contingent on the supplier???s supply chain position. Additionally, we find that customer development commitment does not have any significant direct effect on supplier product development activities, but that this relation is fully mediated by supplier innovation strategy. The meaning of the findings for developing a more extensive conceptual framework for understanding supplier product development activities, some managerial implications, and future research are discussed.supply chain;product development;supplier relations

The role of supply chain integration in achieving competitive advantage: A study of UK automobile manufacturers

The competitive nature of the global automobile industry has resulted in a battle for efficiency and consistency in supply chain management (SCM). For manufacturers, the diversified network of suppliers represents more than just a production system; it is a strategic asset that must be managed, evaluated, and revised in order to attain competitive advantage. One capability that has become an increasingly essential means of alignment and assessment is supply chain integration (SCI). Through such practices, manufacturers create informational capital that is inimitable, yet transferrable, allowing suppliers to participate in a mutually-beneficial system of performance-centred outcomes. From cost reduction to time improvements to quality control, the benefits of SCI extend throughout the supply chain lifecycle, providing firms with improved predictability, flexibility, and responsiveness. Yet in spite of such benefits, key limitations including exposure to risks, supplier failures, or changing competitive conditions may expose manufacturers to a vulnerable position that can severely impact value and performance. The current study summarizes the perspectives and predictions of managers within the automobile industry in the UK, highlighting a dynamic model of interdependency and interpolation that embraces SCI as a strategic resource. Full commitment to integration is critical to achieving improved outcomes and performance; therefore, firms seeking to integrate throughout their extended supply chain must be willing to embrace a less centralized locus of control

Supply chain risks: an automotive case study

The supply chain is a complex system exchanging information, goods, material and money within enterprises, as well as between enterprises within the value chain. An effective supply chain management contributes to large corporate profits and it is therefore a valid path to reinforce the enterprises' competitiveness. However, supply chain is exposed to influences from undesirable factors both from the outside environment and the entities in the chain. Moreover, industrial trends towards lean production, increasing outsourcing, globalisation and reliance on supply networks capabilities and innovations, increase the complexity of the supply chain . Therefore, managers need to identify, and manage risks, as well as opportunities, from a more diverse range of sources and contexts. This paper contributes to identify and categorise supply chain risks based on a literature study and an automotive manufacturer’s viewpoint. The empirical results indicate suppliers and raw material prices as the major internal and external potential risks

Egyptian pyramid or Aztec pyramid: How should we describe the industrial architecture of automotive supply chains in Europe?

This article questions a terminology that is frequently used to describe automotive supply chains’ industrial architecture. Since vertical disintegration became a trend in the 1980s, this architecture has been represented using the image of the pyramid. Implicitly, authors have had the image of an Egyptian pyramid in mind, one that is pointed at the top and broad at the base. We will demonstrate that even if pyramids are an appropriate image, in the auto industry the Aztec variant, with its shortened peak and room for SMEs, is more accurate. The paper’s first section – with its more historical focus – explains the birth of the Egyptian pyramid. The section 2 puts forward the idea that the Egyptian metaphor is more misleading than informative. We start by demonstrating that overusing this metaphor will ultimately exclude a number of very strategic companies from analysis. This is followed by a presentation of the findings from a study of 750 French SMEs*, in which it is demonstrated both that some continue to maintain direct access to carmakers and also that the hierarchy of tiers comprising this supply chain features greater porosity than is commonly recognized.modularity, supply chain, industrial architecture, SME, automobile.

From Supply Chains to Total Product Systems

The evolution of supply chain management and practice has had an integral and expanding role in contemporary global economic and socio-political change over the past 25 years or so. Thi srole is moving closer to centre stage with the emergence of business models equating to 'total product systems'. The impacts of advanced supply chain practice include driving fundamental changes in approach to product design, the concept of 'product', production methods, distribution, marketing, aftermarket support and end-of-life (EOL) reprocessing. Viewed in their full context, methods in supply chain management (SCM) have major influences on societal functioning and on economic development at global, national and local levels. Even the supply chains for simple products can involve several different industries and link many companies, large and small. Those for complex products may span several technological domains and economic sectors, linking hundreds or sometimes thousands of companies

Product recalls: The effects of industry, recall strategy and hazard, on shareholder wealth

The purpose of this paper is to provide insights into the effects of product recalls on shareholder wealth of manufacturing firms in different supply chains. Previous research examining this phenomenon is largely uni-sectorial and/or does not consider the interplay of hazard, recall strategy and sector. By utilizing the event study method, this study examines investors\u27 reactions to key product recall characteristics: industry, recall strategy and hazard level, on a cross-industry sample of 296 product recall announcements. The results show a significant negative reaction of share values to product recalls and significant differences between industry type and hazard levels. More regulated and stringent supply chains, such as the automotive and pharmaceutical, showed statistically significant losses in share price. The results show that industry sector and level of hazard associated with defective products are significant factors impacting the shareholder wealth of manufacturing firms. Contrary to some studies, the impact of recall strategy was not confirmed, although proactive recall strategies led, in some cases, to an increase in share price. Further research would benefit from more detailed investigation of recall strategies on the value of companies in specific sectors, particularly ones which are susceptible to frequent and costly product recalls

'Smart' design: greening the Total Product System

About the book: Since the Rio summit in 1992, the paradigm of corporate environmental responsibility has gradually and consistently extended beyond complying with increasingly stringent environmental regulation and taking up the proactive initiatives of a few world-class companies. Research indicates that the business and financial performance of companies may depend directly on socially and environmentally responsible business practices. Many world-class companies now realize that customers and other stakeholders do not distinguish between a company and its suppliers. As a result, greening the supply chain is an innovative idea which is fast gaining attention in the industry. Greening the Supply Chain is a compilation of important chapters written by a diverse set of international authors which incorporates a broad variety of perspectives. Note: Smart car refers to Smart City coupe and Fortwo, and all terms are registered trademarks of MCC (micro compact car)

Effects of the crisis on the automotive industry in developing countries : a global value chain perspective

This paper applies global value chain analysis to study recent trends in the global automotive industry. The authors pay special attention to the effects of the recent economic crisis on the industry in developing countries. The principal finding is that the crisis has accelerated pre-crisis trends toward greater importance of the industry in the South. More rapid growth of car ownership is the impetus, but the co-location and close interaction of suppliers and lead firms in this industry is an important catalyst. Opportunities to move up in the value chain for suppliers in emerging economies have proliferated and are likely to become even stronger now that an increasing number of new models are developed specifically for markets in developing countries. The co-location of assembly and parts plants in national and regional production systems has largely confined the impact of sales declines during the crisis to each country/region. In addition, the different development strategies followed by countries like Mexico, China, and India are slowly converging as their industries gain size and independence.Markets and Market Access,Microfinance,Labor Policies,Economic Theory&Research,Debt Markets

Drivers and sources of supply flexibility: An exploratory study

Purpose - There has been much research on manufacturing flexibility, but supply chain flexibility is still an under-investigated area. This paper focuses on supply flexibility, the aspects of flexibility related to the upstream supply chain. Our purpose is to investigate why and how firms increase supply flexibility. Methodology/Approach – An exploratory multiple case study was conducted. We analyzed seven Spanish manufacturers from different sectors (automotive, apparel, electronics and electrical equipment). Findings - The results show that there are some major reasons why firms need supply flexibility (manufacturing schedule fluctuations, JIT purchasing, manufacturing slack capacity, low level of parts commonality, demand volatility, demand seasonality and forecast accuracy), and that companies increase this type of flexibility by implementing two main strategies: “to increase suppliers’ responsiveness capability” and “flexible sourcing”. The results also suggest that the supply flexibility strategy selected depends on two factors: the supplier searching and switching costs and the type of uncertainty (mix, volume or delivery). Research limitations - This paper has some limitations common to all case studies, such as the subjectivity of the analysis, and the questionable generalizability of results (since the sample of firms is not statistically significant). Implications - Our study contributes to the existing literature by empirically investigating which are the main reasons for companies needing to increase supply flexibility, how they increase this flexibility, and suggesting some factors that could influence the selection of a particular supply flexibility strategy.Supply flexibility, sourcing, Spain, case study