Supply chain management problems experienced by South African automotive component manufacturers

Abstract

The South African automotive industry has experienced significant changes in the last 20 years. Globalisation, the implementation of lean production and the development of modularisation have had a profound influence on the relationships between original equipment manufacturers (OEMs) and their suppliers, the automotive component manufacturers (ACMs), and their suppliers. South Africa has a number of OEMs and a vibrant automotive component manufacturing industry (ACM), which supplies the South African aftermarket and a spread of export markets. These ACMs are the focus of this study. The main objective of this research study was to identify the supply chain management problems ACMs in South Africa encounter, to what extent they face these problems and how these can be overcome. The problems were identified through a literature review and interviews with two OEMs in South Africa. Using this data a questionnaire was compiled and sent to all NAACAM members for completion. This study is by nature descriptive and exploratory and contains quantitative and qualitative elements. Seven hypotheses were formulated to guide the research. The findings of this research indicate that the geographic location, age and size of the business, have no bearing on the supply chain problems ACMs face, whist the relationship between ACMs and their suppliers and ACMs and their customers is a significant problem. The findings also indicate that the following are some of the main supply chain problems facing ACMs: pressure by OEMs to reduce prices; the price of materials; cancellation of orders; excessive inventory; the unreliability of rail transport and rail capacity problems; the high cost of South African ports; the cost of replacing outdated technology; and BBBEE – achieving and verifying BEE scorecards. The findings further indicate a lack of skills and labour problems, both of which are time consuming to resolve. This study was completed over a four-year period. At the commencement of this study the automotive industry was booming, but in mid-2008, a global economic crisis started. This crisis impacted adversely on the automotive industry globally and in South Africa. Despite these challenges, leaders in the South African automotive component industry remain positive about the future.

This study was completed over a four-year period. At the commencement of this study the automotive industry was booming, but in mid-2008, a global economic crisis started. This crisis impacted adversely on the automotive industry globally and in South Africa. Despite these challenges, leaders in the South African automotive component industry remain positive about the future.