Developing a relationship value model (RVM) for the South African B2B automotive supply chain

Abstract

In the light of the global competitive markets, firms are motivated to reduce costs and increase benefits derived from collaboration. As a result of this, customers reduce the number of suppliers and rather focus on establishing strategic relationships with fewer suppliers. Relationship marketing, which results in relationship value, is a fairly new concept which originated during the 1980s; as various academic authors have noted, this subject has not yet been fully explored. Value is a subjective concept, conceptualised as a trade-off between benefits and sacrifices, and can be multifaceted. Perceptions regarding value are relative to the competition. This research determined which relationship value constructs can be classified as antecedents and which of those are mediators within the South African automotive supply chain and if relationship value can lead towards retention. This research further determined what Tier 1 suppliers value most from their Tier 2 suppliers. This is important as it is crucial to retain business for Tier 2 suppliers who are usually of South African descent. The primary objective of the research was achieved, that is, to “develop a relationship value model for the South African automotive B2B supply chain”. The secondary objectives were also achieved, namely:  Objective 1: Determine RVM (relationship value model) constructs in the relationship between Tier 1 and Tier 2 suppliers.  Objective 2: Determine how trust and commitment relate to relationship value iii  Objective 3: Determine the antecedents for the perception of relationship value by Tier 1 suppliers.  Objective 4: Determine the relationship between relationship value and business retention. From this study, it is self evident that relationship quality is perceived as being more significant than the actual product in the South African automotive supply chain since it demands a high regard for quality in general. Added to this, Tier 2 suppliers should take cognisance of trust as being of utmost importance to establish relationship value, which in return results in business retention. With the introduction of sufficient relationship value strategies, Tier 2 suppliers should be enabled to mitigate competition based on pricing. Also, with added relationship value, Tier 2 suppliers could establish themselves in a desirable position in order to retain, and even expand, business prospects in the future.