The effect of problems on supply chain wide efficiency

Abstract

For any business to compete successfully in the modern, globalised business environment, it needs to mobilise its suppliers and customers to co-operate in order to reduce unnecessary costs and inefficiencies between them and to ensure the best value for the final customer. The focus is on management of the supply chain as a whole (or a system) and maximum value for the final customer of the supply chain, instead of on management for the maximum benefit of one of the parties in the supply chain. If the supply chain is seen as a system of organisations with one aim (value for the final customer), it is logical that a problem in one part of the supply chain must affect the workings and efficiency of the system or supply chain as a whole.This article reports on an exploratory empirical study to illustrate the effect of problems at one party in the supply chain on the whole supply chain. The study was done at automotive component manufacturers. To determine how problems at one place permeate through the whole supply chain, correlation testing was done between supply-side, internal operations, and distribution or customer-side problems. The study found that problems experienced at one place in the supply chain had a negative impact throughout the supply chain. Automotive supply chains should therefore be managed more as a system, taking into consideration the effect of decision making and actions at one part of the supply chain on other parts of the supply chain. There should be a supply chain wide co-operative effort to find solutions to inefficiencies at all places in the supply chain.

Interdependence analysis of supplier relationship challenges in the South African automotive industry

“…The major actors in the automotive industry comprise the OEMs, such as Toyota, Nissan, and Ford, and their suppliers, the ACMs. A survey among ACMs to determine the nature of the relationships that exist between buyers and suppliers in South Africa’s automotive supply chains showed that, while collaborative relationships do indeed exist between members of the supply chain, this relationship can be improved by communication, understanding of the parties’ situations and cooperation; in this way an alliance between OEMs and ACMs can be created (Naude and Badenhorst-Weiss, 2011).…”

“…The challenges faced were broadly classified into technological, infrastructure, cost, market/service, relationship and production/skills challenges by Ambe (2014), who also suggested that, if these challenges were addressed, the sector could become globally competitive. Naude and Badenhorst-Weiss (2011) identified certain weaknesses in South African automotive industry’s supply chains. Although collaborative relationships exist, a better understanding of the parties’ situations could improve this relationship and create a stronger alliance between OEMs and ACMs.…”

“…Automotive manufacturers are constantly introducing new products with improved quality, design, efficiency and drive innovation to lure customers and enter into new markets. However, automotive manufacturers transfer this pressure to their suppliers to maximise profits through operational excellence with a focus on reducing costs, improving quality and output (Ambe and Badenhorst-Weiss, 2011; Naude and Badenhorst-Weiss, 2011).…”

“…However, South African automotive components manufacturers (ACMs) are not internationally competitive and automotive assemblers, or original equipment manufacturers (OEMs), often import cheaper components from abroad. Thus, parties in the South African automotive supply chains need each other to ensure optimal efficiency and competitiveness (Naude and Badenhorst-Weiss, 2011). The focus of this study is on the relationship challenges between customers, the OEMs, and suppliers, the ACMs, in the automotive supply chains and the dependencies between these identified challenges.…”

Operational efficiency to financial efficiency - a case study on 'apparel sector' in Sri Lanka

“…Many manufacturing business organizations are using information and communication technology (ICT) in there all supply chain management activities (Naude & Badenhorst-Weiss, 2011). ICT is the latest technological concept defined as an extensive method.…”