Symbol of Success is Auto Industry in South Africa

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Introduction

A successful automotive industry is often seen as a symbol of the economic success of a country and the automotive industry plays a key part in the economic well-being of South Africa’ South Africa has its own original equipment manufacturers (OEMs) such as BMW, Nissan, Ford, Volkswagen, Daimler-Chrysler/Mercedes, General Motors and Toyota and automotive components manufactures (ACMs), which are located in three of the nine provinces in south Africa (Naude, 2009:10). An important and most efficient tool that is used by the South African automotive industry is buyer-supplier collaboration which is aligned with the objective of this assignment to identify and discuss the factors that influence buyer and supplier collaboration in South African automotive industry. This assignment will firstly define the automotive industry and the industry buyers and suppliers as well as the relationship between the two. The factors include Pressure by OEM to reduce prices, Lack of advanced communication between the buyer and the supplier, trust, Geographic location, product design, technology, interdependency, Supplier inflexibility/delivery reliability and rapid change of demand in terms of quantity by the buyers. Furthermore the impact of globalisation in South African automotive industry will be underlined. Much emphasis has been placed on globalization in the automotive industry as a result of the rapid increase in automotive exports.

Background to the South African Automotive Industry

The automotive industry has been in existence for decades in South Africa, since the introduction of Ford and GM assembly plants in the 1920’s the industry has seen tremendous growth in the past years to make it one of the biggest contributors ...

... middle of paper ...

...ies could make commitment of an on-going senior leadership communication and change to the same ERP systems for easy access of information this could enhance the communication between OEMs and ACMs. Negotiating discount or set a high cancellation fee could avoid cancelling orders each time the buyers are facing economic crisis instead opt to reduce the quantity that was previously demanded.

Conclusion

From the above mentioned factors it has become clear that the are some of the issues that are significant factors that influence the buyer and supplier collaboration negatively such as the pressure from OEMs for price reduction results in the total sales and employment to decline in the long-run and put the management under pressure to lower costs to regain market share. The cancellations of orders resulted in the excessive slow-moving inventory for ACMs.

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