Study finds that none of the
companies are currently up to scratch
EASTERN CAPE motor manufacturers will have to bring their supplier networks up to global standards if they want to remain competitive, according to a doctoral study. The study, which examines the supply chain and supplier network activities of the South African automotive industry, was conducted by University of Port Elizabeth DCom graduate Ernst van Biljon.
It included East London-based DaimlerChrysler SA (formerly Mercedes Benz of South Africa), and Volkswagen and Delta in the Port Elizabeth metropole. According to Van Biljon not one of the companies has developed fully integrated supplier networks.
In fact, the research has shown that the supplier network models of all three companies do not meet all the requirements of a world-class supplier network model such as network sourcing, he says. According to van Biljon, network sourcing is founded on the traditional Japanese supplier sub-contracting system, and is based on a structure that accommodates direct and indirect suppliers.
This strategy has been further developed and has become the best model for supplier integration and networking, as it is a holistic and practical approach that addresses each of the key aspects required of a successful supplier network model.
It ultimately leads to specialised technical know-how and allows suppliers to focus on their core business - resulting in continuous improvement of quality, cost design and delivery. Apart from automotive industries in Japan, network sourcing has already been introduced by various other leading automotive industries in Europe and North America, including Toyota (UK), Toyota (USA), Rover (UK) and Nissan (UK). In a three-point plan to create a world-class supplier network, Dr Van Biljon recommends that lean enterprise principles should be entrenched in all corporate and operational activities, focusing on value adding, waste reduction and outsourcing non-core activities.
Other important steps include the implementation and measuring of the progress of cross-organisational teaming, transparent costing and risk sharing, human resources empowerment, Electronic Data Interchange (EDI) and Systems Integration, Enterprise Resource Planning (ERP), Total Quality Management (TQM)/ Kaizen, Just-in-Time delivery (JIT), partnering and supplier tiering.
He also stresses the importance of creating a learning organisation and a learning supplier network, through personal mastery, mental models, shared vision, team learning and systems thinking. The speed at which change is happening in the highly competitive world of vehicle manufacturing is frightening.
A true learning organisation - of which there are few in the world - will assist the assembler in dealing effectively with environmental changes impacting on the industry, he says.
Dr Van Biljon, who is head of the Department of Logistics Management and Economics at the PE Technikon, has been invited to read a paper on his research at the world congress of the International Federation of Purchasing and Materials Management in Sydney, Australia, in November.
