Impact of supply chain on the competitiveness of the automotive industry

Abstract

Purpose There is a great reliance on fiscal incentives to sustain the automotive industry competitiveness due to several structural problems, among them the inefficiency of the supply chain. This paper aims to compare the supply chain structure of traditional automotive industry with the supply chains from South Korea and China. Based on strategic decision and transaction cost theory, this comparison seeks to exploit the factors that led to the inefficiency of automotive supply chains. Design/methodology/approach The authors used a qualitative approach and applied a multi-method research. They conducted semi-structured interviews with six executives from automakers representing the selected countries, carried individual meetings during one workshop and used secondary data from several sources. Findings Concepts identified in the research such as reliability, supply chain governance and automaker competencies led the authors to propose that the traditional automakers have higher transaction costs when compared to the new automakers due to the horizontal structure of their supply chain. While new competitors have vertical upstream supply chains, which indicates better profitability, traditional automotive industry is horizontal, depends on fewer Tier 1 suppliers and is disconnected from Tier 2, impacting negatively in the transaction costs and supply chain management. Practical implications This study suggests that automotive executives rethink the current upstream supply chain model by identifying the competencies required for their current and future competitiveness and implementing a vertical integration of these competencies. Originality/value This research exploited the inefficiency of supply chain as one of the explanations for the low competitiveness of the national automotive industry.

Quality and innovation as drivers for manufacturing competitiveness of automotive parts suppliers

“…Gonzalez and Martins (2016) researched the automotive industry and capital goods and pointed out that continuous improvements in their production processes are necessary for an increment in the level of competitiveness, and for identifying that, capabilities such as incremental quality and organisational behaviour as employee engagement are relevant elements for organisational performance. Gonzalez and Martins (2016) and Sakuramoto et al (2019) presented exploratory studies on the basis of a qualitative approach using interviews and case studies as primary methods, with findings that emphasised the importance of supply chain and continuous improvement capabilities. In the same manner, Tambade et al (2019) incorporated dimensions, such as supply chain management, global value chains and employee empowerment, to measure competitiveness and identify relevant dimensions, including firms' ethical behaviour, protection of intellectual property and innovation in Indian auto-component industry competitiveness.…”

Multimethodological Framework in the Development of Traceability Systems for Food Supply Chains

“…Beberapa penelitian di bidang logistik dan rantai pasok yang secara eksplisit mengunkapkan menggunakan multimetodologi antara lain: Choi et al [16] dengan kombinasi System of System Theory dan model analitis untuk merancang manajemen rantai pasok fashion yang berkelanjutan. Sakuramoto et al [17] meneliti pengaruh struktur rantai pasok terhadap persaingan dalam industri otomotif menggunakan pendekatan multimetodologi kualitatif. Namun, sejauh ini, belum ada penelitian dalam bidang pengembangan sistem ketertelusuran pangan yang menggunakan multimetodologi.…”

Increasing supply network transparency: structure model, mapping procedure and performance impact

“…While new competitors in the automotive industry have vertical upstream supply chains, which indicates better profitability, the traditional automotive industry is horizontal, depends on fewer tier-1 suppliers and is disconnected from tier-2, impacting negatively in the transaction costs and supply chain management. In Brazil, it is common that tier-2 suppliers have financial difficulties, negatively affecting transaction costs and sometimes ending in bankruptcy (Sakuramoto, Di Serio, & Bittar, 2019). Hence, it is important to achieve high vertical information quality to prevent cost problems.…”

“…Hence, we deduce that companies with a differentiation strategy use SNM if they have high horizontal information quality (H4a). On the other hand, the tier 2-suppliers in the vertical supply chain have a low level of innovation, as most of them have a low capacity for investment (Sakuramoto et al, 2019). Hence, there is a lack of correlation between upstream SCM strategy and innovation performance (Scannell et al, 2000).…”