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Key factors required by purchasing and supply departments in the automotive manufacturing industry

The main research problem addressed in this study was to determine the key factors required by purchasing and supply departments in the automotive manufacturing industry to be efficient and effective. To achieve this objective, it was necessary to identify five sub-objectives which were, firstly, to determine the extent to which the purchasing and supply departments in the automotive industry believe that certain key factors in pricing, quality and supplier management are required to achieve excellence. Secondly, to identify if the purchasing and supply departments in the automotive industry actually implement the key factors on pricing, quality and supplier management in practice. Thirdly, to determine if there are any additional factors other than these key factors that business firms regard as key factors to be classified as worldclass purchasing and supply departments. Fourthly, to analyse why purchasing and supply departments in the automotive manufacturing industry do not always implement these key factors. Lastly, to identify any other factors that could have a significant negative impact on the performance of purchasing and supply departments. The study commenced with an analysis and review of relevant literature from various text books, journals, publications and internet sources. The literature study covered issues such as price determination, cost management, basic negotiation strategies, managing supplier quality and the supplier base, as well as a general overview of the latest developments in purchasing and supply management in business. The purpose of the literature analysis was to establish a theoretical basis for the design of the questionnaire which was used as a research instrument in this study. A survey was conducted among selected automotive assemblers and their first and second tier manufacturing suppliers in the automotive industry. The main areas of focus in the questionnaire were pricing, quality, and supplier management. As the questions in the questionnaire related to the purchasing and supply department of a business firm, a qualified and experienced buyer in the purchasing and supply department was identified in each firm to complete the questionnaire. The empirical results from the study conducted indicated that the respondents were in strong agreement with the proposed importance of the factors of pricing, quality, and supplier management required to achieve xcellence. However, the respondents also indicated that there were various obstacles which prevented the firms from implementing these key factors. Some of the obstacles mentioned were long lead times, late deliveries from suppliers, too few competitors in the market place, supplier capacity constraints and the sustainability of suppliers. Additional obstacles that the study identified were the high workload of buyers in general, incompetent staff and insufficient manpower that affected the performance of a purchasing and supply department. The buyers were not only performing buying activities, but were also involved in logistics related activities, which increased their workload and negatively affected their performance. Lack of specialised purchasing and supply chain knowledge was identified as another obstacle to achieving excellence. The empirical study highlighted some recommendations to assist purchasing and supply departments in the automotive industry to achieve excellence and become world-class departments. Examples of these recommendations are that suppliers need to be educated on how to understand their costing models and to check their own sustainability; local purchasing and supply departments require training in the purchasing skills such as incoterms, delivery times, minimum and maximum order quantity; as well as the payment terms. Buyers should be trained to become experts in their products and packaging, as well as the manufacturing process of the product they are purchasing The business firm should only employ qualified buyers who have financial and administrative skills, as well as the ability to adapt to change and work in teams. Buyers also need to master the in-house systems and work procedures involved in purchasing a product. The empirical study also identified that the majority of buyers in the automotive manufacturing industry are senior buyers, male in gender and between the ages of 40-49. The implementation of the recommendations based on the study’s empirical findings will assist in improved pricing, quality and supply management in the automotive manufacturing industry.
Date January 2015
CreatorsHowell, Jean Karin
PublisherNelson Mandela Metropolitan University, Faculty of Business and Economic Sciences
Source SetsSouth African National ETD Portal
Detected LanguageEnglish
TypeThesis, Masters, MTech
Formatxiii, 160 leaves, pdf
RightsNelson Mandela Metropolitan University

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