STRATEGIC CHANGE IN PROCUREMENT ORIENTATION IN THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY: A CASE STUDY

Abstract

The South African automotive industry faces increasing challenges for Original Equipment Manufacturers (OEMs) and their suppliers to produce high-quality products at low costs. Items purchased by OEMs from the supply chain typically account for more than seventy percent of the total costs of manufactured automobiles. The strategic significance of the purchasing function is subsequently recognised as a major determinant of competitiveness. From a review of literature, a conceptual model is introduced whereby localisation strategies of OEMs, with respect to their main suppliers, can be optimised for competitive advantage. The findings of a case study of a South African OEM's localisation strategies are presented. Based on the findings, an improved model is proposed that could be used as a guideline to orientate procurement strategies for optimal performance, so as to guarantee the competitive advantage of local OEMs. It is anticipated that these results will provide a platform of effective strategy development for the South African OEMs. [PUBLICATION ABSTRACT]