Dynamic supplier management in the automotive industry

• Published in: International journal of operations & production management 2010-01, Vol.30 (3), p.312-335
• Main Authors: AlezAller, Ricardo, Carlos LongsGarca, Juan
• Format: Article
• Language: English
• Subjects: Annual reports; Assembly plants; Automobile industry; Automotive industry; Competition; Competitive advantage; Cost control; Manufacturers; Outsourcing; Spain; Studies; Supplier relations; Suppliers; Vehicles
• ISSN: 0144-3577; 1758-6593
• DOI: 10.1108/01443571011024647

Purpose - The purpose of this paper is to provide an explanation and set out the reasons for the change in supply strategy from sole sourcing to split sourcing at an automotive assembly plant. In that context, this paper highlights the advantages of split sourcing over earlier strategies.Design methodology approach - The information on which this paper is based comes chiefly from two sets of qualitative interviews staged in 1996 and 2003 at automotive supplier plants in northern Spain. Particular attention is paid to suppliers working with sequenced deliveries located close to the Volkswagen plant in Navarre. The vehicle model manufactured changes between the interviews. A comparison of the two pieces of fieldwork reveals changes in the plant's supply strategy.Findings - A comparison between the supply strategies of a plant for two successive, distinct models provides empirical support for the idea that supply strategies evolve. The need is also demonstrated for the first time to consider individual plants expressly, since significant cost savings can be made at this level at two key times: when switching models and during model life-times. These cost savings depend clearly on the type of buyer-supplier relationship established at plant level.Practical implications - The most significant conclusion for practitioners concerns the need to design a supply strategy from a dynamic approach that specifically considers the plant level.Originality value - The basic contribution of this paper is that it examines changes over time in outsourcing decisions in the automotive industry by incorporating the viewpoint of individual plants. Following this approach, the evolution from sole sourcing to split sourcing is described and interpreted. The paper also stresses the need to analyse procurement strategies in evolutionary terms (i.e. as being reconfigured in line with experience).