A proposed centralised distribution model for the South African automotive component industry

Abstract

Purpose: This article explores the possibility of developing a distribution model, similar to the model developed and implemented by the South African pharmaceutical industry, which could be implemented by automotive component manufacturers for supply to independent retailers. Problem Investigated: The South African automotive components distribution chain is extensive with a number of players of varying sizes, from the larger spares distribution groups to a number of independent retailers. Distributing to the smaller independent retailers is costly for the automotive component manufacturers. Methodology: This study is based on a preliminary study of an explorative nature. Interviews were conducted with a senior staff member from a leading automotive component manufacturer in KwaZulu Natal and nine participants at a senior management level at five of their main customers (aftermarket retailers). Findings: The findings from the empirical study suggest that the aftermarket component industry is mature with the role players well established. The distribution chain to the independent retailer is expensive in terms of transaction and distribution costs for the automotive component manufacturer. A proposed centralised distribution model for supply to independent retailers has been developed which should reduce distribution costs for the automotive component manufacturer in terms of (1) the lowest possible freight rate; (2) timely and controlled delivery; and (3) reduced congestion at the customer's receiving dock. Originality: This research is original in that it explores the possibility of implementing a centralised distribution model for independent retailers in the automotive component industry. Furthermore, there is a dearth of published research on the South African automotive component industry particularly addressing distribution issues. Conclusion: The distribution model as suggested is a practical one and should deliver added value to automotive component manufacturers in that it could reduce distribution costs and also may improve customer service.