Abstract
Background: The significant economic importance of the country’s automotive industry provided the context for this study. The success of the industry relies on the effectiveness and efficiency of the supply chain, which can be significantly affected by the strength of the supply chain relationships. The role of trust and information sharing in relation to two key theories was considered, namely: organisational information processing theory and game theory. Previous studies have recognised the importance of trust and information sharing in supply chain relationships and considered the effect of trust on information sharing, or the effect of information sharing on trust in a single direction. Thus, the potential cyclical relationship between the two factors has been largely ignored.Objectives: This paper explored the relationship between trust and information sharing in South African automotive supply chains, and establishes the importance of nurturing a cyclical relationship between these two factors. In addition, the role of information technology (IT) in supporting this relationship was considered. By improving both trust and information sharing, the performance and competitiveness of the supply chain can be improved.Method: An examination of the effects of a lack of trust in a supply chain relationship, and the consequential lack of information flow, was conducted by means of a case study of an Eastern Cape-based automotive supplier. A case study research method was followed for this study, which made use of multiple data collection methods, including document survey and participant observations. The case selected is an East London based subsidiary of a larger multinational automotive component supplier to both local and international automotive original equipment manufacturers.Results: The findings led to the conclusion that the way forward for competitive supply chains is to build trust in the supply chain in order to improve information flow, and vice versa. Information technology can be used to nurture this cyclical relationship between trust and information sharing.Conclusion: It is proposed that simultaneously improving information flow and trust in an interorganisational relationship leads to improved supply chain performance and competitiveness.
Highlights
Governments are recognising the potential impact of automotive manufacturers on an economy and have become dedicated to attracting automakers to their countries and regions
This paper has shown how several works have highlighted the importance of trust in a supply chain and the effects of diminished trust on supply chain operations
Several works have highlighted benefits and concerns regarding sharing information amongst supply chain partners, at the same time noting a relationship between trust and information sharing in a singular direction
Summary
Governments are recognising the potential impact of automotive manufacturers on an economy and have become dedicated to attracting automakers to their countries and regions. For South Africa, attracting automotive manufacturers and their suppliers to invest in the country has become increasingly important (Barnes & Morris 2008; Fingar 2002). The South African government has made the automotive industry a priority through various policy adjustments (Barnes & Morris 2008; Lorentzen 2006), which are aimed at convincing multinational automotive manufacturers and suppliers to strengthen and deepen their South African operations (Lorentzen 2006). The operations of automotive manufacturers depend on a substantial network of suppliers As these automotive supply chains can consist of over 300 suppliers, including first-, second- and third-tier suppliers, the cyclical relationship between trust and information sharing in this context, is the focus of this article. The potential cyclical relationship between the two factors has been largely ignored
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