Improving Competitiveness Through the Application of Cost Estimation Models in the South African Automotive Industry

Abstract

Optimal sourcing decisions have become a critical factor to maintaining and improving the competitiveness of organizations operating in a globally competitive environment. This research utilized a case study approach to determine the impact of cost estimation models on the competitiveness of organizations in the South African automotive industry. A parametric cost estimation model was adopted and applied to the sourcing processes at an automotive manufacturer situated in Durban, Kwa-Zulu Natal to support the introduction of the next generation passenger vehicle. Additionally, the sourcing process was redesigned to incorporate the parametric cost estimation model. The model was generated on Microsoft Excel, making it cost effective and user friendly. It was shown that the application of the cost estimation yielded favorable results and significantly improved the competitiveness of the organisation studied.