The dynamics in customer-supplier relationships in South African automotive supply chains

Abstract

Although the automotive industry is of utmost importance to the South African economy, the industry is faced by numerous challenges brought about by increased globalisation pressures including strained customer-supplier relationships resulting in increased supply chain risks. Literature suggests automotive component suppliers have limited scope for differentiation, and are left with only the relationship to add value, which promises to mitigate risk. The study reported on in this paper asked the following question: What is the nature of customer-supplier relationships in automotive supply chains in South Africa with regard to the dynamics between the elements of relationship value, trust and commitment? Through hierarchical regression, trust revealed a direct and strong correlation with relationship value, whilst commitment acted as a partial mediator. An important risk mitigation strategy might be the investment in close customer-supplier relationships. This paper makes a valuable contribution towards the theoretical conceptualisation of relational governance within automotive supply chains.