Relationship value antecedents in the South African automotive component supply chain

Abstract

Orientation: Although literature agrees on the importance of ‘relationship value’, the term is still seen as ambiguous and authors fail to agree on its antecedents. Within a challenging global arena, relationship value is believed to result in business retention. It is therefore critical to have a better understanding of this value to ensure business sustainability within supply chains. Literature suggests that relationship value drivers comprise three dimensions, namely a core offering, sourcing process and customer operations.
Research purpose: The contribution of the research reported on in this paper is an enhanced conceptual understanding of relationship value and its salient drivers within the South African automotive supply chains.
Motivation for the study: Literature invites more research on relationship value and its drivers. Therefore, the research reported on tested the antecedents of relationship value.
Research design, approach and method: Relationship value drivers were tested through empirical research within the South African automotive supply chains by means of a path analysis. The research utilised a closed-ended questionnaire, and targeted managers among Tier 1 buyers and asked them about the relationship value traits of their best Tier 2 suppliers.
Main findings: It was found that personal interaction, which forms part of the sourcing process, is viewed as the strongest antecedent of relationship value within the South African automotive supply chains, followed by product quality and delivery.
Practical/managerial implications: It is suggested that superior supply chain practices within the South African automotive industry might secure business retention. Automotive component suppliers are therefore advised to implement relationship value strategies to promote higher value through personal interaction.