Barriers in supplier development encountered by SMEs as suppliers in the South African railway industry

Abstract

The purpose of the study was to explore barriers to supplier development encountered by SMEs as suppliers in the South African railway industry. The first objective was to identify barriers faced by SMEs to be suppliers of large OEMs in the South African railway industry. The second objective was to establish the challenges that lead to failure in the supplier development process. The third objective was to describe the activities done by SMEs to position themselves in becoming preferred supplier development candidates for OEMs in the South African railway industry. SMEs as suppliers in the railway industry were interviewed through an explorative interview. The interview targeted suppliers who were involved in the railway industry and who are actively seeking contracts with the South African railway operators. The findings are that new suppliers are experiencing barriers to enter the railway industry. The key barriers for new suppliers are industry human capital, industry regulation, capabilities, ineffective government intervention and lack of resources. The main challenges identified during the supplier development process are the long bureaucratic process related to supplier development on-boarding, miscommunication and lack of transparency. Suppliers also faced challenges in the way they position themselves in becoming preferred suppliers development candidates for OEMs in the South African railway industry. Recruiting railway expertise and innovating compliant products were the most effective measures taken by suppliers in becoming a preferred supplier.