The role of strategic supplier relationships in enhancing supply chain innovation : a qualitative study in the South African automotive manufacturing industry

Abstract

Supply chain innovation is a mechanism that firms use to ensure efficient supply chain management through collaboration with external supply chain partners. The interaction between buyers and suppliers is especially crucial in fostering innovation resulting in modifications, improvements and development of new products and processes in a manner that improves overall efficiency. Understanding the role of the supplier in firm innovation is critical for cross-firm innovation. The automotive manufacturing industry faces increasing pressures to innovate due to the high demands from stakeholders and operating in a highly competitive market. This study aimed to explore the role of strategic supplier relationships for supply chain innovation in this particular industry. A generic qualitative approach, through semi-structured interviews, was used to gather data from ten middle to senior managers in six automotive manufacturing companies. It was found that only two manufacturers involve their suppliers in the pre-innovation phase indicating that there might be an untapped source of innovation for manufacturers. It would appear from the participant responses that the involvement of suppliers increases from low to high in the pre-innovation and post-innovation phases, respectively. Furthermore, despite the cost pressures in the industry, manufacturers stated the need for suppliers who are able to adapt and synchronize with their innovation initiatives. Additionally, a possible theoretical contradiction was identified. Because many manufacturers share suppliers, transparency might act as an inhibitor of innovation, mainly if the manufacturer aims to compete on the basis of differentiation. Finally, other factors that could strengthen the relationship and subsequently the potential for innovation include being intrinsically motivated to innovate and create synergies from a supplier’s perspective, along with incentives in the form of continued business from the manufacturer’s perspective.