- Title
- Specific service level expectations that automotive manufacturers have of third party logistics service providers in the Eastern Cape Province
- Creator
- Pillay, Shandran
- Subject
- Business logistics -- South Africa -- Eastern Cape
- Subject
- Delivery of goods -- South Africa -- Eastern Cape -- Management Physical distribution of goods -- South Africa -- Eastern Cape -- Management
- Date Issued
- 2018
- Date
- 2018
- Type
- Thesis
- Type
- Masters
- Type
- MCom
- Identifier
- http://hdl.handle.net/10948/23108
- Identifier
- vital:30422
- Description
- Very few business enterprises, whether as a service provider or manufacturer, operate in isolation. Most business enterprises have suppliers from whom they acquire their resource inputs (inbound processes), and customers to whom they supply (outbound processes) their outputs. These processes include logistics functions such as transportation, warehousing, information technology, packaging and design activities. In an effort to reduce costs, both these inbound and outbound processes are often outsourced to a third party when the business enterprise finds it too costly to do the processes by itself. Logistics outsourcing refers to an arrangement whereby a logistics service provider, called a third party logistics (3PL) service providers, performs services for a firm that could be, or have previously been, provided in-house. 3PL service providers have a strategic role to play especially in the business of automotive manufacturing firms. They act as external suppliers of logistical services that ensure the efficient and effective flow of resource inputs into the firm as well as final products to the end customer. Low cost, despite being a critical success factor, is not the only expectation. 3PL service providers are also expected to be flexible and versatile in its operations, and to cater for the needs of the manufacturing business strategy. Millions of Rands are spent on 3PL service providers, with the hope and belief that they will streamline business processes. Outsourcing of the logistics division to 3PL service providers reduces the costs of getting the right product to the right place for the consumer. Automotive manufacturing firms are not willing to add any costly service to the commodity which is not perceived as value-adding by the customer. Customers have always been classified as value conscious, but in recent times of economic difficulty and uncertainty, this has become even more apparent. This trend has caused many automotive manufacturing firms to prioritise cost saving, and logistics is no exception. The main objective of this study was to investigate the specific service level expectations that automotive manufacturing firms have of third party logistics (3PL) service providers in the Eastern Cape Province. In support of the main objective, it was necessary to source the reasons why automotive manufacturing firms in the Eastern Cape Province find it important to trade with 3PL service providers and to determine whether or not 3PL service providers are meeting the expectations of automotive manufacturing firms in the Province. Furthermore, the study set out to highlight the major problems currently associated with 3PL service providers, as well as to determine the consequences of unacceptable performance levels provided by 3PL service providers. Lastly, to identify the action plans that automotive manufacturing firms have to bring 3PL service providers in line with their expectations. As a starting point to the study, a literature review was undertaken which revealed that the supply chain philosophy is an important operation in any manufacturing environment. In order to satisfy the end customer, business organisations need to ensure that all supply chain operations are completed in the most efficient and effective manner. In addition, modern business strategies, also referred to as international trends, need to be practiced by principal manufacturing organisations in their quest to be more efficient, effective, competitive and successful in an ever-changing business environment. In order to achieve supply chain success, principal organisations need to ensure that all supply chain partners, particularly 3PL service providers, are aligned with the goals of the principal organisation’s supply chain. The review highlighted that business organisations need to review their selection methods for 3PL service providers on a continuous basis and only select providers that can tailor their service offerings according to the principal organisation’s needs. Therefore, in order for automotive manufactures to realise more potential from their 3PL service providers in the future, issues such as early 3PL service provider involvement, cost saving initiatives from 3PL service providers and 3PL service provider development, will become more crucial. Lastly, the review showed that the automotive industry plays a key role in developing countries as it is a significant contributor to GDP and provides a source of employment, which is much needed in South Africa. However, automotive logistics is a highly complex field, demanding considerable capital resources. One of the most important roles of 3PL service providers in the automotive industry is the management of cargos of goods within the supply chain. As a result, the automotive industry is becoming more based on a system of modularity, through a system of modular production. Logistics outsourcing is receiving increased attention, since it is a sector in which productivity and efficiency improvements are possible in order to lower operating costs, while improving customer services. However, 3PL service providers face significant barriers in developing countries such as stringent legal regulations, poor infrastructure and equipment, as well as a lack of competent manpower for efficient operations. This research was performed mainly within the positivist research paradigm of causality, since it was held by the researcher that there should be a clear causal relationship between the variables that may be observed to answer the research questions of this study. A simple random probability sample of participants from the research population of automotive manufacturing firms in the Eastern Cape Province was gathered, and the questions posed in the questionnaire of this study were structured using both Likert-scale and open-ended questions. In order to analyse the data, two popular quantitative data analysis techniques of descriptive statistical analysis and inferential statistical analysis were employed, with particular techniques of Correlation Analysis, Cronbach’s alpha, and tests for normality being performed. The empirical study revealed that the largest group was employed in the assembly sector, and the vast majority of the respondents made use of 3PL service providers for both sending and receiving components and parts. Almost all of the respondents outsourced transportation services to 3PL service providers. Most respondents were satisfied or very satisfied with their transportation 3PL service providers; but fewer were satisfied, and some were dissatisfied or very dissatisfied, with warehousing and VAS 3PL service providers. The range of mean values across all of the ‘consequences’ that had been caused due to inferior 3PL performance was concisely grouped, indicating that no single issue stood out as far more or less of a problem than the others; though three common problems noted were that respondents had not received parts and components on time, experienced production stoppages; and higher costs had impacted their organisations negatively. The Cronbach alphas of each of the transportation, warehousing, VAS and consequences data sets, combined, indicated that the data was reliable, and had suitable internal consistencies. The main corrective actions to be taken by automotive manufactures against 3PL service providers who fail to perform as promised are to impose a penalty as per the terms and conditions of the contract signed between the automotive manufacturing firm and the 3PL service provider or to cancel the contract and look for an alternative 3PL service provider if they do not have a back-up service provider.
- Format
- xvii, 160 leaves
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economics Sciences
- Language
- English
- Rights
- Nelson Mandela University
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