Developing Strategic Supplier Alliances in the Australian Automotive Industry: A Case Study

Abstract

Traditional purchasing practices typically play a supportive role to production, but recently the purchasing function has been recognised as being capable of making significant contributions to a firm's corporate objectives through the development of strategic supplier alliances or relationships between manufacturers and their supplier networks. This study focuses on the nature and progress of strategic supplier relationships in the automotive industry. It examines the progress made towards partnership relationships by the Australian subsidiary of a major Japanese motor vehicle manufacturer. These relationships are examined using Helper's 1991 framework which classifies relationships as ‘voice’ or ‘exit’ according to the method used to resolve problems between the parties. Voice relationships arise from joint problem resolution, exit relationships arise from the threat of withdrawal by the customer. Previous research in Japan, Europe and the United States suggests that voice relationships lead to better performance than non‐voice relationships. This research was carried out at an organisational rather than an industry level, surveying the suppliers to one major motor vehicle manufacturer. It examined the extent of information exchange and commitment from the suppliers' perspective. The suppliers were classified along a continuum from voice to transitional to exit relationships on the basis of information exchange and commitment. The results indicated that from a supplier perspective fewer voice or true strategic alliances existed than the manufacturer would like, with limited progress made towards them to date. There was evidence of supplier mistrust towards the manufacturer and perceptions of unfair treatment by the manufacturer. Future development of supplier relationships will depend on the manufacturer's ability to recognise and address the current of mistrust which remains as a legacy of past practices.

Citation

Clarke, J. and Kloot, L. (1998), "Developing Strategic Supplier Alliances in the Australian Automotive Industry: A Case Study", Asian Review of Accounting, Vol. 6 No. 2, pp. 1-24. https://doi.org/10.1108/eb060695