SOUTH AFRICAN CONFERENCE: Suppliers need to improve
Auto industry suppliers must improve quality, reduce cost and invest more in training, the South Africa Automotive Conference was told.
"Let's get the Chinese, Korean and Taiwanese talking about us rather than the other way round," Dave Coffey, managing director of supplier Shatterprufe and President of the National Association of Automotive Component & Allied Manufacturers (NAACAM) told delegates.
"Quality has improved and we are delivering the right product but we are rejecting and re-working too much in-house which adds cost," he said. South African suppliers were rejecting, internally, 2.91% of output against an international average of 1.54%.
Internal rework rates were 3.13% against an international average of 0.93%, said Coffey.
The reject rate by customers had fallen to 550ppm since 2001 against an industry average of 472ppm.
"We have an effective Tier 1 supply base but we haven't done enough to develop the Tier 2 and Tier 3 suppliers," he said.
Coffey told the conference that suppliers were not spending enough on investment and technology and urged local suppliers to form technology partnerships and joint ventures. "We need to be part of the global supply system," he said.
The SA supply chain is not globally competitive, he said. "There is a geographic disadvantage but we need to reduce stock in the entire supply chain," he said. SA suppliers were holding 21 days stock against an industry average of 14 and it was taking 68 days to supply internationally against an average 26 days.
"We must get aggressive, even if just to take a few days out."
Another problem area was lack of investment in training - SA suppliers spend an average of 2% of their total remuneration package against an average of 4%.