Modelling strategic responses to factors influencing mode choice in completely built units transportation

Abstract

The purpose of this research to model strategic responses to input drivers influencing road and rail transportation of completely built units (CBUs) in Gauteng’s automotive industry. Due to the global economy and free market trade, like all industries Original Equipment Manufacturers (OEMs) are shifting plants to locations were lower production and shipment costs are (Black, 2001). This concept is identified by Christopher (2011) who points out that leading-edge companies have realised that the real competition is not company against company but rather supply chain against supply chain. Within the context of South Africa being geographically positioned further from the markets, there is need for improved operational efficiencies within the OEM supply chain. By modelling the strategic responses of input factors in various scenarios, outputs can be used to inform business of the likely impact of certain decisions. The research applied a mixed method approach (qualitative and quantitative) to generate a fuzzy cognitive map and model which was used to simulate various scenarios in the study. Literature review was used to formulate the draft FCM which was then participated to eight industry experts through a semi-structured interview. Making use of the experts’ feedback the draft FCM was updated/refined into the final FCM which was used to model the various scenarios. Within South Africa, road and rail are the key modes of transport of CBUs over the long haul. The OEM supply chain is hybrid of cost sensitive and service sensitive. Cost because the industry needs to be competitive against other markets who they are competing for production contracts with and service sensitivity because movement of vehicles should be timeous, reliable, flexible and ensure integrity of cargo to meet market needs. Through scenario testing the sensitivity of supply chain cost and service outputs to changes in influencing factors from a road and rail base were examined. In general, the results indicate that there is positive and negative responsiveness to these factors whilst in some few instances outputs are unchanged. Business needs to be able to have a long-term view of these factors and the likely impact on business process and outputs considering the highly competitive global environment. Road and rail transportation of CBUs in SA complement each other. The decision to use either mode is informed by multi-criteria analysis governed by cost sensitivity and service sensitive parameters. The integration of road and rail services will mitigate the impact of primary input factors and provide optimised cost and service needs that will provide coopetition i.e. cooperative competition for the benefit of the South African CBU transportation industry.