Automotive Supplier Development in South Africa
The automotive industry is South Africa’s leading manufacturing sector and contributes approximately 4.9% to GDP in 2007. It attracted about R27.1 billion worth of investments between 2000 and 2008 and contributes significantly to employment. At least 131,000 people are working in the manufacturing of accessories, components and vehicles, translating to about 5.9% of total manufacturing employment. The sector has been growing considerably over the last decades - volumes have increased from 388,442 units in 1995 to 587,719 units in 2006 and down to 562,965 units in 2008.
As local and global car manufacturers and Tier 1 suppliers are continuously increasing their requirements with regard to cost, quality, and delivery, and also focus on social and environmental sustainability and related engineering and managerial know-how, UNIDO is being requested to support small and medium-sized component manufacturers in their endeavour to tackle these challenges.
There are major opportunities to leverage the South African government’s objective to strengthen, broaden and deepen the automotive, components and medium and heavy commercial vehicles sector. The government aims to raise volumes to 1.2 million vehicles per annum by 2020 and substantially diversify and deepen the component supply chain (2010/11 – 2012/13 South Africa Industrial Policy Action Plan p. 54).
To encourage the sector’s transformation into a globally competitive industry, UNIDO, the South African Department of Trade and Industry (the dti) and the Automotive Industry Development Centre (AIDC), have sought to address some of the challenges that the South African automotive industry is facing through different technical assistance projects over time that focus on the “Tirisano Programme” (TP) as well as best practices for supplier development.
The Tirisano Programme - Pilot Project
In 2003/04, UNIDO launched a technical assistance project to support the South African Automotive Industry Development Centre – AIDC in developing fundamental shop floor improvement programmes for automotive component suppliers in the country. This pilot initiative, supported by the Ford Motor Company of Southern Africa and the Department of Trade and Industry – the dti, focused on five Gauteng-based firms (employing between 20 and 250 people), which supplied components directly to Ford.
UNIDO assisted AIDC in creating the so-called “Tirisano Shop Floor Improvement Programme”, a continuous improvement programme aimed at raising operating efficiency at plant level. It involves skills transfer and training on the shop floor with a focus on lean manufacturing and ways to eliminate wastes. Derived from the Sotho word for ‘working together’, the aim of the Tirisano Programme is to achieve sustainable improvements in product quality, cost and delivery in supplier firms.
The pilot upgraded the sills of 248 workers holding strategic positions in five companies, who all confirmed that this training and coaching increased productivity, reduced costs, increased efficiency, improved quality and delivery, and raised staff morale. Participating companies achieved up to 75% time reduction in bottleneck operation changeovers, up to 35% reduction in finished goods stock/inventory holding and up to 67% improvement in overall employee productivity.
Sustainable Automotive Component Supplier Development Programme
The successful completion of the pilot initiative led to the development of a comprehensive and sustainable supplier development programme based on global best practices in manufacturing (including cleaner production and environmental management elements) and reaching out to a larger number of component manufacturers in the South African context.
More specifically, the objectives of the Sustainable Automotive Component Supplier Development Programme, which was initiated in 2008 and will be finalized by the end of 2012, are threefold:
Funded by the dti and implemented in collaboration with the AIDC, the project is also drawing on well established benchmarking practices for the automotive industry in collaboration with B&M Analysts and the South African Benchmarking Club.