




































American Research Journal of Economics, Finance and Management 

Volume 12 Issue 3, July-September 2024 

ISSN: 2836-9416 

Impact Factor: 4.85 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

Email: contact@americaserial.com 

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20 | P a g e  

EVALUATING AND CHOOSING SUPPLY CHAIN STRATEGIES: A 

COMPREHENSIVE FRAMEWORK 
 

 

JABULANI THEMBA DLAMINI AND MANDLA SIPHO MKHIZE 
Department of Business Management, College of Economic and Management Sciences, University of 

South Africa, P. O. Box 392, UNISA 0003, South Africa. 

DOI: https://doi.org/10.5281/zenodo.12772255 

  

Abstract: The root cause of many supply chain issues is a misalignment between supply chain 

strategy and business strategy. This article aims to address these challenges by focusing on the South 

African automotive industry. Through a theoretical analytical review of relevant literature on supply 

chain strategies, this study identifies the primary challenges faced by the industry, including external 

environmental factors, customer demands, competition, and industry-specific issues. The article 

argues that these challenges are exacerbated by the mismatch in the application of supply chain 

strategies. To address this, a framework is proposed to guide supply chain managers in selecting 

appropriate strategies. The article seeks to advance the discussion on differentiating supply chain 

strategies and offers a practical tool to align supply chain and business strategies effectively. 

Keywords: Supply chain strategy, Business strategy alignment, Automotive industry, South Africa 

Supply chain challenges  

  

 INTRODUCTION  

 Supply chain managers are confronted by significant challenges in managing their supply chains (Lo 

and Power, 2010). This makes it necessary to take strategic decisions and to develop competitive supply 

chain strategies with capabilities that add value in the eyes of the customers (Lee, 2002; Ismail and 

Sharifi, 2006). Fisher (1997) developed a model that helps managers determine their supply chain 

based on the nature of the product (functional and innovative products). Scholars have contributed 

extensively to Fisher’s model and have suggested that in addition to the „product‟, there are additional 

factors that might influence the choice of a supply chain strategy (Lo and Power, 2010). These are due 

to several developments in the market, such as increased competition, increased demand variability, 

increased product variety, increased amounts of customer-specific products, and product life cycles 

getting shorter (Christopher et al., 2004).  

According to Sun et al. (2009), choosing and implementing the right supply chain strategy is believed  

to enable the improvement of supply chain management (SCM) performance. The ability to design an 

effective supply chain strategy is an important core capability of SCM (Nel and Badenhorst-Weiss, 

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American Research Journal of Economics, Finance and Management 

Volume 12 Issue 3, July-September 2024 

ISSN: 2836-9416 

Impact Factor: 4.85 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

Email: contact@americaserial.com 

Official Journal of America Serial Publication 

 

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21 | P a g e  

2010). Supply chain management (SCM) can be defined as a set of approaches utilized to efficiently 

integrate and coordinate the materials, information and financial flows across the supply chain, so that 

merchandise is supplied, produced and distributed at the right quantities, to the right locations, and at 

the right time, in the most cost-efficient way, while satisfying customer requirements (Hilletofth, 

2009).  

In South Africa, the automotive industry is the leading industry in supply chain practices (Supply chain 

foresight, 2007). The industry is often referred to as the barometer of the health of the economy of the 

country. Yet, many companies within the sector have little knowledge of the costs involved in 

maintaining their supply chains, nor of the impact of supply chain on their operations (Data scope 

Consulting, 2008). Manufacturers and suppliers are challenged to react flexibly to changes in customer 

demand (Supply chain foresight, 2010), thus forcing second-tier manufacturers to hold larger inventory 

levels (Data scope Consulting, 2008). Therefore, the challenges in the South African automotive 

industry can be attributed to poor  

supply chain strategies that are not matched to the business strategies (Lee, 2002).  

According to Fisher (1997), mismatch is the root cause of the problems plaguing many supply chains 

and therefore supply chain strategies that are based on a one-size-fits-all strategy will fail (Lee, 2002; 

Sun et al., 2009). A good supply chain strategy must be aligned to a company’s business strategy 

(Chaudhary, 2008) since a mismatch generally leads to significant problems in business operation (Lo 

and Power, 2010). It is therefore imperative for supply chain managers to understand their customers‟ 

needs, and to choose and implement the right strategy for the supply chain to satisfy customer 

demands.  

Given the importance of choosing the right supply chain strategies for organizational performance, the 

purpose of this article is therefore to firstly examine supply chain management challenges with specific 

reference to the South African automotive industry and secondly to suggest a comprehensive 

framework that will help managers chose their supply chain strategies. The article, which is based on a 

theoretical analytical review of related literature on supply chain strategies, contributes to the ongoing 

debate on supply chain strategies. The body of the article presents SCM in the South African automotive 

industry; supply chain strategies, related review of supply chain strategies and a framework for 

implementing supply chain strategies.  

 DEFINITION AND BACKGROUND OF SUPPLY CHAIN  

MANAGEMENT IN THE AUTOMOTIVE INDUSTRY  

 The definition and background of SCM in the automotive industry and the challenges of SCM in the 

South African automotive industry is presented here.  

 Definition of supply chain management  

 Supply chain management (SCM) can be defined as the systems approach to managing the entire flow 

of information, materials and services from the raw materials suppliers through factories and 

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Volume 12 Issue 3, July-September 2024 

ISSN: 2836-9416 

Impact Factor: 4.85 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

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22 | P a g e  

warehouses to the end customer (Leenders and Fearon, 2004; Ambe, 2010). SCM involves the 

management of upstream and downstream relationships with suppliers and customers to deliver 

superior customer value at less cost to the supply chain as a whole (Christopher, 2005). SCM exists in 

all types of business organizations and can be classified into three categories: a management 

philosophy, implementation of a management philosophy and a set of management processes 

(Klemencic, 2006; Lambert, 2006). It contributes to value creation in the business through 

optimization and alignment of the structures, policies and processes (Deloitte, 2011). Methodologies 

that align the supply chain to customers‟ products comprise the biggest opportunity for profit and cash 

improvement (Deloitte, Ambe and Badenhorst-2011). However, managing a supply chain involves 

considerable levels of complications (Lo and Power, 2010).  

 Background of supply chain management in the automotive industry  

 Globally, SCM has undergone an evolution over the last two decades in the automotive industry 

(Cooney and Yacobucci, 2005; Zhu et al., 2006). Historically, the industry operated according to a 

„push‟ model. In this model, marketing and sales take a best guess at market demand and then supply 

these forecasts to the design, engineering, financial and manufacturing teams to determine make 

and/or model production volumes  

(Howard et al., 2006).  

Mass production was the standard production strategy adopted (Zhang and Chen, 2006). Mass 

production relies heavily on a company’s ability to forecast demand accurately, which in turn guides 

the company’s decisions regarding operations and production. Characterized as a push system, 

forecast-driven production is a highly efficient but rather rigid system that utilizes historical data and 

projections to create a production plan and makes use of existing configurations to produce products 

for stock (Zhang and Chen, 2006). Due to changing demands in the business environment, the focus 

shifted to mass customization. In this situation, a company’s operations are initiated by the customers‟ 

orders rather than by a forecast, hence the employment of a customer order strategy (Holweg et al., 

2005). A customer-order driven production approach is characterized as a pull system that produces 

the products for specific customer orders in a timely manner, thus, avoiding stockpiles (Zhang and 

Chen, 2006).  

 Challenges of supply chain management in the South  

African automotive industry  

 The automotive industry is an important contributor to the  

South African economy. The industry was South Africa’s most heavily protected industry before trade 

liberalization was launched in the 1990s (Flatters and Netshitomboni, 2006). The industry, which has 

attracted much government attention and a wide range of public support (Ambe and Badenhorst-Weiss, 

2011), has managed to achieve operations among all role players and is now fully integrated into the 

global framework of parent companies and multi-nationals (Fernandes and Erasmus, 2005). All of the 

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American Research Journal of Economics, Finance and Management 

Volume 12 Issue 3, July-September 2024 

ISSN: 2836-9416 

Impact Factor: 4.85 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

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23 | P a g e  

major vehicle manufacturers are represented in South Africa. Many of them use South Africa to source 

components and assemble vehicles for both the local and the overseas markets (Muller, 2009; Van der 

Merwe, 2009).  

A growth catalyst of the South African automotive industry has been the government's Motor Industry 

Development Programme (MIDP). Compliance with the World Trade Organization (WTO) led the 

South African government to review the MIDP and replace it with the Automotive Production 

Development Programme (APDP) (Ambe and Badenhorst-Weiss, 2011). This involved a shift from 

export support to production support, while phased-down tariff reductions (albeit at a slower pace) are 

transitionally maintained as the MIDP gives way to APDP (Mohubetswane, 2010).  

The South African automotive supply chain is segmented and comprises eight major OEMs who are 

supplied by approximately 275 first-tier suppliers, 100 second-tier suppliers and more than 200 third- 

and fourth-tier suppliers (Khayundi, 2010). Critical issues for consideration in the industry’s supply 

chain are cost containment, development know-how and resources, product quality and logistics 

(Khayundi, 2010).  

Muller (2009), Supply chain foresight (2010) and Ambe and Badenhorst-Weiss (2011) have pointed out 

that the South African automotive industry faces great supply chain challenges. These include the 

establishment of cost reduction measures and service improvement (Supply chain foresight, 2007). 

Moreover, the majority of companies within the industry do not only operate with low levels of 

collaboration, but are also not market sensitive or reactive to the changing market (Supply Chain 

Intelligence Report (CSIR), 2009). The supply chain foresight report (2010) also highlighted the fact 

that the industry supply chain is more vulnerable than ever as a result of vast swings in demand and 

volumes because of the global recession.  

Adding to the disarray faced by the South African automotive industry was pressure by OEMs to reduce 

prices, excessive inventory, the unreliability of rail transport and rail capacity problems, the high cost 

of South African ports, the cost of replacing outdated technology, and broad-based black economic 

empowerment; and a lack of skills and labour problems, both of which are time-consuming to resolve 

(Naude and Badenhorst-Weiss, 2011). Therefore, there is a need for the South African automotive 

industry manufacturers to produce at a competitive cost and to have the ability to respond quickly and 

reliably to first-world market demands (Ambe and Badenhorst-Weiss, 2011).  

Based on the review provided, this article articulates that supply chain challenges in the South African 

automotive industry stem from the external environment, the customers, competition and the 

automotive industry. Table 1 summarizes the supply chain challenges in the South African automotive 

industry and their main sources.  

These challenges affecting the South African automotive industry have led manufacturers and suppliers 

to build up buffer inventory and limit their ability to react flexibly to changes in customer demand 

(Supply chain fore sight, 2010). Data scope Consulting (2008) point out that, manufacturers forced 

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American Research Journal of Economics, Finance and Management 

Volume 12 Issue 3, July-September 2024 

ISSN: 2836-9416 

Impact Factor: 4.85 

Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, 

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24 | P a g e  

their second-tier manufacturers to hold larger inventory levels to avoid bringing a large manufacturing 

line to a halt. These challenges can be attributed to mismatch in the supply chain (Fisher, 1997; Lee, 

2002; Hines, 2006). Fisher (1997) attributes the root cause of the problems plaguing many supply 

chains to a mismatch between types of environmental uncertainty and supply chain strategy (Lee, 

2002; Hines, 2006). Therefore, choosing and implementing the right strategy for the supply chain to 

satisfy customer demands is vital for automotive manufacturers, their suppliers, and the economy as a 

whole. According to Sun et al. (2009), it is believed that the right supply chain strategy can improve 

SCM performance (Christopher et al., 2004).  

 Review of supply chain strategies  

 Following the definition and background discussion, the focus of the article now moves to a review of 

supply chain strategies.  

 What is a supply chain strategy?  

 Due to an awareness of the need to align processes with trading partners to achieve business outcomes, 

business competition has shifted from a traditional firm basis to a supply chain-wide basis (Hugo et al., 

2004; Lo and Power, 2010). A supply chain strategy is part of the overall business strategy, designed 

around a well-defined basis of competition (innovation, low cost, service, quality) (Cohen and Rousell, 

2005). Supply chain strategy utilizes interfirm coordination as the capability that facilitates 

achievement of objectives focused on revenue growth, operating cost reduction, working capital and 

fixed capital efficiency to maximize shareholder value (Deffee and Stank, 2005). It is integrated with 

marketing strategy and with customers' needs, product strategy and power position. In a rapidly 

evolving global economy, no firm exists in a vacuum (Hugo et al., 2004; Ambe and Badenhorst-Weiss, 

2010).  

It is now increasingly accepted that „one size does not fit all‟ when it comes to designing supply chain 

strategies to support a wide range of products with different characteristics (Christopher et al., 2006). 

Supply chain strategy differs from traditionally accepted company strategies, in that it requires the 

coordination and commitment of many different firms to implement company strategic objectives 

(Deffee and Stank, 2005). The questions remain: how do supply chains function and how deeply are 

supply chain concepts ingrained in manufacturing organizations (Vonderembse et al., 2006)? 

Christopher et al. (2006) says that in the ideal world, supply chains would be designed from the 

„customer backwards‟ rather than according to the conventional approach which tends to be from the 

„factory outwards‟. There is a temptation t o create supply chains that are more focused upon 

„efficiency‟ goals than „effectiveness‟ goals. Thus, the typical supply chain strategy is likely to be aimed 

at achieving a smooth flow at minimum cost. What might look like a cost saving to one firm could mean 

increased costs to the supply chain as a whole. Therefore, there is a great need for research establishing 

how, and to what extent, supply chain strategies directly or indirect shape a company’s performance 

(Sun et al., 2009).

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Table 1. Supply chain challenges in the South African automotive industry.  

 Sources of 

challenge  

Description of supply chain challenge  

External  

  

Rising fuel cost; dealing with oil price volatility; vulnerability of the supply 

chain; restructuring of operations as a result of global recession  

  

Competition  

  

Delicate balance in servicing customers and dealing with suppliers; effect of 

globalization on the supply chain; planning and forecasting issues; increased 

road flight volume; globalization and market convergence; individualization; 

accelerated modification and diversification of product portfolio; increased 

pressure of innovation and stiff competition among manufacturers resulting 

in more mergers or acquisitions  

  

Customer  

  

Cost reduction and service improvement; growing severity of the economic 

slowdown; making the supply chain lean; efficient planning and forecasting; 

producing at a competitive cost and pressure on OEMs to reduce costs  

  

Industry  

Inadequate infrastructure; operating with low levels of collaboration and not 

reacting to market changes  

Differentiating supply chain strategies  

 Supply chain scholars have agreed that a supply chain strategy should be chosen based on the nature 

of the product and by matching the strategy to the unique characteristics of different products or 

markets (Christopher and Towill, 2002; Fisher, 1997; Lee, 2002; Sebastiao and Golicic, 2008). The 

Fisher (1997) model has helped managers to understand the nature of their product and to devise a 

supply chain strategy that can best satisfy the specific demand (Jacobs et al., 2009). According to 

Fisher’s model, supply chain strategy is established based on the product type (functional or innovative 

products) (Fisher, 1997). Functional products are predictable and stable over time and therefore have 

a supply chain strategy oriented toward efficiency (Jacobs et al., 2009). Innovative products have a 

shorter product lifecycle and their demand is unpredictable and oriented towards a responsive supply 

chain strategy reducing lead times (Jacobs et al., 2009).  

Lee (2002) introduced a framework for establishing a strategy based on supply and demand 

uncertainties. Lee (2002) elaborates upon the match between strategy and product characteristics by 

considering stable versus evolving supply characteristics in addition to demand. According to Lee 

(2002), efficient and responsive supply chain strategies are associated with stable supply processes 

while risk-hedging and agile supply chain are associated with conditions of evolving supply processes 

(Sebastiao and Golicic, 2008).  

Chopra and Meindl (2010) consider two main strategies for the supply chain (efficiency and 

responsiveness) and introduce a three-step procedure for achieving strategic fit. In the first step, the 

competitive strategy of the supply chain is established, and as a result, the uncertainty level a supply 

chain must face is measured. In the second step, the supply chain strategy is recognized, and in the last 

step, the competitive strategies and supply chain strategies are matched to the strategic fit zone. These 

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authors have shown that there is a direct relation between the competitive strategy and the supply chain 

strategy in achieving strategic fit (Chopra and Meindl, 2010).  

Furthermore, Christopher and Towill (2002) contend that there are different pipelines to satisfy 

customer demands, but these pipelines must be selected to match the business strategy of the supply 

chain. Christopher et al. (2006) proposes a three-dimensional classification appropriate for global 

supply chains. These dimensions and their binary gradations are: products (standard or special), 

demand (stable or volatile) and replenishment lead-times (short or long).  

Christopher and Towill (2002) also note that the element to influence the choice of supply chain 

strategy is the specific „market winner‟ criterion. Where cost is the primary market winner, the 

emphasis must be upon efficiency, which will imply lean strategies. However, the reality is that lean 

strategies will only be viable where demand is stable and the products are standard. Where availability 

is the market winner, the emphasis will inevitably veer towards agile strategies.  

Fawcett et al. (2007) also note that a supply chain strategy can be determined from the product life 

cycle (PLC). The PLC summarizes all the steps from product design and development phases to the 

decision to remove it from the market. The product goes through an introduction, growth, maturity and 

a declining phase (Aitken et al., 2003; Astrom and Ohgren, 2010). Different types of products, that is, 

innovative, hybrid or functional, can be classified into different phases of the PLC. Chibba (2007) 

explains that the PLC describes in return which type of supply chain should be preferred: agile, hybrid, 

lean or efficient. The number of different supply chains can be narrowed down to the generic supply 

chain strategies (lean and agile supply chain).  

Simchi-Levi et al. (2003) distinguishes between push and pull supply chains (Diaz, 2005). A push-

oriented supply chain caters to stable demand of homogenized products. In this type of supply chain, 

production and distribution decisions are based on long-term forecasts, as demand is stable. In the pull 

supply chain, the entire supply chain is driven by actual demand; the time to market becomes long, 

depending on the type of supply chain and the number of players involved in it. Also, in a pull strategy, 

it is not possible to get advantage of economies of scale, since batch production or truckloads are hard 

to achieve (Simchi-Levi et al., 2003; Diaz, 2005).  

There are therefore, several factors that could be used to determine supply chain strategies. Some of 

the aspects include the demand and supply characteristics of a product; the market winners and market 

qualifiers; the product life cycle; pull and push strategy; and manufacturing strategies. The paper 

further suggests a framework to help managers choose their supply chain strategies. 

  

 

 

 
Figure 1. Steps for choosing supply chain strategies.  

The right  s upply chain  

strategy for a product   

Step 1 :   Understand  

the market and the  

nature of customer  

demand   

Step 2 :  Determine  

competencies and  

capabilities of the  

company   

Step 3 :   Choose the  

strategy applicable   

  

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FRAMEWORK FOR SUPPLY CHAIN STRATEGIES  

 A framework for choosing and implementing supply chain strategies is presented here. According to 

Ismail and Sharifi (2006), Sharifi et al. (2006), Hines (2006), Fawcett et al. (2007) and Chopra and 

Meindl (2010), important and critical processes for choosing a supply chain strategy include the 

following: understanding of market requirements and the current situation of the supply chain; 

determining supply chain performance attributes based on an analysis of customer requirement and 

the current situation of the supply chain; determining supply chain performance dimensions that stand 

for the areas where the supply chain attributes can be deconstructed to more concrete performance 

dimensions; translating supply chain dimensions into supply chain functions converting the conceptual 

supply chain to an actual supply chain; and designing and examining all the components and aspects 

of the desired supply chain against the market requirement and current situation. However, a supply 

chain strategy can be chosen using three basic steps that will be aligned with the business strategy. The 

first step is to understand the markets and the nature of customer demand. The second step is to define 

the strengths or core competencies and capabilities of the company. The third step is to choose the 

strategy applicable to the product. Figure 1 illustrates the steps for choosing supply chain strategies.  

 Step 1: Understand the market and the nature of customer demand  

 Customers today are more demanding, not just of quality, but also of service (Sahav et al., 2006: 16). 

Therefore, for an organization to make the right decision on the type of supply chain strategy, it must 

understand the customer and the supply chain uncertainty (Hines, 2006; Chopra and Meindl, 2010). 

There are six key market variables that determine the attributes of a supply chain structure: volume, 

time, variety, service level required, price and rate of change, innovation and new product development 

(Hines, 2006). It is also important to identify customer segments to determine similarities between 

groups of customers so that their needs can be satisfied efficiently (Hines, 2006). Customers in different 

segments may have similar needs to other segments but in most cases the difference will be greater than 

the similarities observed. As noted by Sun et al. (2009), as well as Waller (2004), the faster the response 

to the market for a product, the more uncertainty will be experienced in the supply chain.  

Supply chain uncertainty is strongly affected by product life cycle (Fawcett el al., 2007). New products 

being introduced have higher supply uncertainty because design and production processes are still 

evolving. Mature products have less supply uncertainty (Hines, 2006; Chopra and Meindl, 2010). 

Jacobs et al. (2009) point out that Fisher developed a framework to help managers understand the 

nature of their product and devised the supply chain that can best satisfy that demand. According to 

Lee (2002), Selldin and Olhager (2007), and Jacobs et al. (2009) based on Fisher‟s (1997) model, 

products can be categorised as either primarily functional or primarily innovative. Each of the supply 

chain categories requires distinctive kinds of supply chains. Choosing the wrong strategy for a product 

may lead to mismatch in the supply chain (Lee, 2002). Mismatch is the root cause of the supply chain 

problems (Fisher, 1997; Hines, 2006). Table 2 shows the difference between functional and innovative 

products based on the demand and supply characteristics.  

 Step 2: Define core competencies and capabilities of the company  

 Supply chains have different characteristics but all supply chains have two important attributes: cost 

and service (Taylor, 2004: 280). Hines (2006: 61) and Chopra and Meindl (2010: 44) explain that 

supply chain capabilities include the ability to respond to wide range of quantities demanded, meet 

short lead times, handle a large variety of products, build highly innovative products, meet a high 

service level and handle supply uncertainty. To be able to determine the capabilities of the supply chain, 

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a trade-off between responsiveness and cost is required (Taylor, 2004; Hines, 2006). Responsiveness 

comes at a cost (Chopra and Meindl, 2010). Increase in cost leads to the concept of „supply chain 

efficiency‟ (Hines, 2006). The trade-off philosophy of cost and responsiveness led to the term „efficient 

frontier‟ (Taylor, 2004; Hines, 2006; Chopra and Meindl, 2010). Taylor (2004) refers to the  

„efficient frontier‟ as an intermediary „win-win‟ situation that allows two qualities to be combined to 

some degree with an upper bound (the constraint of the total of the two). The efficient frontier shows 

the lowest possible cost for a given responsiveness (Chopra and Meindl, 2010).  

The efficient frontier therefore represents the cost responsiveness performance of the best supply 

chains. A key strategic choice for a supply chain is the level of responsiveness an organization seeks to 

provide (Chopra and Meindl, 2010). The most important consideration in deciding where to place a 

company along the trade-off curve is the choice of the corporate positioning strategy (Taylor, 2004).  

 Step 3: Choose the strategy applicable  

 From the afore analysis, it is clear that putting responsiveness and efficiency as a trade-off, recognizes 

that different levels of responsiveness are associated with cost implications (Taylor, 2004; Hines, 

2006). The level of responsiveness in the supply chain depends upon increasing cost. Increase in cost 

lowers efficiency but increases responsiveness. In deciding upon the type(s) of supply chain strategy to 

choose, it is necessary to understand what the customer needs (Hull, 2005; Hines, 2006; Jonsson, 

2008; Chopra and Meindl, 2010). Designing a supply chain strategy that can meet the customer’s needs 

is what customer focus is all about. Therefore, the customer needs should be the main focus. This point 

of focus helps an organization to achieve strategic fit. To achieve complete strategic fit, an organization 

must ensure that all its functions maintain consistent strategies that support the competitive strategy. 

All sub-strategies within the supply chain, such as manufacturing, inventory and purchasing, need to 

Table 2. Characteristics of the dimensions of demand and supply.  

 Demand 

characteristics  

Functional  

  Supply 

characteristics  

 

Innovative    

Higher demand 

uncertainties    

Stable  Evolving  

Low demand 

uncertainties  

Fewer breakdowns  Vulnerable to 

breakdowns  

More predictable 

demand  

Difficult to forecast    Stable and higher 

yields  

Variable and lower 

yields  

Stable demand  Variable demand    Fewer quality 

problems  

Potential quality 

problems  

Long product life  Short selling season    More supply sources  Limited supply sources  

Low inventory cost  High inventory cost    Reliable suppliers  Unreliable suppliers  

Low profit margins  High profit margins    Fewer process 

changes  

More process changes  

Low product variety  High product variety    Fewer capacity 

constraints  

Potential capacity 

constrained  

Low stockout cost  High stockout cost    Flexible  Inflexible  

Low obsolescence  High obsolescence    Dependable lead time  Variable lead time  

  

Source: Adapted from Fisher (1997), Lee (2002) and Verdouw and Verwaart (2008).  

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be consistent with the supply chain level of responsiveness. Firms with different locations along the 

spectrum must have different supply chain design and different functional strategies that support the 

spectrum (Chopra and Meindl, 2010). Table 3 shows a comparison between efficient and responsive 

supply chains.  

An efficient supply chain focuses on delivering products at lowest possible costs to customers 

(functional), while in a responsive supply chain, speed and flexibility are required from suppliers, 

manufacturers and product design solutions (innovative products) (Kaipia and Holmstrom, 2007: 4). 

Supply chain strategies vary according to the discipline from which they originate. However, their intent 

is consistent; to reduce uncertainties and cost while satisfying the end customers‟ needs (Hines, 2006). 

Supply chain strategies may be designed to be more efficient and/or more effective. Within these 

parameters, supply chains can be grouped into two broad categories that summaries their core 

competencies and capabilities in meeting the end customers‟ needs. According to Christopher and 

Towill (2002), an efficient supply chain is also known as a „lean‟ supply chain while a responsive supply 

chain is known as an „agile‟ supply chain (Nel and Badenhorst-Weiss, 2010). Table 4 presents some of 

the distinguishing attributes of a lean and an agile supply chain.  

There are two main strategies in the supply chain (Mason-Jones et al., 2000; Christopher and Towill, 

2001; Christopher, 2005; Hull, 2005; Simons and Zokaei, 2005; Hallgren and Olhager, 2009; Vinodh 

et al., 2009; Pandey and Garg, 2009). These strategies are termed „generic‟ supply chain strategies and 

include „lean‟ and „agile‟. A lean supply chain strategy works best in high volume, low variety and 

predictable environments, whereas an agile supply chain strategy is needed in a less predictable 

environment where the demand for variety is high (Christopher, 2005). Identifying the types of supply 

chain strategies might be appropriate in different circumstances to position the products in an 

organization’s portfolio according to their supply and demand characteristics (Ambe and Badenhorst-

Weiss, 2010).  

Lean and agile supply chain strategies can be integrated in a variety of ways (Faisal et al., 2006; 

Krishnamurthy and Yauch, 2007: 591; Hilletofth, 2009) because they are common to each other. They 

can be linked to evolve a new manufacturing paradigm under the name „legible‟ (Vinodh et al., 2009). 

Krishnamurthy and Yauch (2007) define a system as one in which the advantages of leanness and agility 

are combined. A legible supply chain aims to infuse competitiveness in an organization in a cost-

effective manner (Faisal et al., 2006). Legality refers to the combination of lean and agile paradigms 

within a total supply chain strategy. This occurs when the decoupling point is positioned so as to best 

suit the need for responding to a volatile demand downstream, while still providing level schedule 

upstream from the decoupling point (Hull, 2005; Vinodh et al., 2009; Rahiminia and Moghadasian, 

2010).  

Therefore, a supply chain can either be lean, agile or a combination of lean and agile (legible). An 

organization can achieve a competitive advantage by strategically employing a legible supply chain 

model through combining a lean and an agile supply chain strategy, as shown in Figure 2. customer 

demand (Hull, 2005). This will lead to com- 

By employing a legible supply chain strategy, an petitive advantage through innovation, cost, service 

and organization can ensure that it will minimize cost and quality (Mistry, 2005). Figure 3 presents a 

comprehensive maintain stability while being flexible and responsive to framework for chosen supply 

chain strategies. 

 Source: Christopher and Towill (2001: 208).  

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 Figure 2. Achieving competitive advantage through a leagile supply chain.  

  

Table 3. Comparison of efficient and responsive supply chains.  

Characteristics  Efficient supply chain  Responsive supply chain  

Demand  Constant, based on forecasting  Fluctuates, based on customer orders  

Product life cycle  Long  Short  

Contribution 

margin  

Low  High  

Order fulfil lead 

time  

Allowed longer fulfilment lead time  Short or based on quoted due date  

Supplier  Long-term  According to product life cycle  

Production  Make-to-stock  Make-to-order; Assemble-to-order; Build-to-

order  

Capacity  Low  High  

Inventory  Finished goods inventory  Parts, components, subassembly  

Supply selection  Low cost, consistent quality, and on-time 

delivery  

Flexibility, fast delivery, high-performance 

design quality  

Source: Jonsson (2008: 384).  

 Table 4. Distinguishing attributes of a lean and an agile supply chain.  

Distinguishing attribute  

Typical products  

Lean supply  

Commodities  

Agile supply  

Fashion goods  

Marketplace demand  Predictable  Volatile  

Product variety  Low  High  

Product life cycle  Long  Short  

Customer drivers  Cost  Availability  

Profit margin  Low  High  

Order winner  Cost  Time, 

availability  

  

  

  

  

  

  

    

Leagile  

supply chain   

Lean supply  

chain   

Agile supply  

chain   

Competitive advantage   
Innovation   

Cost   
Service   
Quality   

  

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Figure 3. Framework for supply chain strategies.  

 CONCLUSION  

 In view of increased competition and complexities that constitute critical issues for automotive 

companies, supply chain management (SCM) is paramount to the success of the South African 

automotive industry. The purpose of this article was firstly to examine SCM challenges with specific 

reference to the South African automotive industry and secondly to suggest a comprehensive 

framework to help supply chain managers choose their supply chain strategies. The article, which is 

based on a theoretical analytical review of related literature, reviews SCM in the South African 

automotive industry, supply chain strategies, and different approaches for differentiating supply chain 

strategies.  

The literature review reveals that the South African automotive industry faces great supply chain 

challenges. Adding to the disarray faced by the South African automotive industry is pressure by OEMs 

to reduce prices, excessive inventory, the unreliability of rail transport and rail capacity problems and 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

SUPPLY CHAIN STRATEGY   

Step 1: Understand the  
market and the customer  

demand   

Functional    
( Predictable)  
product   

Innovative  
( Unpredictable)  
products   

Step 2: Determine core  
competencies and  
capabilities of the  

comp any   

   Market winner:  
low cost   

   Product life  
cycle: long   

   Few market  
segments   

   Market winner:  
high service  
levels   

   Product life cycle:  
short   

   Multiple market  
s egments   

Step 3: Choose the  
strategy applicable   

Efficiency   
Decisi on drivers:   
Production centralised  
with little excess capacity;  
reduced inventory levels;  
f ew locations with  
centralised activities; slow  
and cheaper  
transportation mode; cost  
of information drops while  
other cost s   rise.   

Responsiveness   
Decision drivers:   
Production decentralised  
with excess capacity;  
high level of inventory;  
many locations physically  
close   to customers; fast  
and flexible  
transportation mode;  
collect and share timely,  
accurate data   

The right supply  
chain strategy   

Lean supply chain  
strategy   

Agile supply chain  
strategy   

Leagile supply chain  
strategy   

( Pos ses s   characteristics  
of lean and agile supply  
chain strategies)   

    
  

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the high cost of South African ports. There is clearly a need for the South African automotive industry 

manufacturers to produce at a competitive cost and to have the ability to respond quickly and reliably 

to first-world market demands (Ambe and Badenhorst-Weiss, 2011). The article articulates that supply 

chain challenges in the South African automotive industry stem from the external environment, the 

customers, competition and the automotive industry.  

Challenges in the supply chain can occur as a result of a mismatch in the application of supply chain 

strategies. As indicated by Fisher (1997), the root cause of the problems plaguing many supply chains 

is a mismatch between types of environmental uncertainty and supply chain strategy (Lee, 2002; Hines, 

2006). Therefore, it is important for supply chain managers to understand how to choose the right 

strategy for the supply chain to satisfy customer demands. It is believed that by implementing the right 

supply chain strategy, managers will be able to improve SCM performance (Christopher et al., 2004).  

The article concludes by suggesting a framework for chosen supply chain strategies. The framework is 

made up of three steps: the first step is to understand the markets and the nature of customer demand, 

the second step is to define the strengths or core competencies and capabilities of the company and the 

third step is to choose the strategy applicable to the product. The framework will help to ensure that 

strategies in the supply chain are chosen in a manner that will satisfy customer demand and match to 

the business strategies. The limitation of the framework suggested in this article is that it is still to be 

tested for its applicability in the industry.  

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