Importance of Supply Chain Management in the Auto industry

Supply management is an integral part of the success of any business. One, it boosts the customer’s service. Buyers expect to receive the automobiles that are of high quality, and devoid of mechanical problems. In the wake of new models of the vehicles designed on regular basis, the customers are much concerned about the capability of the cars, to serve them for long. Any industry that guarantees the buyers about the sustenance and the power of the engine tends to win their loyalty, hence improving the brand image (Eltantawy 2011, p.98). Consequently, supply management ensures that the products are delivered at the right time, with a reduction in communication latency. Globalization has opened new opportunities for the automobile companies to serve international clients. However, the geographic distance limits the extent in which to reach out to the customers. Setting up a well-coordinated channel of availing the vehicles to the final users, heightens the trust of the customers, suppliers and other stakeholders (Cecilia 2011, p.57).

The major objective of an automobile industry is to make profit and reduce the operating costs. Most of the companies find themselves in the quagmire of tracking the sales, supplies, legal documents among others, due to lack of well-instructed management system. Managing the supply chain eliminates the errors and frauds that happen in between the receiving of the raw materials, and the dispatch of the final products (Howard et al. n.d, p.77). Operating costs is reduced in the sense that the blatant behaviors of the suppliers are curtailed. This is supported by the agency theory which argues that suppliers behave in an opportunistic manner, with the subtle idea of maximizing what they gain, without considering the effects on the seller. The supplier can exhibit hazardous behavior that can damage the reputation of the business (Chaghooshi et al. 2015, p.45). With a well-designed supply chain management system, such cases can be prevented thus benefiting the company.

Furthermore, the quality of the automobiles improves significantly. Based on the research conducted by Cecilia (2011, p.72), she identified that the major cause of the low-quality vehicles is due to lack of good relationship between the suppliers and the manufacturers. The former tends to focus on maximizing the profits, at an expense of the latter. This misunderstanding is translated to the final customer, who receives the undesired vehicle. Establishing a pragmatic benchmarking with large and established companies allows the small automobile companies to increase the level of their services to meet the international standards. An empirical study conducted among the Indian auto industry revealed that having an internal and external quality control system improves the loyalty of the customers and increase the competitive edge (Maslaric and Groznik 2011, p.94). Furthermore,Cecilia (2011, p.62) notesthat quick scan of both customers and suppliers allow seamless supply, eliminating the impediment along the channel of distribution. Organizational theory encapsulates that the motivation to buy a particular product is directed at the value it has. In the case of auto industry, the ability to secure the spare parts and the longevity of the various mechanical parts of the vehicle is the potential locus in determining whether to buy or not. The decision to purchase the vehicles is intensely controlled by the brand name

Volkswagen is the German-owned company that is primarily recognized for the manufactures of vehicles such as Bugatti, Bentley, Audi, among others. It is spread across the world with 342 group of companies, but its presence is heavily stationed in Europe (Chaghooshi et al. 2015, p.43). The operations are segmented into two sections; financial and automotive. In terms of suppliers, it partners with IBM, which provides technology solutions such as sensors for the vehicles. Moreover, BASF offers the coating for the external bodies of the vehicles, while DHL provides some spare parts such as engines and gearboxes. Collaboration with well-recognized suppliers guarantees top quality products. This has improved the brand image, subsequently increasing the profits for the company. The distribution of the Volkswagen vehicles takes a long process, as they are first shipped to the five ports in the U.S. Within the ports, there are processing sectors, where they have to pass through before dispatching to the dealers. The entire process is expensive in terms of time and money. Reducing the time latency before the final user receives the vehicle would significantly boost the customer relation (Xia and Li-Ping 2011, p.500).

Impact of digital marketing and how it has changed the marketing dynamics

Digital marketing is increasingly taking the precedence of the most of the businesses’ primary objectives. It is envisioned to take the level of performances of the various companies to the next level, in terms of increased sales and profits (Flores 2014, p.219). The advent of modern technology has prompted the management of various firms, to consider the aspect of digital marketing to retain the competitive advantage.  Digital marketing has increased the brand awareness. With the improvement of the usage of social media, a significant number of people consider searching through to find the sellers of the products which they desire. According to the survey conducted by Cowley (2016, p.57), he identified that the highest number of digital platforms users comprise of the youths, who have the potential capacity to spend. Again, the research elucidates that the old people are not left out, because they have also integrated technology in purchasing the various products. Any company that is able to place an ad on Facebook, Twitter, among others, is considered to leverage on the broad base of customers. Therefore, people are able to know more about the product irrespective of the geographic distance.

Furthermore, it increases the sales predominantly to the people who are technologically alert. The form of conducting businesses is primarily shifting to e-commerce. The convenience associated with it allows people to embrace it, and transition from the traditional mode of sales. Currently, it’s possible to purchase with a click of a button and receive the product at the place of residence (Fores 2014, p.230). The ability to position the products to diverse groups of people increases the sales of a particular brand. In the same vein, the company minimizes the operating costs significantly. Traditional marketing DNAs involved promotional methods, advertisement over the popular media, use of magazines, offering discounts among others. These platforms are expensive to use since they requirea huge investment in terms of capital. Again, they are limited to the geographic region, which eliminates a particular region. Digital marketing has a wide coverage became it has become a global platform. For examples, a post on Facebook can be read by someone in another continent (Kaptein and Eckles 2012, p.183).A single computer with one technician can reach to millions of people, without engaging much financial effort.

Digital platforms have changed the strategies and plans of marketing dynamics. Chen and Lo(2017,p.320) define the marketing dynamics as the control factors that dictate the right channel to position the product in the market. Huge coverage of customer base allows a company to leverage from the pros of big data. The feedbacks from the buyers are used to determine the best prices for various products, hence increasing the purchasing rate. In the modern time, customers are integrated into the process of making major decisions; hence they feel as part of the business. Additionally, it’s possible to track the supply and demand in the market, by use of information consolidated in the popular marketing sites. This way, the management can choose to either offer the discounts to clear the stock or hike the prices due to decreased supply. Digital marketing has transformed the perception of the markets into the customer based one.

References

Cecilia, G. (2011). Importance of Reverse Logistics for Retail Acts. Supply Chain Management – New Perspectives.56-78.

Chaghooshi, A. J., Soltani-Neshan, M., and Moradi-Moghadam, M. (2015). Canonical Correlation Analysis Between Supply Chain Quality Management And Competitive Advantages. Foundations of Management7(1),34-56.

Chen, T., Yeh, T., and Lo, W. (2017).Impacts on Online Impulse Purchase through Perceived Cognition. Journal of International Consumer Marketing29(5), 319-330.

Cowley, M. B. (2016). How Marketing Communication Has Changed in the Digital Age: A Brief Study of Tiffany & Co.’s Iconic Marketing Formula. SSRN Electronic Journal,56-67.

Eltantawy, R. (2011). Supply Management Governance Role in Supply Chain Risk Management and Sustainability. Supply Chain Management – New Perspectives,98-100.

Flores, L. (2014). Digital dashboards: A tool for managing the effectiveness of digital marketing and integrated marketing communication (IMC). How to Measure Digital Marketing, 218-237.

Howard, M., Vidgen, R., and Powell, P. (n.d.).Strategies for E-Procurement. Information Technologies, Methods, and Techniques of Supply Chain Management, 77-97.

Kaptein, M., and Eckles, D. (2012).Heterogeneity in the Effects of Online Persuasion. Journal of Interactive Marketing26(3), 176-188.

Maslaric, M., andGroznik, A. (2011).Towards Improving Supply Chain Coordination through Business Process Reengineering. Supply Chain Management,89-96.

Xia, Y., and  Li‐Ping Tang, T. (2011). Sustainability in supply chain management: suggestions for the auto industry. Management Decision49(4), 495-512.

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