Vertical decoupling/outsourcing and the subcontracting relationship in the Brazilian automobile industry

Vertical decoupling/outsourcing and the subcontracting relationship in the Brazilian automobile industry

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Article ID: iaor19961674
Country: Brazil
Volume: 1
Issue: 1
Start Page Number: 29
End Page Number: 48
Publication Date: Apr 1994
Journal: Gesto & Produo
Authors:
Keywords: relationships with other disciplines
Abstract:

The aim of this study is to investigate, based on the context of the global industry restructuring, the main factors which have induced the process of vertical decoupling of the larger companies in the Brazilian automobile industry. It involves the consequent increase of the outsourcing process by the same companies. Thirteen case studies are presented (5 car makers and 8 autoparts companies) with the purpose of identifying the tendency of these phenomena (vertical decoupling/outsourcing process) within the Brazilian automobile complex. These case studies provide evidence which allow us to reach some conclusions, for instance: the relationship between the car makers and the autoparts companies belonging to the first step of the ‘subcontracting pyramid’ has become less one of conflict. But the relationship between the autoparts companies (‘first step’) and their suppliers (second, third,...steps) is still based upon the ‘exit strategy’, representing a lot of problems to both sides (e.g.: delay in deliveries, high rate of low quality products, etc.). The tendency in the forthcoming years is to improve the relationship between suppliers and customers, mainly between the car makers and those companies that produce the most complex autoparts (such as engine, gearboxes, brake systems, etc.). The same kind of relationship, when it comes to lower steps of the ‘subcontracting pyramid’, seems to be more difficult.

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