A conceptual model of procurement management for new products in the automotive industry

Abstract

The automotive industry is one of the most dynamic and challenging business areas in the European Union (EU) and wider. It implies a complex supply chain with a turnover of 7% of EU GDP (gross domestic product) and 6.1% of total EU employment and has an important multiplier effect on the economy. Given the apparent impact of automotive companies on the economy, they are under constant pressure to review and improve their production processes, business activities, and market position. It can be said that each process that supports the creation of new value in the automotive industry is of equal importance. The focal point of this paper is the procurement management process for new products. Considered procurement is related to the components of the products purchased for the first time. These procurements have a direct impact on business expenses. Therefore, the paper proposes a conceptual model to improve the procurement of new products components. The model is developed following modern control theory and based on the feedback loop principle. All elements of a feedback loop (reference, system, sensor, comparator, and controller) are described. The model development is based on a case of a large company from the automotive industry in the Republic of Serbia.