Proximity as a key factor to narrow the relationship between supplier and its customer – a case study in the auto industry

Themodern literature shows that the Just in Time (JIT) utilization in therelationship between client and its supplier aims at optimizing the flow in thesupply chain. Nevertheless, there are other aspects to be considered for thefull utilization of the lean supply practices. Among those, the proximity triesto improve the liaison between the client and its provider of materials andcomponents as a possible response to an increasing competitiveness level. Toexplore this subject this work had the objective of evaluating the determinantfactors that could possibly explain the partial relocation of a manufacturingfacility to create proximity conditions with one of its clients. For thatpurpose, a case study was developed in which a Brazilian auto partsmanufacturing company belonging to the first tier of the automotive supplychain was considered. As a result of such study, it was possible to concludethat the strategic advantages resulting from the proximity overpassed theconventional reasoning of considering financial gains as a key factor tojustify such a decision. In fact, the cost savings obtained with the plant relocationwere not enough to justify the investment made