Simpler, better, faster
In the past, logistics was just about moving goods from one place to another, but the focus is now on doing it as fast and as efficiently as possible, and on a cost-versus-value basis. FOCUS investigates.
Shane de Beer, sales and marketing manager at TNT Express, stresses the importance of looking at the best possible way to move goods in line with the specific needs of the customer and the items that need moving around. “For example, when it comes to parts being delivered to motor manufacturers, bulky raw materials like door panels would typically be brought in by container ship, whereas higher-value, lower-volume finished parts, like door handles and electric switches, are more likely to be shipped by airfreight.
“Smaller volumes of goods from multiple customers can be transported in a container, but if one customer’s order gets caught up in customs, it holds up the entire container. On the other hand, airfreight can add as much as 30 percent to the cost.”
The choice of mode of transport can also depend on how vital the part is to a company’s production line. De Beer explains: “We have a customer that closed down a plant for maintenance and then discovered that 30 kg of welding rods were needed, and they were only available in Italy. The company was prepared to bring them in at any price, because it was costing it R1 million a day in downtime.”
Today, logistics providers need to sit down with customers and understand their needs and assist them to reduce the amount of working capital tied up in stock, for example by moving smaller volumes of products more quickly and more often.
To reduce costs and increase efficiencies, in order to meet increasing customer expectations, logistics companies are finding smarter ways to move components and finished goods from source to destination.
For instance, increasing volumes of goods are being shipped to Dubai by sea, and then transported by air from there to Europe, because it is cheaper to do it this way. Fuel costs are lower in Dubai. The time zones between Dubai and Europe are favourable and allow almost next-day delivery. De Beer says some global organisations are setting up hubs in Dubai and the United Arab Emirates for similar reasons.
A knock-on effect of globalisation, changing trade routes and increasing customer demands, is that the gap between the roles of express delivery companies and freight companies is closing, as an increasing number of customers are looking for a single entity that can provide both of these services.
As a result, logistics providers in both camps have to change their business models and their vehicle fleets. “Two years ago, at TNT, our delivery fleet consisted mainly of light, one-tonne panel vans, but today our vehicles can carry two tonnes or more,” says De Beer.
At a macro level, international express delivery companies are buying into freight companies and vice versa, or partnering with each other, so that they can provide complete solutions. Smaller local logistics companies are being acquired by, or partnering with, bigger players. The latter ties back to the need for quicker, more frequent deliveries to reduce stock holdings.
Santosh Komal, solutions architect at T-Systems in South Africa, emphasises the importance of telematics solutions in mitigating the challenges facing cargo transport companies.
“These solutions often differ from supplier to supplier, however, and thus are limited by an inability to integrate. In order to optimise and gain maximum control over logistics processes, access to integrated real-time information is critical – which requires a platform to bring disparate telematics systems together,” he suggests.
Often, different systems from various suppliers cannot work together seamlessly. In addition, individual systems do not provide any benefit to any of the stakeholders outside of the owners of that system. “The key to unlocking the value of telematics lies in breaking down these silos to deliver visibility between the different providers,” Komal says.
“This can be done using an integrated, cloud-based, vendor-neutral aggregation platform to bring together information from various telematics systems in real-time. A standardised interface, with dynamic central data visualisation that is independent of vehicle manufacturer, telematics provider or stakeholder, will create visibility throughout the value chain,” he adds.
“For example, using such a solution can ensure that trucks are sent to cargo yards for a pick-up only once cargo has been offloaded and is ready to be moved. This will reduce backlog and improve planning and turnaround times. Another example is that if adverse weather conditions or road accidents cause delays, all necessary stakeholders can be notified. Information can also be made available to improve journey times and gain an accurate view of arrival times, thereby alleviating congestion and disruption.”
Finally, supply chain management training remains critical in building capacity and ensuring South Africa’s competitiveness and sustainability in the global context. This key theme emerged during the recent Supply Chain Management Education Excellence Awards (SCM|EEA) which took place during a gala event at the end of the South African Production and Inventory Control Society (SAPICS) annual conference, held at Sun City during the first week of June.
The SCM|EEA Corporate Educator of the Year category was open to companies that believe they made a difference in developing and transforming education in the supply chain sector during the past year. Imperial Logistics took top honours, while Syspro was the runner-up by a small margin. Other nominees for the award were Automotive Industry Development Centre, NGK Spark Plugs and Transnet.
Gerard de Villiers, chief judge on the SCM|EEA panel, says: “Training helps to develop individuals, who develop companies that grow the economy. It is, therefore, a way to uplift the individual, the company and the country and we’re delighted to be able to recognise those companies that are doing outstanding work in this critical area.”
Emerging markets engines of demand
Aware that global supply chain markets are fast changing, DHL Supply Chain recently commissioned Lisa Harrington, president of the lharrington group LLC and associate director, supply chain management centre at the Robert H. Smith School of Business, University of Maryland, to conduct a white paper exploring the current state of the technology sector in emerging markets around the world.
The paper (which is available from the company), makes it clear that a “regionalised global supply chain” model is emerging. This, along with shortened product lifecycles and shifting demographics characterise the challenges and opportunities for the technology sector in emerging markets.
The pace of change also makes emerging markets an uncertain bet, while the risks are unique to each market. “Companies are not familiar with doing business across different established markets,” says Harrington.
The regionalised global supply chain model represents a best-practise approach to counter and manage risk and operate profitably. “In doing so, supply chain networks are best placed to respond to a specific market’s own variables, issues and challenges, while also competing well with local manufacturers,” she notes.
Further, the white paper identifies three practices the sector must adopt to capitalise on growth in emerging markets: Managing risk through a scalable and flexible approach to market penetration; prioritising compliance and quality from the start, rather than low-cost quick fixes; and avoiding a one-size-fits-all market approach.