The South African solution to supply chain - Supermarket.co.za

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SUPPLY CHAIN ▲ “There is a lot of theory around collaboration between retailers and suppliers, but in South Africa, I do not think we have even scratched the surface,” says Liezl Smith from SAPICS. “Logistics companies are service providers stuck between the customer and the product owner so they can take shots from both sides a lot of the time,” comments Permark’s Mark Aling. “A big no no is the sub-optimisation of parts of a supply chain network. The entire Every South African company needs to get creative in trying to improve efficiencies and reduce costs to ensure that they’re still in business tomorrow Ensuring the order is placed on the correct day (taking into account the correct lead time) will ensure the stock arrives at the retailer in time to replenish outgoing stock and will, in most instances, reduce returns off invoice. supply chain needs to be looked at as a whole,” says Kelly. For example, you may be able to save costs in one place, but then you need to see how it impacts on another part of the chain. “Planning is great but what is needed is to build a culture of quality into every step of the supply chain. This will take years and needs buy-in from all players so it is very difficult, but that’s the only way we go forward,” says Aling. It’s not even just about collaborating with the other parties – it’s about coordinating within one organisation as well. “What underpins any supply chain is the link between the sales function and the distribution. Yet, companies will often outsource the sales function so communication fails between the two divisions,” says Kelly. “If there were better communications between sales and distribution, I think sales would run a lot smoother as well,” he adds. “With better information, better decisions can be made. Less guesswork generally means fewer mistakes. There is a clear case for better communication and collaboration,” says Smith. Quick wins Looking forward, there’s no doubt that the tough times are going to continue. Fuel 16 SUPERMARKET & RETAILER, APRIL 2013
Contingency plans need to be put in place so planned or unplanned events don’t ultimately affect the stock on shelf. These may include annual stock takes or public holidays (planned events) or unforeseen events such as industrial strike action. Centralised distribution is also great from a delivery point of view for carriers as they have a single delivery point per region rather than having to send vehicles all around the country. costs are increasing each month and the 8% electricity tariff hike is coming into effect. Every South African company needs to get creative in trying to improve efficiencies and reduce costs to ensure that they’re still in business tomorrow. For the retailers, suppliers and 3PLs in the fast moving consumer goods industry, there is an even greater need to keep up with the dynamic market they serve because ultimately, they determine the price of goods on our tables. SAPICS’s Liezl Smith says there are a number of short-, medium- and long-term measures that need to be implemented concurrently to get sustainable benefit: “Some long-term investments include skill development and breeding a culture of continuous improvement. Medium-term measures would include better forecasting methods, including internal and external collaboration processes’ and aligning every employee’s goals with that of the business. Short-term measures could include business process re-engineering to eliminate non value-adding activities; and questioning ‘the way we have always done it’ and empowering all employees to suggest improvements.” four cost-cutters Jason Kelly highlights Logtrix’s top four cost-cutters for retailers: ■ Alignment of order and delivery day This process will instantaneously assist in creating a more controlled and rigid operational environment and ensure synergy and collective effort between sales and distribution teams. Ensuring the order is placed on the correct day (taking into account the correct lead time) will ensure the stock arrives at the retailer in time to replenish outgoing stock and will, in most instances, reduce returns off invoice. ■ Create a scheduled planned environment Scheduling ensures all parties are aware of assets and stock movement within the supply chain. After the savings through routing efficiencies and reduction of drops, this practice will ensure that resources are allocated during peak times and ensure that there are no bottlenecks in the supply process. ■ Expedite the distribution process We all know that what we plan very seldom takes place due to reasons outside of our control, however, communicating exceptions or problems to key role players will ensure that the process is kept dynamic enough to still create cost saving. Communicating delays, late departures, special deliveries will ensure reduced re-deliveries (RDs) and turnaround times. ■ Share critical data Most delivery exceptions are recorded in customer relationship management systems (CRMs) and reporting the data can assist in pinpointing delinquent areas. Sharing this information (a key to supply chain management) with your strategic partners allows you to avoid continuance of the problem and ensure resolve, ultimately reducing the costs related. 17 SUPERMARKET & RETAILER, APRIL 2013
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The South African solution to supply chain - Supermarket.co.za

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