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

SUPPLY CHAIN
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Leron Varsha, CEO of the Fore Good
Group, says the three factors to consider
when comparing DC and DSD are
efficiency, control and cost. “Efficiency
will improve over time, however, with
specific perishable items, specialist
focused distribution is required. Suppliers
would also prefer to have control over
their products and ensure that they are
ultimately responsible for the focus on
their own distribution into stores.”
Competing distributors will ensure
that costs are competitive but there are
still pros and cons to each model. “Direct
store deliveries allow for flexibility on
distribution models, for example, direct
sales to owner run stores. The DC model
allows for reducing costs, if stock is
carefully managed,” he explains.
As much as centralised distribution has
become a fundamental part of retailing in
South Africa, there will always be a need for
direct to store delivery (DSD).
“DCs are definitely required, hence most
retailers began embracing centralised
distribution years ago. However, not all
vendors can go through a DC so there will
Ian Moir, Woolworths CEO, pointed out this
empty space on his Nicolway store’s shelf. He
explained that they do not like to hide out-ofstocks
from customers – but rather keep them
visible to remind staff and suppliers of their
unacceptability.
always be need for DSD, especially in
provinces in which retailers don’t have their
own regional DCs,” comments Kelly.
“The planning component is enormous
whether it’s DC or DSD. Ultimately, the
goods still have to arrive at the back door.
Integrating the two schedules is critical to a
productive receiving environment,” he adds.
Getting productivity
at the back door right
SAPICS’ Liezl Smith says that forecasting
and planning are activities that have
traditionally lacked focus from retailers.
“They are generally masters at displaying
their products in the most effective way
or understanding consumer behaviour.
However, when those have to be translated
to product supply, it often fails.”
Varsha says that in order to forecast
accurately, a clear understanding of
the market and distribution channels is
essential. He points to historical data and
market trend analysis as being two good
indicators. The marketing team should
also be involved in the demand plan, he
argues. “There must be joint agreement
on the procurement process with the
supplier or manufacturer. One should
stipulate service levels and ensure there
is continual communication. This includes
updating on shortages in products, delays
on transport, as well as variations in raw
material costs,” he says.
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SUPERMARKET & RETAILER, APRIL 2013
22/09/2011 12:01:16 PM