The South African solution to supply chain - Supermarket.co.za
The South African solution to supply chain - Supermarket.co.za
The South African solution to supply chain - Supermarket.co.za
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SUPPLY CHAIN<br />
▲<br />
Leron Varsha, CEO of the Fore Good<br />
Group, says the three fac<strong>to</strong>rs <strong>to</strong> <strong>co</strong>nsider<br />
when <strong>co</strong>mparing DC and DSD are<br />
efficiency, <strong>co</strong>ntrol and <strong>co</strong>st. “Efficiency<br />
will improve over time, however, with<br />
specific perishable items, specialist<br />
focused distribution is required. Suppliers<br />
would also prefer <strong>to</strong> have <strong>co</strong>ntrol over<br />
their products and ensure that they are<br />
ultimately responsible for the focus on<br />
their own distribution in<strong>to</strong> s<strong>to</strong>res.”<br />
Competing distribu<strong>to</strong>rs will ensure<br />
that <strong>co</strong>sts are <strong>co</strong>mpetitive but there are<br />
still pros and <strong>co</strong>ns <strong>to</strong> each model. “Direct<br />
s<strong>to</strong>re deliveries allow for flexibility on<br />
distribution models, for example, direct<br />
sales <strong>to</strong> owner run s<strong>to</strong>res. <strong>The</strong> DC model<br />
allows for reducing <strong>co</strong>sts, if s<strong>to</strong>ck is<br />
carefully managed,” he explains.<br />
As much as centralised distribution has<br />
be<strong>co</strong>me a fundamental part of retailing in<br />
<strong>South</strong> Africa, there will always be a need for<br />
direct <strong>to</strong> s<strong>to</strong>re delivery (DSD).<br />
“DCs are definitely required, hence most<br />
retailers began embracing centralised<br />
distribution years ago. However, not all<br />
vendors can go through a DC so there will<br />
Ian Moir, Woolworths CEO, pointed out this<br />
empty space on his Ni<strong>co</strong>lway s<strong>to</strong>re’s shelf. He<br />
explained that they do not like <strong>to</strong> hide out-ofs<strong>to</strong>cks<br />
from cus<strong>to</strong>mers – but rather keep them<br />
visible <strong>to</strong> remind staff and suppliers of their<br />
unacceptability.<br />
always be need for DSD, especially in<br />
provinces in which retailers don’t have their<br />
own regional DCs,” <strong>co</strong>mments Kelly.<br />
“<strong>The</strong> planning <strong>co</strong>mponent is enormous<br />
whether it’s DC or DSD. Ultimately, the<br />
goods still have <strong>to</strong> arrive at the back door.<br />
Integrating the two schedules is critical <strong>to</strong> a<br />
productive receiving environment,” he adds.<br />
Getting productivity<br />
at the back door right<br />
SAPICS’ Liezl Smith says that forecasting<br />
and planning are activities that have<br />
traditionally lacked focus from retailers.<br />
“<strong>The</strong>y are generally masters at displaying<br />
their products in the most effective way<br />
or understanding <strong>co</strong>nsumer behaviour.<br />
However, when those have <strong>to</strong> be translated<br />
<strong>to</strong> product <strong>supply</strong>, it often fails.”<br />
Varsha says that in order <strong>to</strong> forecast<br />
accurately, a clear understanding of<br />
the market and distribution channels is<br />
essential. He points <strong>to</strong> his<strong>to</strong>rical data and<br />
market trend analysis as being two good<br />
indica<strong>to</strong>rs. <strong>The</strong> marketing team should<br />
also be involved in the demand plan, he<br />
argues. “<strong>The</strong>re must be joint agreement<br />
on the procurement process with the<br />
supplier or manufacturer. One should<br />
stipulate service levels and ensure there<br />
is <strong>co</strong>ntinual <strong>co</strong>mmunication. This includes<br />
updating on shortages in products, delays<br />
on transport, as well as variations in raw<br />
material <strong>co</strong>sts,” he says.<br />
▲<br />
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10<br />
axis_ad_retail-lp_supermarket-ret_190x135_en_1109.indd 1<br />
SUPERMARKET & RETAILER, APRIL 2013<br />
22/09/2011 12:01:16 PM