‘The real competition is supply chain against supply chain’

Safcor Panalpina considers Supply Chain Academy
JOY ORLEK
EFFECTIVE SUPPLY chain optimisation relies on the acceptance of a key principle – that the real competition is not company against company or product against product, but rather supply chain against supply chain. It’s a principle that the automotive industry in South Africa has embraced with gusto and it’s clearly paying dividends. At a recent automotive industry supply chain conference, Original Equipment Manufacturers (OEMs) openly stated that their very existence depended on their ability to compete with their own production plants in South America, the Far East and Eastern Europe – not necessarily with local competitors. “They therefore recognise the need to co-operate as an industry in South Africa to ensure their sustainability and in the medium to long term their very existence,” says Safcor Panalpina national supply chain executive, Anthonie Verploegh. “In the past relationships among suppliers and customers were often adversarial rather than collaborative. Simply transferring costs did not make them more competitive since all supply chain costs ultimately make their way into the marketplace. This is why companies have realised that the real competition is supply chain against supply chain.” It’s all part of the globalisation process and since South Africa has become part of the global market, a lot of our inward thinking has been affected by what happens globally. “The whole trend of finding markets in which to produce goods at cheaper rates has shifted from Europe to Eastern Europe to Asia and China, all of which affects the international supply chain tremendously,” says Verploegh. “It impacts on lead times, on new relationships with suppliers, on risk management, on capacity constraints with airlines and shipping lines, and local and international customs issues, all of which must now be taken into account.” Key decisions Ultimately this means that a lot of key decisions are being made by multinationals overseas and not necessarily by the local entity, which means terms of purchase for example could change, affecting how you bring your goods into South Africa. The scope of supply chain management is therefore much broader now, which is why Safcor Panalpina is approaching supply chain management from an international perspective, he added. Top of the agenda in terms of challenges facing supply chain professionals in the local market, particularly on high value goods, is risk management in Verploegh’s view. “Crime syndicates work around the world which is why Safcor Panalpina has invested heavily in a recently-constructed TAPA A-accredited degroupage facility at JIA, which has enabled us to perform a number of additional services for our clients. Over and above its degroupage function, it acts as a warehouse for high value, time sensitive goods. In addition to short-term storage, this facility allows us to perform a number of services which we were previously not in a position to do – like reworks on products that we bring in, repackaging of products for local consumption, and postponement logistics and cross-docking under a secure environment.” Dan Purtell, president of the supply chain security division of US-based First Advantage Corporation, commented: “After assessing more than 450 facilities in 35 countries, Safcor Panalpina’s ‘airside’ facility located at Johannesburg International Airport is the most secured facility I’ve ever assessed.” In addition to security, an equally significant challenge facing the local industry lies in the dearth of available skills. “It’s a huge problem faced in South Africa,” says Verploegh. “According to recent statistics, China produces hundreds of thousands of engineers per annum. In South Africa, for many years supply chain management or logistics management specifically has been regarded as an add-on to a transport economics and BCom degree. Safcor Panalpina is looking at offering bursaries to individuals studying in the direct fields of supply chain and logistics management as a way of promoting expertise, but the lack of skills right now is a serious concern.” “Internally, within Safcor Panalpina, we have embarked on a programme of developing expertise through ‘in-house’ supply chain management training, with the creation of a Supply Chain Academy in mind. We are also working in conjunction with the key universities, offering vacation work to students to give them exposure to the supply chain and logistics industry.” Business success is increasingly linked to effectively managing international logistics, says Verploegh. “Growing low-cost country sourcing and rising sales to international customers are forcing companies to seek new ways to manage the costs, complexities and uncertainties of moving goods across borders. If we want to be an effective global player, we have no option but to meet and overcome the challenges head on.”