Aug 17, 2012
Gas manufacturing, supply company prioritises logisticsBack
Africa|Compressors|Environment|Eskom|GM|GM Seelan Gounden|Industrial|Road|SECURITY|Storage|Training|Africa|Electrical Energy|Electricity|Energy|Equipment|Gas Industry|Logistics|Manufacturing|Product|Products|Solutions|Supply Chain|Environmental|Power|Operations
© Reuse this
Rising costs, in particular electricity and transport costs, are exerting pressure on the gas industry, forcing companies to rethink their supply chain strategies, says industrial and speciality gas manufacturing and supply company Air Products South Africa supply chain GM Seelan Gounden.
“Environmental pressures such as tariff increases have forced us, from time to time, to change our logistics operations. An efficient supply chain may have to make way for business effectiveness.
“When product has to be pooled from production sources that are geographically widely spread throughout the supply chain, transport costs increase,” he states.
Gounden explains that it is a matter of understanding that supply chain efficiencies may need to be prioritised on occasion to realise the greater goal – that of business effectiveness. This is the approach Air Products South Africa has had to take in the winter months for the business to cope with increased winter power tariffs.
“As a result, product availability will be prioritised to maintain our security of supply promise to customers. Electrical energy is by far the biggest portion of our production costs, so hikes in State-owned power utility Eskom’s tariffs have a significant impact on our bottom line, necessitating a change of approach to one of flexibility in response to these pressures.
“As a network, this body needs to be flexible enough to respond creatively to the environment, which includes changes in power and fuel costs,” says Air Products South Africa packaged gases GM Sizwe Nkonde.
According to Gounden, Air Products South Africa has increasingly been looking for creative solutions within its production and supply chain to meet the challenge of Eskom’s proposed hikes in power tariffs. Such solutions include switching off equipment such as compressors, when possible, to minimise plant use.
“It necessitates a reconfiguration of plant use, as well as auxiliary equipment, such as cooling fans in the winter months,” states Gounden.
He stresses that managing power use is also closely aligned with managing demand in a fluctuating market.
“Managing the dynamic inter- change between supply and demand necessitates not only better management and flexibility on our part, but also better forecasting skills in terms of market knowledge, both locally and globally,” adds Nkonde.
Another challenge facing the gas industry is the rise in fuel costs and Air Products South Africa is dependent on road transport for its bulk and packaged gas distribution.
“There are a number of ways in which Air Products South Africa meets this challenge, such as analysing and improving a customer’s on-site inven- tory storage. Improved inventory and cost management result in increased reliability and security of supply,” comments Gounden.
In addition, the company has made inroads into reducing its fuel consumption through driver training and the monitoring of driving behaviour through drive-cams, as well as the use of route optimisation programmes.
“The fleet should ideally be both robust and fuel efficient – there should be a balance,” he maintains. “Further, an increase in labour costs has to be taken into account in any business context but must be mitigated within the supply chain through the alignment of all stakeholders towards a common goal of cost effi- ciency,” he concludes.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines (150 word limit)
Other Materials-Handling News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...