Aug 17, 2012
Gas manufacturing, supply company prioritises logisticsBack
SECURITY|Africa|Compressors|Energy|Eskom|Gas|GM|GM Seelan Gounden|Industrial|Road|Security|Africa|Security|Electrical Energy|Electricity|Energy|Equipment|Gas Industry|Logistics|Product|Products|Security|Supply Chain|Transport|Environmental|Power|Security
© 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 and Logistics News
Logistics solutions provider Dovetail Business Solutions reports that it will launch its new Container Transport Solution (CTS) software package next month, enabling logistics companies to track the whereabouts of containers and improve efficiencies.
Bulk materials handling equipment company Flexicon has increased the output of its tubular cable conveyor range of Flexi-Disc systems with the addition of a 15-cm-diameter system.
A fuel-economic series of container straddle-carriers, Mobicon ECO, was launched on the South African market in December 2013 by container and materials handling equipment suppliers Big Lift Trucks South Africa (BLT SA).
Updated 4 hours ago Independent, black-owned and managed investment holding company Southern Palace Properties has acquired an 8% stake in Growthpoint Properties from the Public Investment Corporation’s (PIC’s) Government Employees Pension Fund (GEPF) for R4.5-billion. Standard Bank...
Updated 4 hours ago Shareholders of JSE-listed real estate investment trusts (REITs) Octodec and Premium Properties have approved the proposed merger of the two companies, creating a combined property fund that will attract a market capitalisation in excess of R5-billion and comprise...
Updated 4 hours ago The Metal and Engineering Industries Bargaining Council (MEIBC) this week called on employees and employers to exercise restraint as the metals and engineering industries resumed operations following a four-week strike, stating that it regretted the strike’s...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...