Aug 17, 2012
Gas manufacturing, supply company prioritises logisticsBack
Eskom|Gas|GM|GM Seelan Gounden|Africa|Electrical Energy|Electricity|Gas Industry|Supply Chain|Transport
© 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
Other Materials-Handling News
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of 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 steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
This Week's Magazine
Updated 5 hours ago Celebrating its fiftieth Green Star SA certification in only six years, and with a further 150 projects in the Green Star SA registration pipeline, the impact will increase significantly. “In South Africa, certified new green buildings now cover nearly one-million...
Updated 5 hours ago Volkswagen Group South Africa (VWSA) has installed an automated guided vehicle (AGV) line to replace the traditional roller conveyor used on the VW250 engine line. An AGV is a mobile robot that follows markers or cabling in the floor, or uses vision or lasers to...
Updated 5 hours ago South Africa has an opportunity to achieve a similar result to that of China, which has lifted hundreds of millions of its citizens from poverty to prosperity, but the challenge is to develop world-class customer-focused engineers.
Updated 5 hours ago South Africa had more than enough money and resources to deliver on the constitutional promise of quality of life for all, but those involved in corruption have cost the country immensely.
Updated 5 hours ago BMW South Africa has postponed the introduction of the i3 city car and i8 supercar to March 2015, says spokesperson Edward Makwana. The i3 is an electric vehicle, and the i8 a plug-in hybrid. Both models were scheduled for local introduction this year.