Imports made easy with one point of contact

20th June 2014

By: Donna Slater

Features Deputy Editor and Chief Photographer

  

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Import and working capital company Blue Strata reports that importing automotive components can be easier if one point of contact is used, as it eliminates the need to deal with five or more service providers, including banks, overseas suppliers, freight forwarders, clearing agents and local transporters.

Blue Strata notes that using one point of contact streamlines the process, as the company can manage all these functions as one solution, whereby the client places the order with the supplier, and Blue Strata sees to the rest.

This benefits suppliers and distributors of automotive components in South Africa, as it removes the burden of sorting out foreign currency payments.

Blue Strata head of sales Dr Greg Cline tells Engineering News that Blue Strata pays the overseas supplier, imports the goods into South Africa, delivers them to the client’s warehouse and provides a rand-based invoice, with numerous payment terms, to suit the client.

“Dealing with one point of contact means reduced administrative overheads and better transpa- rency in monitoring inbound supply chain logistics. In the automotive sector, companies are best served by focusing on operational issues and service-level agreements pertaining to the original-equipment manufacturers (OEMs) with which they do business, rather than on managing the inbound supply chain,” he says.

However, Cline notes that while OEMs are reliable in terms of payment, supplier terms vary and often result in a gap between supplier payments and accounts received. “By providing a way to free up working capital that is traditionally tied up in imports, the business can access capital to grow,” he states.

Further, there is a level of predictability in terms of demand planning in the automotive components sector, but flexibility may also be required when applying for tenders or accepting large orders, highlights Cline. “Often, it is in these situations that working capital constraints result in missed opportunities.”

Blue Strata acquired more than R5-billion in foreign exchange, enabling the company to use its economies of scale to become a buying group on behalf of its customers.

“This means Blue Strata can secure a better rate, based on purchase volumes. These benefits are passed on directly to the customer,” notes Cline.

Moreover, the company has spent more than R40-million on developing an Oracle-based system, called BlueLink, for managing imports.

“BlueLink is to imports much like Internet banking is to banking,” Cline enthuses, adding that clients can log onto a unique and secure Web-based profile, track their shipments, access interactive reporting along with activity-based costing, monitor their supplier performance and review payments and forward exchange contracts.

“It is a unique business intelligence capability that analyses efficiencies pertaining to shipments, container utilisation, supplier production and transit times,” says Cline, adding that Blue Strata has patented the technology, which the company considers to be a game changer.


Sluggish vehicle sales and a slow economy are the main challenges that automotive components clients face, says Cline.

He points out that total vehicle sales growth contracted by 9.2% year-on-year in May 2014, following a 10.6% year-on-year drop in April.

“In May, sales in the passenger and commercial vehicle segments underperformed,” he says, adding that the weakened demand side of the sales curve will negatively affect the automotive components sector and associated imports.

However, while the comp- any cannot directly control these factors, Blue Strata adopts an informed approach towards the credit process, where the fundamentals of the business are closely evaluated in conjunction with the financials.

“We find that investing time in understanding our clients and their businesses often informs our understanding of the risk associated with the clients. As a result, Blue Strata can provide more money than a bank to fund various businesses,” explains Cline.

He notes that the critical understanding of contracts and relationships between the components manufacturers and OEMs provides value for the sector.

“The industry is playing catch-up, owing to the protracted automotive strikes at the end of last year. We have seen many companies with a slow start to the 2014 financial year, but businesses seem to be building momentum,” Cline concludes.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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