Photo by: BLOOMBERG
Only 32% of supply chain managers in South Africa have complete visibility of their supply chains, with the remainder claiming “zero” visibility beyond the second tier of their chain, a recent survey of 645 global supply-chain managers by the Chartered Institute of Procurement & Supply (CIPS) has revealed.
“Only a small minority of South African businesses can fully account for where their products and services have come from and are going to.
“The results raise serious concerns about supply chain practices and standards in the country. According to the survey, three in five businesses have no relationship with the suppliers in their second tier – an important mechanism for preventing fraud, minimising disruptions and finding corruption,” the institute outlined in a statement on Monday.
It added that the “opaque” nature of South Africa’s supply chains meant that 56% of businesses were unable to guarantee there was no malpractice in their supply chain.
South African businesses also lacked the processes to cope with an unexpected disruption, such as a natural disaster, economic crisis or armed conflict in a region they relied on for exports or imports, it revealed.
“Should a supply chain disruption take hold, only 40% of South African businesses are aware of a risk mitigation strategy which encompasses their whole supply chain,” it held.
According to the survey, 67% of polled businesses had avoided a “major crisis” in the last 12 months as a direct result of strong supplier relationships, with almost three-quarters avoiding a smaller disruption.
“With only 50% of businesses in the rest of the world claiming to have averted a crisis through the same means, the figures highlight the scale of the challenge facing South African businesses as well as the benefits of closer supplier links,” the CIPS asserted.
The survey did, however, reveal some good news for South African businesses, as 70% of procurement professionals in the country would take “full” responsibility for any malpractice found – considerably higher than that of Australia (43%) and the UK (40%).
“These figures must surely be a wake-up call for South African businesses [as] the extent of South Africa’s supply chain blind spots threatens to put consumers and the economy at serious risk.
“South African businesses embracing best practice supply chain management are protecting the country from major crises on a regular basis, but more must be done,” commented CIPS Africa’s Andre Coetzee.
He added that, only through investment in skilled, licenced professionals who interrogated their supply chains, could South African businesses free themselves from the risks of corruption, fraud and malpractice.