Many South African businesses believe that access to cheap labour is the most important factor when it comes to being competitive in the global arena. That is partly why the business community reacted with such alarm to the recent cancellation of BMW’s plans to expand production over labour unrest.

“Whilst labour is a major concern for business in general, it is not the only factor that affects costs,” says Bruce Laval, Product Manager at supply chain specialists, VSc Solutions.  “South African businesses are largely missing out on the transformative role that implementing the appropriate technology can have on both reducing costs as well as identifying new streams of revenue.”

Secrets of an efficient supply chain

The key to unlocking potential savings, according to Laval, is for businesses to switch their dependence on manual processes to using software for automation and optimisation.

“Opportunities for optimisation in every step of the supply chain can realise an enormous reduction in costs,” he says. “This increased efficiency is carried forward with knock on effects down the line.”

But first, strategise

As an executive, the correct strategic decisions are essential before one tries to improve current processes. “In the logistics world, that includes taking into consideration factors like optimal location and size of distribution points based on order volumes, locations of major roads and customers.”

Equally important is understanding the optimal number of vehicles and combination of vehicle sizes based on order quantities, frequencies and time allowed on route. Then comes the optimal allocation of customers to distribution points based on geographic locations and order profiles.

“Depending on the size of one’s operation, arriving at the best solution through manual processes can be extremely difficult. However, advanced software applications are available that can model the best possible scenarios and provide detailed information to the decision makers,” adds Laval, noting the potential ramifications if, for example, depots have been built based on incorrect assumptions.

Streamlining processes

Once the major logistics capital expenditure decisions have been made, it’s time to start streamlining processes. To this end, several top systems are available:

“For example, warehouse management systems are able to manage stock flow, route optimisation software can help optimally allocate orders to vehicles and reduce not only the number of vehicles required but also the number of kilometres and hence fuel that is consumed.”

Furthermore, vehicle tracking systems may be used to monitor vehicle locations and driver behaviour. Route compliance systems monitor the execution of one’s plan and ensure that projected savings are realised. Also, electronic proof of delivery systems help reduce manual paper work, as well as the payment period.

“All of these technological innovations substantially reduce the cost of running these logistics operations; yet, we find that the majority of business owners – even 3 PLs that depend heavily on their ability to reduce costs - just don’t know that help of this nature exists, or even of the full impact that using these tools can have on the running of their businesses.”

For South Africa to be regarded as a contender in the global arena, Laval says it’s critical that the business community demonstrates that it doesn’t merely imitate processes that have worked elsewhere. “The rest of the world needs to see that we are able to deploy and adapt the most advanced technical solutions availably globally to our unique environment.”

“Investors are looking for companies whose leaders continuously drive innovation, with strategies that work well in the long term,” he concludes. “Whether it’s labour or global economic factors, there are always going to be risks in doing business anywhere. That’s why we need to show the world that we’re visionaries who can roll with the punches and are comfortable with ‘business unusual’.”