Global logistics and forwarding company Savino Del Bene received a platinum award for its importer tyre-industry supply chain cluster initiative at the twenty-fifth yearly Logistics Achiever Awards, held last month at Montecasino, in Fourways, Johannesburg.
Platinum awards are handed out for project excellence of an international standard, says logistics software solutions company Dovetail director Ralf Rolle.
The cluster initiative comprises 75% of the South African imported-tyre market. The cluster initiative involves the warehousing and distribution of 25 tyre brands from 31 different countries, which are imported by 13 companies. At the end of 2012, more than 11-million tyres were handled by Savino, with more than 49 000 t being delivered to 4 000 outlets across a South African road network comprising more than
400 000 km.
Savino solutions centre GM Teresita van Gaalen notes that the South African tyre market is divided equally between local manufacturers and importers, highlighting the scope of the company’s overall warehousing and distribution market share.
“This cluster has enabled economies of scale, which assists companies in keeping costs down and remaining competitive,” says Van Gaalen.
“The cluster model is a third-party logistic warehousing and distribution system, which involves storage for multiple principals/clients in one warehouse and the potential distribution of multiple products of different brands in one vehicle,” explains Rolle.
This model enables different tyre brands, such as Michelin and Yokohama, to be stored in one warehouse facility, increasing efficiency, as retail outlets can receive stock of several different brands from one location, improving delivery times and decreasing delivery costs.
The cluster initiative resulted in several benefits for the companies within the cluster, such as a 98% on-time and in-full delivery rate, which is measured monthly by internal audits and supported by external audits. The remaining 2% is because of uncontrollable factors in the supply chain.
Further, the initiative attained a 100% item-picking accuracy, which was measured through daily internal audits and corroborated by partner external audits, says Van Gaalen.
Companies in the cluster decreased their total yearly logistics costs significantly, she adds, highlighting that the Motor Industry Development Programme established that the companies received more than R147-million in import duty rebates.
The electronic bond storage system enabled companies in the cluster to achieve a R1.3-billion cash flow benefit, owing to savings in interest costs that would normally be incurred through borrowing money from financial institutions to pay for import duties and value added tax (VAT).
“Savino is the industry-recognised pioneer and authority of bond warehousing, which enables companies to defer import duties and VAT to the time of consumption. Companies, therefore, have more capital, as the warehousing and delivery costs are managed by a third party such as Savino. Also, bond warehousing decreases the amount of money a company needs to borrow, as it will not need to pay import duties and tax for shipments,” says Van Gaalen.
Savino uses several warehouse management and distribution systems provided by Dovetail, including the FreightWare Warehouse Management System (WMS), which increases operational efficiencies, subsequently improving supply chain processes and increasing productivity. Dovetail’s WMS takes all warehouse requirement into account, offering companies a solution that can be configured to suit the individual needs of a business, says Rolle.
Van Gaalen notes that, without the support and integration of Dovetail’s system with Savino’s existing system, the cluster model would not have been successfully implemented.
“Efficient data management in a warehouse is crucial,” notes Rolle, adding that Dovetail provides Savino with data management software, such as eDocs, which facilitates safe, proficient and cost-effective imaging and distribution of business documents, ensuring process consistency.
He notes that Dovetail and Savino began developing a system in 2009, called MobileControl, which calculates the best delivery route from warehouses to retail outlets. “The system, which was completed in early 2013, calculates the best delivery sequence, which helps increase the speed of delivery and also limits the distance travelled, decreasing travel costs,” Rolle explains.
The companies also developed a system that sends notifications to the companies in the cluster with an estimated time of arrival (ETA). The development of the system began in 2012 and was completed in September this year. It sends updated ETAs, should there be changes to a driver’s delivery route. The system also enables companies in the cluster to keep their customers informed of ETA, further increasing their service offering.
The system is also flexible enough to be tailored to the requirements of an individual company. “One of the companies in the cluster required delivery twice a day, while others required only one delivery a day,” points out Van Gaalen.
When the 2009 recession meant the former company no longer needed two deliveries a day, it sought a ‘just in time’ delivery system, as most of its customers still required product delivery within the same day of ordering. The company, in cooperation with Savino, designed a delivery system that delivers tyres within 30 minutes to an hour of an order being placed with Savino. This quick delivery system, known as Expresso, requires that so long as four tyres are ordered at a time, the order is loaded on to a Vespa scooter for delivery.
Savino business intelligence manager Darryl Zeelie notes that one of the biggest challenges associated with the cluster model was maintaining client confidentiality, owing to the close proximity of competing products under the same warehouse. “The system helps maintain confidentiality by configuring the bin locations, which enables Savino to manage each company’s inventory accurately.
“Savino showed the companies exactly how the system operates with regard to trip sheets, point of delivery and invoices. Everything is filtered by the system, ensuring companies in the cluster are informed of only their own products,” concludes Zeelie.