Wholesale and retail group Massmart says its localisation focus, in partnership with the Department of Trade, Industry and Competition (DTIC), is bearing fruit, with visible benefits being experienced by the group and an increasing number of local suppliers.
Massmart, over the past nine months, reviewed its top imported products and determined which of these have the potential to be manufactured more competitively by local manufacturers.
The process involved retaining industrial engineers to review 600 products and selecting those with the highest potential for local manufacture based on local manufacturing capability, opportunity to achieve target pricing and local availability of raw materials.
“There are several benefits to localising supply. Locally manufactured products present significant supply chain benefits by reducing supply lead times so that stock arrives in our stores faster and more reliably, which translates directly into improved sales,” says Massmart sourcing optimisation executive Von Stander.
An example is the successful localisation of supply of cookware products for Makro’s private brand Primaries. Previously imported pots and pans are now manufactured locally by Africa Cookware.
In this case, the DTIC played an important role by assisting Massmart to engage a local aluminium supplier to supply previously imported base materials for these items, Stander notes.
“Our Makro cookware buyer Christina Hinis successfully re-launched some Primaries cookware products through a local supplier that, nevertheless, still had to import the required aluminium to manufacture the products.
"We appraised the DTIC of the situation during a regular meeting, after which they quickly introduced us to a local aluminium supplier. This type of work is difficult to execute, but it is made easier with the DTIC’s support, which we have found to be generally pragmatic and constructive,” he says.
Massmart has successfully localised a variety of previously imported products including baby cots, flat pack office furniture, pool accessories and instant noodles.
One of the most successful projects has been the localisation of medium-density fibreboard toilet seats, which involved investing in capital equipment, such as hydraulic presses, raw material milling machines and paint lines, for local manufacturer Active Factory.
Massmart also assisted Active Factory to relocate to a larger facility to increase its output from 5 500 units a month to 12 500 units a month, enabling Builders Warehouse to meet its average monthly demand for this product.
“Once again, the encouragement and input from DTIC was remarkable," says Stander.