Variable demand requires new strategy

24th July 2020 By: Tracy Hancock - Creamer Media Contributing Editor

Variable demand requires new strategy

CAPACITY CUT GUD’s plants have reopened under conservative conditions to about 60% of normal capacity

Uncertain demand in the original-equipment manufacturer (OEM) and aftermarket environments, owing to the Covid-19 pandemic, is impacting on short- to medium-term capacity management decisions to meet variable demand, says automotive parts manufacturer GUD Holdings CEO Chris Haworth.

“However, opportunities do exist for local manufacturers, especially in terms of localisation or import substitution.”

Availability and service levels are key levers in taking advantage of this opportunity, he says.

Demand in the aftermarket parts sector has been above expectation, but well below pre-Covid-19 levels.

“The reduction in demand differs between the various types of parts we supply, with our service parts holding up best. The benefit of being a local manufacturer has enabled us to leverage this demand,” says Haworth.

However, demand from OEMs and Tier 1 customers has been more severely impacted, as these customers focused on the startup of their assembly plants under new Covid-19 protocols at reduced output levels. Consequently, GUD expects suppressed demand from these customers in the immediate future.

In aftermarket parts exports, now that the shipment of orders delayed during the hard lockdown has been recovered, indications of future demand from Europe remain below the pre-Covid-19 levels. African exports are stable, with the exception of Zimbabwe, which continues to navigate its prevailing economic conditions, explains Haworth.

GUD has fulfilled its commitments to private brands locally and internationally during the lockdown through the management of its finished goods inventories, and the careful and appropriate use of available plant capacities following the Level 5 lockdown.

South Africa’s port congestion and delays have had a negative impact on the service levels that GUD’s export customers are accustomed to receiving.

Consequently, the company constantly expedites export orders, and manages its supply chain and future demand in conjunction with customers to ensure that GUD’s internal supply chain does not become the cause of delays.

Addressing Covid-19

GUD has manufacturing sites locally in Durban, Pietermaritzburg, Johannesburg, Port Elizabeth and in Harare, Zimbabwe.

GUD fully supports government initiatives to flatten the curve of infections and complies with regulations employed during lockdown.

The company safeguards its employees through the introduction of comprehensive return-to-work protocols, and the adoption of a conservative and deliberate methodology to the restarting of warehouses, factories and administrative centres, notes Haworth.

To date, this methodology has functioned well and is constantly improved upon, while the company continues to service its customers despite these constraints, he adds.

“During the hard lockdown, our manufacturing plants were closed. “With the economy reopening during levels 4 and 3, our plants have reopened under conservative conditions to about60% of normal capacity. “We expect to see further ramp-up of capacity in the near future.”

New Products

As a supplier and manufacturer of a range of chemicals, GUD has developed and launched industrial surface and hand sanitisers for use in all markets and environments.

“The development of these products came about as we needed this type of product within our own factories and warehouses, as part of the post-Covid-19 startup. “We subsequently decided to manufacture and supply them in all the markets in which we operate.”

This is in addition to developing and manufacturing mobile hand-washing stations that can be used in facilities and locations where there is no access to plumbed ablution facilities.

These units are simple and self-contained, requiring no external service connections, says Haworth.

GUD is particularly proud of the 150 mobile hand-washing units that are being delivered and installed at schools and taxi ranks countrywide through its broad-based black economic-empowerment partner, FILPRO.