Automotive task team set to drive down logistics costs

The Eastern Cape auto
industry has set up a
logistics task team that
aims to drive down logistics
costs.
It will be looking for
greater efficiencies and
lower costs from Transnet
and logistics service
providers and will push for
greater collaboration within
the local auto industry itself,
Selwyn Naidoo, chairperson
of the logistics task team
“pillar” told an Eastern
Cape Automotive Industry
Cluster briefing last week.
Logistics is one of three
pillars on which the cluster
is focusing, according to
Lance Schultz, manager:
supply chain and supplier
development at the Eastern
Cape Automotive Industry
Development Centre. The
other two are supplier and
skills development.
“We need to identify
areas in the supply chain
that contribute negatively
to long inventory holding
times and disruptions in
component flows,” says
Naidoo.
He says the industry
needs to adopt a
collaborative approach in
order to address some of
the critical challenges in
logistics.
One of the problems
identified is that the
logistics system is
fragmented, with “little or
no coordination”.
Greater cooperation
and coordination along
the whole logistics chain
is needed to develop a
Gauteng-Eastern Cape
transport corridor.
High logistics costs in the
Eastern Cape are due, in
part, to a lack of economies
of scale due to component
companies working in
isolation rather than
collaborating.
Areas of collaboration
would include regular
“milk runs” that pick
up components from a
series of suppliers, shared
warehousing, consolidation
of container loads, and
sharing of information so
that loads can be balanced
in and out of the province.
Naidoo says the task team
is also looking for greater
visibility from service
providers, starting with
Transnet.
There is a need to know
what benchmarks are
being used for measuring
productivity and efficiency.
Turnaround times from the
port gate may, for example,
be acceptable, but they do
not measure the hours spent
waiting outside the gate.
Efficiencies can also
be improved by taking
advantage of the changes
that Customs is introducing.
The industry will work
with suppliers to help
them become certified as
Preferred Traders – a move
that will speed up clearance.