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.