Focus will continue to fall on cost control and innovation

SOUTH AFRICA appears to be lagging behind its global competitors in terms of supply chain innovation. Safcor Panalpina national supply chain executive Anthonie Verploegh and logistics engineer Duncan Willox shared their insights into global and local trends with FTW editor Joy Orlek. FTW: What are the global supply chain trends? SP: According to a recent study, 2007 is likely to see a continuation of low-cost sourcing from countries in Eastern Europe and Asia. OEMs (Original Equipment Manufacturers) in particular will look at sourcing parts from Eastern Europe and Asia and taking their tier one suppliers with them. Further high economic growth is expected in Asia and that will result in Asian countries moving away from an export–centric to a market-centric model, with growth in sales to emerging markets. An economic slow-down both in the US and European economies will lead most companies to continue to focus on cost control and cost improvement initiatives within their supply chains. Supply chain leaders will continue to focus on supply chain innovation in an attempt to drive supply chain improvements in their business. FTW: What supply chain innovations are likely to make significant impact in the shortterm? SP: There is likely to be a dramatic upturn in implementation of the most significant supply chain innovation of recent years – RFID. This is thanks to the recent ratification by EPC global of the EPCIS specification for data sharing in real time – a development that will provide “the third leg of the stool” for RFID implementation. FTW: How do SA companies measure up in global terms? SP: SA companies essentially have supply chains that offer a “functional focus” with a functional management of resources compared to the collaborative and integrative approach now adopted by operators from Western Europe and the United States. Up to 42% of companies in the UK and Scandinavia have this level of maturity within their supply chains. It is this “functional focus” approach that will see SA companies lagging behind their global competitors in areas such as supply chain innovation as they fail to see the benefits of collaborative relationships – a foundation for further supply chain and logistics management development and implementation. FTW: To what extent are infrastructure issues impeding supply chain efficiency in SA? SP: South Africa’s supply chain infrastructure – road, rail and port operations – has been blamed for holding back the country’s economic growth and competitiveness in the global market. The associated costs to the South African economy of these infrastructure deficiencies have been calculated at R134 billion (2004) of which R111 billion (83%) is road transport. The main problem continues to be the road versus rail transportation gap with the only highlight being that rail transport has halted its declining share of the freight market during the past two years. However the caveat to that is that road freight transport continues to capture any new freight business. To address the imbalance between rail and road Transnet has embarked on an ambitious spending programme across the next five years with a focus on the development of the Spoornet rail network: • 31.5 billion capital expenditure for Spoornet alone • Plans to buy 374 new locomotives at a cost of R8.5 billion over the next 5 years • Plans to upgrade 514 locomotives estimated at R3.7 billion • Technical innovations to include GPRS systems, black box technology, touch screens and ergonomics This capital expenditure, coupled with developments in infrastructure in areas such as ports – with the completion of the deep sea water port at Coega and developments at the Port of Durban – adds up to an impressive list of initiatives. FTW: Is South Africa’s investment in infrastructure merely playing a game of ‘catchup' despite Transnet's initiatives? We believe so. While there has been some progress, more focus needs to be placed on the development of “intermodal” logistics facilities between rail and road, a development which would really catapult SA logistics infrastructure into a new realm. FTW: What are Safcor Panalpina’s expansion plans for the year ahead? SP: We will be commissioning the second of our two 10 000m2 facilities at OR Tambo International Airport. Commissioning date is set for July 2007 and this high tech de-group facility has been designed with emphasis placed on aircargo throughput and resultant lead time enhancements as well as security. Safcor Panalpina has been instrumental in introducing TAPA (Transported Asset Protection Association) to South Africa. A South African Chapter has been created and is in the process of recruiting members. Official launch is scheduled for July 2007. The purpose and goal of TAPA, a non profit organisation registered in the Netherlands, is to mutually address freight crime against its members’ supply chains.