Locking down supply chain efficiency

South African importers are, generally speaking, very small players in the global supply chain and are located far away from their source markets. Subsequently, they face an uphill battle to get products to their customers at the right time and at the right price. Keeping the total cost of ownership down – which includes a quick turnaround on production and delivery – is heavily dependent on an efficient, flexible and streamlined supply chain, said Agnieszka Morton, newly appointed procurement manager for Assa Abloy in South Africa, a global specialist in the manufacturing and supply of door opening solutions. “Decisions need to be based on the total supply chain cost rather than on a low purchase cost,” she added. The company has several door opening solutions in its stable, ranging from padlocks to sliding door locks, electronic access control locks, mechanical locks and more. Well-known brands, which form part of the Assa Abloy portfolio, include Yale, Henderson, Union, Besam, Vingcard and Mul-T-Lock Customers include retailers, wholesalers, locksmiths and Original Equipment Manufacturers (OEM). The manufacturer has a large production facility in Roodepoort, Johannesburg, where it manufactures the majority of its products. “We ship a lot of our products nationally and into parts of Africa from the Gauteng warehouse,” said Morton. Assa Abloy imports materials, components and sometimes fully assembled products from other Assa Abloy companies across the globe. Morton noted that the majority of the South African imports were currently sourced from emerging markets such as India, China and Eastern European countries such as Poland, Romania and the Czech Republic. “We find these countries offer good-quality products at competitive prices Yet there are several challenges for importers in South Africa, not least of which are low levels of responsiveness from source countries. It is crucial to align with the right suppliers as we need enough presence in their companies to build a strategic partnership in order to obtain transparency on costing or price projections. We also need to establish the right relationships so we can collaborate and get answers when deliveries are delayed,” commented Morton. Furthermore, emerging markets are highly volatile and are subject to sudden economic changes and labour policies, she said. “For example, the cost of labour in China has substantially increased over the past few years, which adds to the cost of the products or materials.” China is no longer regarded as the ‘cheapest’ country to manufacture goods. Cost competitiveness around the globe has drastically changed over the past decade. South Africa’s location also counts against it for importers as the lead times for products are quite long. “Depending on the nature of the product, there is an average of 30 days’ production lead time and then it takes around 4 to 6 weeks by sea to reach Durban port,” Morton said. She added that ocean freight was the preferred method of transport as it was most cost-effective. “Airfreight is mainly used for urgent deliveries .” High logistics costs and excessive inventory can dilute the benefits of low cost sourcing. To overcome these challenges and ensure a more efficient and cost-effective supply chain, Morton suggests importers – and their freight forwarding partners – look at more consolidation and improved collaboration between internal and external suppliers in order to pool resources and gain maximum savings benefit. Transparency is also a key deliverable from freight forwarders and agents, particularly because of the length and complexity of an import supply chain said Morton. Collaboration between companies and suppliers is critical to global success. True partnerships require transparency and clear understanding of requirements and expectations driven by an agreed set of Key Performance Indicators. INSERT & CAPTION Decisions need to be based on the total supply chain cost rather than on a low purchase cost. – Agnieszka Morton