Price trumps reliability in logistics hierarchy

South Africa can no longer afford the silo approach that has been the driving factor of logistics in the country. Speaking during a presentation of the 10th State of Logistics survey in Cape Town recently, Professor Jan Havenga, director at the Centre for Supply Chain Management at Stellenbosch University, said collaboration was the key going forward. “We have to make a very definitive move away from the silos we have been operating in. If we don’t logistics costs will just continue to escalate,” he said. “The sustainable approach is to create riskaverse supply chains that may not be the least costly to set up right now, but have by far the most long-term gains. Without doubt we have some major improvements to make on various fronts but we have to change from the ‘supply side mentality’ we have on logistics.” He said this was not necessarily easy or quick to accomplish. “We are busy with a study at the university that will allow us to develop a model to provide a forecast on containers and so we have been studying the movement of containers in the country extensively. From how they are moved to why and where they are moved has been closely scrutinised – as well as where they are unpacked and how this decision is made,” he said. “And so far our research has shown us that the biggest determining factor is price. What does it cost to move my goods from A to B is still the most important element with the second issue being reliability.” Havenga said research had shown that logistics in South Africa was for the most part not inefficient, but with little collaboration across the supply chain, costs were high.