Shorter supply chain provides competitive edge

In a highly competitive
industry, where transporters’
profit margins are under
increasing pressure, the
fact that Shell Downstream
South Africa has a local base oil
production plant in Durban – the
only one in South Africa – means
it utilises a shorter supply chain
and is able to offer stability and
security of supply as a key element
in its customer value proposition.
So said the manager of
commercial lubricants for the
Gauteng-based company, Anton
Niemann, who told FTW that
Shell’s Sapref refinery – a joint
venture with oil company BP –
processes around 24 000 tonnes of
crude oil per day.
“Shell produces most of its
lubricants products locally, with
raw materials being imported
mostly, as well as certain higher
tier products. As a leading global
brand, access to a wide range of
plants globally and with a global
trading capability, South Africa is
well positioned to offer the best in
class products and services to its
customers.
“We also focus strongly on
technology and innovation, with
Shell spending
around US$1.1
billion globally
on research and
development
alone,” said
Niemann,
pointing out that
the company
worked with
global original
equipment
manufacturers (OEMs) of heavy
duty commercial vehicles –
including trucks, agricultural and
mining equipment – to ensure
that their lubricants met OEM
specifications.
“Shell can therefore back up its
claims that its range of lubricants
prolongs engine life which results
in a longer oil drainage period
and thus less downtime for
commercial businesses. This also
means fleet
owners need less
regular engine
maintenance
which helps
them save
on operating
costs,” Niemann
commented.
He highlighted
that by adding
value to its
customers, Shell’s lubricant
products could, to some extent,
minimise the impact of an
economic slowdown, which also
affects the supply chain. “Our
customers are increasingly pricesensitive,
as are their customers,
and if we can help them optimise
efficiencies through product
innovation and technology,
covering the whole Drive-line
concept – from wheel bearings
to engine oil, gear oil etc – then
we are adding the kind of value
that sets us apart from our
competitors,” said Niemann.
The company also prides itself
on its technical support and aftersales
service. “Even our distributor
channel partners receive regular
training and up-skilling to ensure
they offer full technical support
to the product users,” Niemann
pointed out.
Being Gauteng-based, Shell’s
headquarters are located close to
the majority of its clients’ national
offices but Niemann added that
the company had an extensive
distribution and supply chain
system throughout South Africa.
The transport, warehousing
and distribution services are
mostly outsourced to “the experts
in that field”, he said. “With our
partners in the supply chain
and distribution area, we cover
all modes of transport to suit
customer needs – from bulk to
packed products.”
The Shell brand is available
across the African continent in
many countries via joint venture
and macro distributor models.
He explained that the majority
of Shell’s route to market was
through direct selling, but that
the indirect distributor channel
was becoming increasingly
important and growing. “We
therefore require a partnership
approach with our selected Shell
distributors, to service the market
in a comprehensive way,” said
Niemann.
He added that transformation
was an important aspect and
Shell was striving to be a leader
in transformation in South
Africa. “We fully comply with the
Broad-Based Black Economic
Empowerment (B-BBEE) Codes of
Conduct.
“Even within the current
economic climate, which will
recover, and a world of more
volatility and uncertainty, we still
believe that South Africa remains
a highly attractive investment
destination for suppliers or
manufacturers,” he said, adding
that the African continent also
offered “so much potential” for
growth if it managed to stabilise
its economy and focus on strong,
sound governance.
INSERT & CAPTION
The transport, warehousing
and distribution services
are mostly outsourced to
the experts in that field.
– Anton Niemann
CAPTION
Shell spends around US$1.2 billion annually on research and development.
Photo: Shell