SAPICS President Liezl Smith reviews the state of the sector
ahead of its annual conference in June 2013

 South African supply chains generally compare very well with their developed market peers, and in some cases I believe we are ahead of the game. One of the reasons for this is that we have had to become very innovative in the way we do things in the face of challenges that do not exist in developed markets. Doing business in Africa is not for ‘sissies’, and so we have developed much strength in terms of our creativity and tenacity when confronted with adversity i.e. poor road conditions, under-utilisation of rail transport, unreliable postal service and slow Internet connectivity.

However, we would be deceiving ourselves if we did not acknowledge the blatant fact that effective supply chain functioning is often hampered by corruption and gate-keepers who charge a “facilitation fee” (read bribe) to let the chain flow properly.

Good to great

Aside from bribes, it is quite clear that simply pouring money into solving our supply chain challenges has no enduring value. However, spending it wisely, like investing in skills development, I believe will pay off in the long run.

Too many untrained people are entrusted positions where they influence inventory holding and movement. Often the stock in various stages of completion amounts to up to 60% of a company’s cost of sales. It is irresponsible to let an unqualified person manage this.

Unfortunately very few companies realise the severity of this problem, as it is often disguised by ‘noise’ and other distractions in the system. One of the most fundamental areas that improvement should be sought in is the ability to forecast demand better, align goals across departments and secure good leadership in order to steer a company in the right direction.

Where to from here?

The turbulence of the past few years has taught us that we cannot predict on the basis of historical data and that our supply chains have to be agile and responsive. Lately, we have been focusing on expanding and contracting in line with demand so as to contain costs while being able to take advantage of improved demand. But, are there other areas in which we need to work to be more responsive?

I believe there is never an end to the improvement story. We need to continually strive to remove bottlenecks and barriers to improvement and excellence. It is important to remember that the goal of any business is to make money, and money can only be made if customers keep buying your product, stock is kept to a minimum, expenses are kept low and everyone in the business speaks with one voice. There is still a lot of work to do in these areas in the majority of businesses.

Change is here to stay

Some people believe that a fresh approach to supply chain – as in, designing a company’s supply chain from the ground up – is the best approach, despite the substantial cost of such an exercise. However, I believe the idea that a fresh start will give you an advantage is just an illusion.

Business changes so fast that the fresh start itself would only be fresh for a short while, so I really don’t think this approach is worth it. By the time the ideal situation is planned and ready for execution, things would have changed so much that it would have to be redesigned – again!

In my view, the best way of improving supply chain is to have an obsession with continuous improvement – for a business to make it a part of its culture, to live and breathe it. With every process step, the question should be asked: “How can I do this better?”

This is the only way businesses will be able to adapt to a fast – changing world.

Catch Liezl Smith along with a host of local and international supply chain specialists at the 2013 SAPICS Conference and Exhibition” to be held at Sun City from 2-4 June. www.sapics.org.