South Africa facing Supply Chain challenges

Today’s marketplace is more competitive than ever before. Globalization, technological change, and demanding customers promise to reduce difficulties. The very nature of competition has changed. Companies no longer compete against companies, supply chains compete against other supply chains for supremacy. Organizations need their suppliers to assist in decreasing costs, improving customer service and efficiency. Also, their customers need their co-operation as suppliers to further decrease costs, since the relationship between the company, suppliers, and its customers are included in the concept of SCM.

When it comes to managing supply chains, South Africa is considered to be one of the best amongst the BRICS nations but the country is still far behind the other developed nations. South Africa’s performance is average against approximately 180 nations according to the WB and the IMF.

These organizations focus their evaluation mostly on the manufacturing and delivery aspects of the supply chain using instruments such as the international logistics competitiveness index. Last year, South Africa was ranked 24th on this index, with China as the closest BRICS nation at 30th. However, KPMG conducted a survey of BRICS nations – looking specifically at the planning, sourcing, and return aspects of supply chains, not normally measured by WB /IMF – and found that on these aspects South Africa did not perform at all well.

South Africa appears to perform well when compared with other African countries. Though, there are a number of challenges that affect our competitiveness in terms of supply chains. These include the type of transport used, some of which are very costly, and the ease of export between other countries as well as the lack of skills and inadequate use of technology. Other challenges

Road Transport
Road transport is the most used method in South Africa, there are some limitations to this form of transport. These include:

• E-tolls
• The cost of exporting goods is high
• Rampant fuel cost

Other transport types
The rail infrastructure in some African countries is more than a century old, therefore it is not geared to support the growing economies of these nations. When compared to the other BRICS nations, South Africa uses rail the most for import and export services.

Poorly functioning ports and airports in Africa delay the growth of the economy. African ports are illustrated by old equipment, which slows down the cargo processing point. At the same time, a single day’s delay in the export supply chain negatively impacts the country’s GDP. However, the ports in South Africa proved to be ‘on their A-game’ and future growth looks well on its way.

Skills and technology
Poor skills and low technology usage are also key obstacles in achieving supply chain efficiencies. A research project conducted in 2013 to benchmark supply chain skills in South Africa against BRICS nations showed that South Africa is under-skilled. KPMG assessed skills in 27 competencies across three categories:

• Foundational sills
• Professional skills
• Occupation-related skills

At a foundational level, the study revealed that South Africa was on par with the BRICS on only two of the 27 competencies. The biggest gap identified was in analytical skills, which are very important in optimally executing the work required in the supply chain. Such a gap in the skills set of supply chain managers creates a barrier to achieving higher maturity in the industry in South Africa.

Another equally important factor is technology. In South Africa, technology is not embraced across the board. In some facets of the supply chain, available technology is optimally used, particularly in the logistics sector (track and trace). As for whether we are using the information to optimize the supply chain behaviors, the answer is a resounding no.

South Africa must quickly determine its short- and long-term goals for the supply chain industry and put in place measures to strengthen the links in the chain where there are deficiencies – or we will lose what little share of global trade we possess.

Considering the opportunities with the changes in South Africa if you are looking for new Freight jobs or Supply Chain jobs, we can assist. Communicate Recruitment’s Supply Chain and Freight division specializes in both sales and operations in the clearing and forwarding, courier, road freight, and supply chain industries. Visit our website for the latest vacancies.

Image Credit: FreeDigitalPhotos.net by Baitong333