Beyond labour unrest at BMW: Using technology to increase SCM competitiveness

Many South African businesses believe that the availability of cheap labour is the most important factor when it comes to being competitive globally, which may partly explain why the business community reacted with such alarm to the news that BMW cancelled it plans to expand production owing to labour unrest.

“Whilst labour is a major concern for business in general, it is only one of many factors that affect cost. Consequently, South African businesses are largely missing out on the transformative role that implementing the appropriate technology can have on both reducing costs as well as identifying new streams of revenue,” says Bruce Laval of supply chain specialists, VSc Solutions.

Unlocking potential savings lies in businesses switching their dependence on manual processes to using software for automation and optimisation, says Laval.

“Opportunities for optimisation in every step of the supply chain can realise an enormous reduction in costs,” he says. “This increased efficiency is carried forward with knock-on effects down the line.”

Strategise before attempting to improve current processes

“In the logistics world, that includes taking into consideration factors like optimal location and size of distribution points based on order volumes, locations of major roads and customers.”

It is equally important to understand the optimal number of vehicles and combination of vehicle sizes based on order quantities, frequencies and time allowed on route. One must also consider the optimal allocation of customers to distribution points based on geographic locations and order profiles.

“Depending on the size of one’s operation, arriving at the best solution through manual processes can be extremely difficult. Furthermore, incorrect assumptions may lead to, for example, depots that cannot handle the logistics capacity. However, advanced software applications are available that can model the best possible scenarios and provide detailed information to the decision makers,” notes Laval.

Streamlining processes

Once the significant logistics capex decisions have been made, it is time to start streamlining processes. Several systems are available.

“Warehouse management systems are able to manage stock flow, route optimisation software can help optimally allocate orders to vehicles and reduce not only the number of vehicles required but also the number of kilometres and fuel that is consumed.”

Furthermore, vehicle tracking systems can be used to monitor vehicle locations and driver behaviour. Route compliance systems monitor the execution of one’s plan and ensure that projected savings are realised. Also, electronic proof of delivery systems help reduce manual paper work, as well as the payment period.

“All of these technological innovations substantially reduce the cost of running logistics operations; yet, the majority of business owners – even third-party logistics providers that depend heavily on their ability to reduce costs – do not know that help of this nature exists, or even of the full impact that using these tools can have on the running of their businesses,” says Laval.

Attract foreign investment

In order for South Africa to be regarded as a contender in the global arena the world needs to see that we are able to deploy and adapt to our unique environment the most advanced technical solutions available globally, says Laval. “It is critical that our business community demonstrates that it does not merely imitate processes that have worked elsewhere.”

“Investors are looking for organisations whose leaders continuously drive innovation with strategies that work well in the long-term. Whether it is labour or global economic factors, there will always be risks associated with engaging in business. South Africa needs to show the world that we are visionaries who can roll with the punches and are comfortable with ‘business unusual’.”