It’s easy to lay all blame on government for the shrinking of South Africa’s once buoyant manufacturing sector. Frequent power outages, tariff hikes and ill-timed legislation have no doubt put local producers under immense pressure, but would all be peachy if these issues were resolved tomorrow? Times have changed and business needs to adapt quickly.
“No company can operate today the way it did 40 years ago,” says Dawid Janse van Rensburg, MD of CargoSolutions, a prominent South African supply chain and logistics service provider. “Everything has changed, and some of the largest manufacturers in South Africa need to accept the cliché of ‘adapt or die’.”
Addressing delegates at the 37th Annual SAPICS conference for supply chain professionals, Janse van Rensburg tells how it’s high time that business stops blaming utilities, laws, or state of the economy and rather for management to take responsibility for implementing changes that will meet the different needs and pace of today.
Smart tech or smart decisions?
“Competitive local manufacturing is less about smart technology than about smart decisions – those made by management,” explains Janse van Rensburg.
“Local manufacturers need to get over their egos, embrace true leadership. Without this fundamental change, no other changes by government, utilities or of IT systems will have a sustainable effect,” he says. “You need breakthrough intervention; something substantial to motivate South Africa’s purchasers to buy locally manufactured goods.”
Local really is lekker
South Africa has posted negative trade balances (where exports exceed imports) since 2012 (Trading Economics/SARS). The sporadic spikes in exports, mostly due to surges in the precious metals trade, is offset by imports of fuel and high value added goods. South Africa’s footwear and steel producers specifically have felt the impact lately.
Despite the initial lure of low prices, importing can have serious drawbacks. Quality issues, lengthy delays during shipment, and language and payment hurdles, can all affect buyer and consumers.
Local purchasers are now seriously considering buying local, and government is supporting, in some instances compelling, companies to source locally manufactured goods. “But,” says Janse van Rensburg, “we desperately need to address service levels as well as stock availability; our ability to compete with these global suppliers.”
“The Theory of Constraints (TOC) is one way that major change can be identified, managed and implemented,” explains Janse van Rensburg, whose company has implemented TOC supply chain solutions successfully in a wide range of local manufacturing companies for many years.
The brainchild of Dr Eliyahu Goldratt, TOC looks to identify the most important limiting factor (the constraint) that stands in the way of achieving a goal and then steadily improving that constraint until it is no longer an issue.
To supply competitively here and compete against imports, lead times for example need to be world class, says Janse van Rensburg. “This would generally imply that you should have products manufactured based on demand forecasts (make-to-stock) or by having high levels of stock, but this, again, is a misconception by management. There are IT systems that can optimise both!
“The cost of implementing this type of breakthrough change should never be the focus. The cost of NOT changing? Potentially going out of business,” Janse van Rensburg concludes.
To learn more about solutions that can completely transform supply chain and management of projects, visit http://bit.ly/1egbbj9 for information on the Theory of Constraints International Certification Organization (TOCICO) Annual Conference, scheduled to be held 6-9 September 2015 in Cape Town, South Africa.
MEDIA CONTACT: Cathlen Fourie, 012 644 2833, firstname.lastname@example.org, www.atthatpoint.co.za
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ABOUT SAPICS – your supply chain network
SAPICS is a professional knowledge-based association that enables individuals and organisations to improve business performance. SAPICS builds operations management excellence in individuals and enterprises through superior education and training, internationally recognised certifications, comprehensive resources and a countrywide network of accomplished industry professionals. This network is ever expanding and now includes associates in other African countries.