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Logistics Newsthe independent voice of the Supply Chain industry

April 2016

ALSO: meaningful outsourcing • inventory modeling for holisticstrategy • cold chain best practices • strategise forinnovation • sustainable retail reverse logistics •

3/4PL outsourcing, Distribution, Cold chain

Logistics News April Cover.indd 1 2016/04/15 2:47 PM

Success on the move www.faw.co.za24-hour road-side assistance

22 YEARS IN SOUTH AFRICA

Lowest cost-per-ton truck

NEW FAW 8.140 FL

At a price of R259 000 (excluding VAT) the new FAW 8.140 FL chassis cab offers the lowest cost-per-ton available in this class

6-ton body and payload allowance5.1m standard body lengthCan operate at 120km/h (below 9 000kg GVM)The new range is locally built and internationally engineeredRenown Cummins ISF 3.8 litre engine with Euro 3 pedigree

Reliable ZF 6-speed synchromesh manual transmission

Safe Wabco full-air dual-circuit brakes

ABS and air-cut parking brake

Ergonomically designed cab for superior visibility

2-year/unlimited kilometre warranty

Air-conditioner

R259 000 (excluding VAT) 8.140 FL chassis cab

Introducing the all-new medium-weight FAW truck range, specially designed for southern Africa.

Quality control2 ENSURE QUALITY … and SC efficiency

Innovation4 SC STRATEGY … can hold back innovation

Distribution6 COMBATTING RISING COSTS … of distribution

Reverse logistics8 SUSTAINABLE REVERSE LOGISTICS … in the retail supply chain

3PL service10 THIRD PARTY … should mean service

Training11 THE PRICKLY ... SCM training dilemma

3PL partnerships12 POINTS LEARNT … from 3PL selection

Collaborative outsourcing16 IS LOGISTICS OUTSOURCING

RIGHT … for your company?

Inventory optimisation18 INVENTORY MODELING … develops holistic strategy

Cold chain20 EVOLVING THE COLD CHAIN: … best practices and

innovations

Manufacturing24 WEARABLE DEVICE … reduces assembly errors

Regulars14 BOOKMARK24 NEWS35 FORTHCOMING EVENTS36 INDUSTRY ASSOCIATIONS &

EDITORIAL DIRECTORIES

April 2016

Kemtek Imaging Systems was among the first South African companies to recognise the growth potential for bar coding technology. Today, Kemtek is a leading supplier and distributor to the sub-Saharan market through three specialist divisions – printing, bar coding and labelling – providing world-class, state-of-the-art end-to-end solutions, plus expert technical and sales service.

COVER

20Evolving the cold chain: best practices and innovationsMoving goods reliably and quickly from the point of production to the point of purchase is what makes large scale retailing, manufacturing and even some types of farming possible.

18Inventory modeling develops holistic strategyMost companies are trying to achieve two things with an inventory strategy: service improvement and reduction in on-hand inventory/working capital. It’s often difficult and sometimes impossible to do both simultaneously.

16Is logistics outsourcing right for your company?Today, organisations face tremendous pressures. Controlling costs and improving efficiencies remain high priorities. Yet, factors such as globalisation and gaps in supply chain talent make it increasingly challenging to achieve goals and remain competitive.

CONTENTS

Success on the move www.faw.co.za24-hour road-side assistance

22 YEARS IN SOUTH AFRICA

Lowest cost-per-ton truck

NEW FAW 8.140 FL

At a price of R259 000 (excluding VAT) the new FAW 8.140 FL chassis cab offers the lowest cost-per-ton available in this class

6-ton body and payload allowance5.1m standard body lengthCan operate at 120km/h (below 9 000kg GVM)The new range is locally built and internationally engineeredRenown Cummins ISF 3.8 litre engine with Euro 3 pedigree

Reliable ZF 6-speed synchromesh manual transmission

Safe Wabco full-air dual-circuit brakes

ABS and air-cut parking brake

Ergonomically designed cab for superior visibility

2-year/unlimited kilometre warranty

Air-conditioner

R259 000 (excluding VAT) 8.140 FL chassis cab

Introducing the all-new medium-weight FAW truck range, specially designed for southern Africa.

2 April 2016 • Logistics News

quality control

Consumer products companies are facing greater challenges than ever before. To reduce costs, companies are purchasing raw materials from global suppliers and outsourcing their manufacturing and packaging to contract vendors. This has increased the risk by reducing

visibility into production processes.

Acknowledgement to Sparta Systems

Ensure quality and SC efficiency

The downTurn in the global economy has resulted in higher costs for raw materials, energy and logistics. There is also a corresponding pushback from retail partners and consumers for quality products at lower prices.

The ability to access data and run reports across all facilities in the enterprise has proved to be a challenge. According to a global manufacturing study, 44% of companies still struggle to synchronise and integrate data across various management systems and internal groups. An estimated 80% of quality managers are still using spreadsheets and paper-based systems to manage their auditing and compliance systems.

Product recallsThe number of product recalls has more than doubled since 1999 and appears to be accelerating. Many factors contribute to the increase in recalls, including the growing speed and complexity of the supply chain, tighter regulatory requirements, and enhanced testing techniques.

The majority of companies are dependent on a network of global suppliers, and outside contract manufacturing and packaging partners. This network can range from hundreds to thousands of vendors and the transparency in this network is usually limited to only a few of the top partners. With an estimated 52% of product recalls attributed to supplier and contract manufacturer issues, it is more important than ever to create visibility within the supply chain network.

Quality begins insideSome companies believe that quality begins after production ends. But top performing companies know that quality impacts every step of the product development life cycle from suppliers’ raw materials, to packaged goods completed at co-manufacturing or co-packaging sites, to

the logistics providers who deliver products to distributors and retailers.

Creating an ecosystem of visibility across supply chain partners will not only reduce the risk in outsourcing, but also reduce the costs associated with recall, rework and scrap. Being proactive is the key to success in manufacturing today. The best place to start is inside the organisation.

Proactive production managementConsumer products manufacturing environments contain a combination of manual and automated exchanges between equipment and personnel. What should not be sacrificed is the attention to standard operating procedures (SOPs) to ensure safety and compliance requirements.

Performing quality inspections in the plant during production and packaging can ensure greater visibility into potential risks and reduce the number of issues that could occur.

Whether the company is trying to achieve greater operational efficiencies or ensure compliance with any number of regulatory or industry initiatives, one of

April 2016 • Logistics News 3

the cornerstones of proactive production management involves Hazard Analysis and Critical Control Points (HACCP).

The goal is to identify and monitor potential issues – whether physical, chemical or biological – at each point in the production process and implement a change or corrective action to eliminate or reduce the impact on the safety of a product. This ensures HACCP compliance to support a number of regulatory initiatives as well as reduce the rework, disposal or recall costs associated with poor quality.

Automating HACCPCompanies can standardise the process and ensure compliance by automating the HACCP plan in an enterprise quality management solution (EQMS). This provides several benefits. First, companies can assign HACCP team members and record required tasks. Managing this step in an EQMS system allows tasks to be escalated to employees responsible for specific tasks and tracked through the process. Second, each hazard, critical control point and minimum/maximum level are recorded within the system and an SOP workflow is established to support HACCP training and identify issues early in the process. Finally, users can monitor and perform scheduled internal or external audits to ensure that hazards are monitored effectively. In the event of an issue, corrective action can be implemented in the same system seamlessly to ensure that actions are resolved in a timely manner. Management can view HACCP reports using analytics tools to determine the source of reoccurring problems.

Visibility outside the four wallsCompanies struggle to synchronise and integrate data across the value chain to create transparency so that they can proactively manage key challenges. The complexity of an organisation’s supply chain is cumbersome: Thousands of part numbers, hundreds to thousands of vendors, different global locations, and managing the distribution and testing requirements needed to ensure that product is on-time, in-spec and safe for use or consumption. It only takes one ingredient to ruin a brand’s reputation, so quality checkpoints throughout the value chain are needed to ensure that the product meets the company’s specifications. This extends to suppliers’ and contract vendors’ quality processes, in which greater visibility will significantly contribute to reducing the costs associated with recall, rework and disposal. With more than half of all recalls attributed to supplier or contract manufacturer issues, there is a definite return on investment (ROI) to creating more transparency across the supply chain. It also provides an opportunity to build more collaborative relationships with suppliers, supporting innovation, speed-to-market and competitive differentiation.

Communication gapsConsumer products companies are beginning to feel the weight of increasing regulatory requirements and the challenges of managing their global operations consistently. They have heard about the success in the highly regulated pharmaceutical and medical device industries and are looking at how they can achieve similar operational and cost efficiencies.

Many large companies work with small-to-medium sized suppliers and a common way they share information is via email, fax, mail, web-based partner portals, and in some cases an electronic data interchange network. Connectivity is an area in which companies realise there is room for improvement.

Automating messages and routing data to back-end systems provides greater accuracy and visibility into monitoring product quality and communications. This supports the latest trend of building collaborative partnerships with suppliers and reduces cycle time in addressing quality issues such as complaints, investigations and corrective actions.

Increased visibilityA true EQMS enables organisations to manage quality processes while connecting to existing ERP and other IT systems to streamline data integration across the enterprise. Automating quality processes in an EQMS provides the consistent and repeatable process needed to enforce SOPs, eliminate redundancies and recording errors, and creates a central repository of quality data to view trends or document historical data for

compliance purposes. This allows organisations to support manufacturing and packaging facilities around the world. An EQMS also enables issues to be identified early in the process so that product can be quarantined at the facility before it enters the supply chain, reducing the impact to brand reputation and the bottom line by eliminating the need to recall product.

Deeper insightsOrganisations are focused on being proactive to reduce costs and increase safety and quality across the product portfolio. Automating existing quality processes and connecting to suppliers’ quality data within one central repository finally allows users to leverage data from a variety of sources across the enterprise and value chain in a single operational view for better business decisions.

Gone are the days of merging multiple spreadsheets into one cumbersome report that is outdated the next day. Now ad hoc reports can be pulled together with just a few simple steps. Reporting and analytics systems should easily navigate users through intuitive screens, dropdown menus and drag-and-drop interfaces to create reports. The easier it is to use, the more likely employees will use it on a regular basis and uncover trends and issues sooner. •

It only takes one ingredient to ruin a brand’s reputation, so quality

checkpoints throughout the value chain are needed to ensure that

the product meets the company’s specifications. This also extends to suppliers’ and contract vendors’

quality processes ...


In early 2011, Lamynix, a leading manufacturer of speciality laminates, was approached by one of its major customers with an enticing contract. VideoFlat offered a premium price to buy a protective film that was twice as wide as the usual size for its new generation of high-end flat screen TVs and computer monitors.

But there was a catch: to be ready for the product launch, the new laminate had to be in production within 12 months. Lamynix understood that delivering on VideoFlat’s proposal within the allotted time would require a significant innovation effort. It also knew that this represented a golden opportunity to capture an emerging and promising segment in the speciality laminates market.

Lamynix and VideoFlat shook hands on a one-year, multi-million dollar contract. Twelve months later, Lamynix had failed to deliver the new product and VideoFlat walked away. What went wrong?

Close examination revealed a deeper cause behind the failure: Lamynix’s supply chain strategy impeded the company’s ability to be an innovator.

Supply chain strategyThe foundation of the company’s supply chain was built on three key principles: achieving the lowest product cost; maintaining the best product quality; and operating with the lowest working capital. The company’s mantra of manufacturing exclusively in high-volume plants to exploit economies of scale to the fullest had led to Lamynix building the largest laminate extrusion plant in the world.

This supply chain strategy served Lamynix well during the first decade of the 21st century, especially due to the rising price of oil – the main raw material for laminates – which added currency to the quest for efficiency and cost management. The company’s success in keeping costs low, however, may have masked an unresolved three-way conflict at the centre of the supply chain strategy between cost, service and inventory. With an inflexible plant, matching supply and demand required the company to keep sufficient inventory of the finished products on hand. But inventory costs money, and higher inventory levels, in turn, increase the final cost to the customer.

Innovation as the Cinderella functionThe operational problems showed how Lamynix’s struggle with innovation was symptomatic of a mismatch between

Supply chain strategy can hold back innovation

Innovation is often the key to a company’s success or failure. That innovation can occur in any part of the business – but it can be hampered by a lack of understanding in another

area. Supply chain strategy can sometimes be the biggest culprit.

By Roberto Perez-Franco, e2open

innovation

strategy and implementation. The manufacturer had been able to create the wider laminate that VideoFlat required, but only in a small pilot plant maintained for R&D. When the company tried to recreate this new product in the high-volume plants used for production, a problem arose where the abnormally wide laminate bowed in the middle, causing manufacturing defects.

At the time, Lamynix was under intense pressure from stakeholders to maintain high margins; as a consequence, the company had little appetite for spending money on innovation, even though it invested in manufacturing capabilities in the form of a huge new plant.

The deeper reason for Lamynix’s failure to deliver was that innovation was not one of the organisation’s top three priorities. Lamynix learned the harsh lesson that its customer did not care about the internal conflicts that stymied the company’s ability to deliver a potentially profitable new product. VideoFlat cared only about results and had no problem walking away.

Innovation is a key principleThe lessons learned as a result of this episode forced Lamynix to rethink its competitive strategy. A new vision was reformulated to include supply chain strategy among its key principles to create meaningful support for innovation efforts.

A company’s verbal commitment to innovation is not enough if its supply chain strategy frustrates innovation and key personnel are unwilling to commit the resources that innovation requires. •

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accordIng To a recent industry study, as small to mid-sized transporters struggle against this rising tide of costs, their attempts to control distribution costs are undermined by outdated communications technologies, a lack of automation in routing and load consolidation, and other distribution inefficiencies.

Yet solutions are emerging that let distributors of all sizes focus on their cost-of-distribution (CoD) to slash their net landed cost of goods, in some cases by as much as 30%, by utilising the latest cloud-based technologies to automate internal and external communications and logistics.

While large distributors have been able to afford expensive, custom-developed, automated systems to effectively manage costs, the availability of affordable, cloud-based solutions is leveling the playing field for smaller distributors who previously were priced out of the automation market.

Now, using cloud-based automation technologies to optimise inventory allocation and distribution planning, all cargo owners have the opportunity to reduce costs and increase margins, without renegotiating transportation rates.

Distribution costs soaringIndustry commentators portray a difficult business landscape for cargo owners, with freight costs rising significantly for consumer packaged goods companies. What’s behind the surging costs? The leading causes are a shortage of truck drivers, the cost of fuel and maintenance costs, the costs of regulatory compliance including increased taxes and tolls,

Combatting rising costs of distribution

distribution

and the impact of the nation’s deteriorating transportation infrastructure.

Supply chain executives at many major consumer products companies agreed that transportation issues are a top concern for all cargo owners. With aggregate transportation costs constantly rising, it’s no wonder cargo owners are looking for efficiencies that will help them slash spending.

Among the situations facing cargo owners is a freight capacity shortage, as recent growth in the construction and energy sectors has increased demand in those industries for trucking and rail carriage. Packaged-goods executives say capacity constraints make it difficult to deliver products where they need to be.

The trucking industry faces a ballooning shortage of drivers for a variety of reasons: fewer drivers are entering the profession, and many drivers are leaving the field for various reasons, including severe health complaints. These reasons include shifting demographics (aging population), burdensome regulations for both vehicles and drivers, and reluctance among more and more drivers to spend long periods of time on the road and away from home. Unfortunately, the industry is having little success in recruiting new drivers or convincing current drivers to remain on the job. Many young people view truck drivers as socially inferior.

A decreasing supply of drivers combined with an increasing demand for their services effectively creates a highly competitive environment and skyrocketing transport

A perfect storm of circumstances – including labour shortages, growing demand for distribution services, regulatory burdens and systemic infrastructure problems – has significantly boosted

freight costs over the past few years for consumer packaged goods companies.

Acknowledgement to Eyefreight


costs. Cargo owners that do nothing to reduce cost of distribution will, by default, see their cost of distribution rise rapidly in the years ahead.

Consequently, cargo owners are placing more strategic focus on automation as a way of controlling costs and finding efficiencies in transportation and logistics.

Manual systems inadequateAcross all physical goods industries, including various retail, commercial and industrial markets, cargo owners’ customers expect quick and transparent delivery, supported by real-time updates. New cloud-based software solutions are empowering cargo owners to meet these expectations. With a buyer’s ability to remain constantly connected and consumer shopping experiences shaping perceptions, real-time visibility is no longer optional.

The challenge that must be addressed is integrating information among all parties in the logistics and distribution process, including the cargo owners’ internal data systems, partner portals and EDI systems used, and their transportation and logistics providers.

Currently, though, many executives report relying on manual processes for information exchange between partners, with at least one manual step being required in half of their processes, and others admitting to many more manual operations. The shortcomings of manual processes are most evident when they limit visibility into end-to-end supply chain processes and metrics, including landed cost and performance by mode of transport.

Agility and complexity are two major challenges driving cargo owners to achieve real-time visibility throughout their operations by turning to automation, which offers the additional benefit of releasing company resources and capabilities to focus attention on other management issues.

Seeking long-term solutionsInstinctively, companies trying to reduce cost of distribution look to renegotiate transport rates. This may provide short-term dividends, but has limited long-term viability. As transporters foot the bill for rising costs, their rates stand to increase, reducing their willingness to negotiate supplier-friendly discounts.

How can manufacturers and brands find cost of distribution savings outside of transporter discounts? Finding more efficient ways to distribute can reduce costs in nearly every facet of distribution, from inventory management to transport planning. Cargo owners can tap a variety of longer-term strategies to use transporters and vendors more efficiently:• Route optimisation and planning technologies, which

apply algorithms to every order, can help mitigate the impact of driver shortages and increased road congestion. By examining shipping orders for variables such as order size, type and destination and combining them with local variables such as street restrictions (one way, no trucks over a certain size, etc.) and fees (tolls, border taxes, etc.), cargo owners can determine optimal carriers, fleet types and routes.

While it’s possible to handle some of these optimisations manually, as orders grow in number and size, the

calculations become increasingly complex. Optimisation and planning technologies enable companies to take control of operational and cost-related shipping variables without increasing staff workload or responsibilities, by responding to complex problems with more informed decision-making in a fraction of the time otherwise required. Plus, thanks to the cloud, these types of technologies are available to boost efficiencies for even small cargo owners and manufacturers.• Execution monitoring and cost management technologies

can provide full visibility into transporters’ performance, while enabling rapid adjustment for unplanned delays. Even with the best route optimisation and planning technologies, unforeseen variables such as accidents or severe storms can cause delays. Real-time insight into these delays enables quick route adjustments and rapid communication to all vested parties (cargo owners, staff, transporters, customers). Quick auditing and invoice settlement can help preserve quality relationships and collaborative partnerships with transporters and vendors.

• More efficiencies can be found in areas including inventory and warehouse management and order consolidation. When combined with regular route optimisation and planning, execution monitoring and cost management efficiencies, companies who stay diligent can reduce their net landed cost of goods as much as 30% to stay competitive without squeezing any harder on manufacturing costs.

Any goods with significant distribution costs (representing a significant portion of net landed cost of goods) can benefit from these approaches to cost cutting, including goods ranging from apparel and other consumer products to industrial steel coils weighing as much as 20 tonne.

Advantages of cloud technologiesWith the majority of supply chain executives agreeing on the importance of achieving real-time visibility of transportation, logistics and supply chain processes, cloud technologies offer affordable, long-term solutions for closing the gaps between today’s reality and rapidly evolving customer demands for these capabilities.

A transportation management system in the cloud creates visibility from start to finish, with all elements of the distribution process in a single platform. It requires a smaller initial investment and typically lower overall costs than on-premise solutions. It also enables a real-time flow of information and allows key decision makers to quickly check delivery status and address problems. Through advanced planning and forecasting, cargo owners can:• Create accurate budgets and cost-reduction forecasts• Identify weak spots for optimisation opportunities• Reduce training time and manual workloads• Improve efficiency by eliminating manual operational

tasks such as registering information and building reports.

By implementing certain cloud-based solutions companies may significantly increase visibility in current supply chain operations and reduce net landed cost of goods by as much as 30%. •


reTurn raTes aT brick-and-mortar stores are estimated at around 10%, and the overall trend continues to grow, especially as return rates for e-commerce are even higher, up to 20% of all sales in some cases. These figures, obviously, vary from retailer to retailer. While painful for retailers, returns have been absorbed as a cost of doing business, and until recently the environmental impacts have been ‘out of sight, out of mind’. Savvy retailers now have the opportunity to improve their recovery and reduce environmental impacts through smart use of data and analytics to efficiently find interested buyers for returned and excess inventory.

One environmental impact model quantifies the environmental benefits retailers can achieve using sophisticated reverse logistics management systems. The model demonstrates waste reductions of up to 60% and savings in fuel-related carbon emissions of up to 30%. Retailers of any size can assess the environmental impacts of their own reverse supply chains using this framework.

Environmental impacts of reverse logisticsThe amount of inventory flowing in the reverse supply chain is massive and growing. In the US alone, customers return some 3,5-billion products back to the point of sale each year, of which only 20% are actually defective. All of this excess and returned inventory must go backwards through the supply chain, the process called reverse logistics. Unlike the forward supply chain where inventory is consistent and uniform, the reverse supply chain is dynamic and unpredictable; items come back to the retailer in a variety of conditions – new, open-box, used – and retailers have little information about which products will be returned or become overstock.

A handful of larger retailers have dedicated facilities to manage returned and excess inventory, but most rely on individual storefront locations, forward fulfillment centres, or third-party logistics providers (3PLs) to process and disposition inventory.

More than 50% of retailers still use a manual system to track and manage returns. Without physical and operational capacity, the majority of these products are liquidated, returned back to the manufacturer, or simply discarded. Furthermore, it is not uncommon for a manufacturer to instruct retailers to dispose of a returned product on-site for cost or brand protection reasons.

The best way to maximise the value of goods in the reverse supply chain is to route each product to its optimal

Sustainable reverse logistics in the retail supply chain

reverse logistics

The global retail industry faces a large and growing challenge in managing the billions of products consumers return every year, resulting in financial losses as well as environmental impacts, including billions of tonnes of waste and millions of tonnes of carbon emissions.

Acknowledgement to Optoro

channel based on its condition, value and costs. Often, that best disposition is reselling individual units to a secondary market consumer through an online marketplace.

On average, this direct-to-consumer sale of returned and excess inventory provides higher financial return than wholesale liquidation, which involves selling items in bulk at heavily discounted prices. Other dispositions, such as donations and recycling can also add value and reduce waste. Despite the volume and potential value of products in the reverse supply chain, most retailers lack the core capacity to test and remarket excess and returned inventory and take advantage of multichannel dispositions that are available. If returned goods require repair, the cost escalates and becomes uneconomical.

LiquidationWidespread reliance on liquidation is a significant source of carbon and waste in the supply chain. Liquidators sell goods to middlemen, such as wholesalers and resellers, who transport goods, often hundreds of kilometres, often in less-than-full truckloads, before they are finally resold to a consumer on a secondary market or thrown away due to transportation damage. Heavy trucks are responsible for a high percentage of transportation-related carbon emissions globally, and each of these heavy truck trips in the reverse supply chain needlessly uses fuel and emits carbon into the atmosphere.

Using technologyToday, technology can be utilised to increase efficiency and decrease impact. As an alternative to the traditional process, retailers can opt to use an advanced returns management system (RMS) that provides the tools and analytics needed to sell returned and excess inventory directly to consumers.

This software is installed on-site at one or several centralised facilities – return centre, distribution centre or 3PL. Once a returned or excess product arrives at the centralised facility from a retail storefront or online customer, it is scanned into the software system. First, the software categorises goods by their condition, ranging from ‘New Sealed’ (for overstock products or products that were returned without being opened) to ‘Used in Good Condition’ (for products that were opened, used and returned). Next, data and real-time secondary market information is used to instantly match and market each product to its optimal disposition – be that direct to


consumer, business to business, recycling, return to vendor, or donation.

Measuring environmental benefitsTo demonstrate the environmental benefits that retailers can achieve using smarter returns management, an environmental model has been developed that quantifies the fuel savings and waste reduction for any retailer’s reverse logistics network.

The goal of the model is to compare the environmental impact of the traditional reverse logistics process (Baseline Scenario) to an intelligent reverse logistics process (Results Scenario). The environmental model compares results using standard methods for supply chain analysis and carbon emissions, based on the best data and assumptions available.

Using this model, it is now possible to evaluate the impact of reverse logistics programmes and track progress toward increased efficiency. The model demonstrates that advanced returns management systems can lead to a 60% reduction in physical waste and an almost 30% reduction in carbon emissions.

Liquidator wholesaler wasteWaste occurs at nearly every node in the reverse supply chain; items are damaged in transit, and buyers and sellers dispose of inventory that is expired or not saleable. Data on the actual amount of inventory that is thrown away in the reverse supply chain is very limited; salvage dealers and retailers do not disclose this information. The estimates used in impact models are based on interviews

with supply chain and wholesale experts, discussions with major retailers, and responses from surveys of bulk buyers aimed at collecting information on waste in the supply chain. The estimates take into consideration the average price point of the unit, the type of good – electronics, household goods, hardlines, softlines – and the buyers and sellers involved at each given node. If additional data on the amount of inventory discarded in secondary markets becomes available, it can be incorporated into the model.

ConclusionThe status quo for managing returned and excess inventory in the retail space is a source of significant waste and inefficiency in the supply chain.

The traditional returns process creates a great amount of waste each year; given the increasing volume of returned and excess goods, and that number is sure to grow steadily in years to come. With new technology now available, retailers have an opportunity to update processes and systems for managing reverse logistics and to reduce these environmental impacts.

Sustainability professionals working in the retail and manufacturing space are encouraged to engage with warehouse and reverse logistics professionals to begin examining downstream impact of returned and excess inventory. Greater financial recovery, less waste and lower emissions are all potential benefits of better technology and efficient processes. An holistic system to manage this inventory is a critical part of supply chain sustainability. •


IT’s obvIous To Logistics News readers – all businesses exist in industry ecosystems with many interdependent players, they are all a supply chain. Readers of Business Section books from CNA or Exclusive Books know that, while money matters, shareholder wealth is the driver. Really?

Two recent experiences alerted me to how foolish we can be – well, me anyway.

Third Party should mean service

3PL service

Implementing new software, implemented hundreds of times before into a logistics operation where warehouse management and transport operations start – learning was painful. Sales orders, 10 to 200 lines captured on the phone to a customer. Order capture screens must be designed for speed – a fact found out too late. Result – orders sent late to the warehouse for picking, causing logistics constraints and missed deliveries. You can’t send beer late to a party. Rapid change to screen processing solved the problem, but it wasn’t anticipated because we thought we understood the customer’s business. Well, did we?

Back order handling is actually easy. In retail when an article isn’t available, offer an alternative or let the customer add to his/her next order. But, this isn’t butter or steak, it’s rare French Cognac or limited Champagne, not an everyday request. Staff must adopt new processes never used before – software creates discipline but is seen as inflexibility to operators used to ‘making a plan’.

Service expectation like trust is earned. Customers servicing customers for 20 years twice daily, with last minute changes. Don’t apply standard SCOR metrics and expect good results. Make sure before the technology planning you’ve listened actively to the customer’s hurt, and watch carefully what the process really is, not what you think it should be. Then, with innovations you can add, debate with the customer. It may be just another day to you but to your customer it is open heart surgery to his business, his baby and what he knows and feels. It’s big change.

Second encounterMy second reckoning was with a 3PL home and office removals specialist. The holiday house is sold but some furniture and boxes must move home, more than a car and trailer load. We need the removal company. Great quoting/ordering process – yes, we need boxes – what type? – what do you have? – okay, these plus those – and a truck?

All okay and the customer, me, makes the other plans – fly family to the coast, arrange services. Drive the car and trailer 1 200 km and we are ready to go with three days of packing. But where are the boxes? “Oh, they are still in Cape Town”. Yes, we knew that but a new commitment was made? Still no boxes. Life teaches plenty but it only sticks when it touches your emotions. No pain, no gain. My advice to third parties in logistics: listen don’t tell; empathise, don’t criticise; help customers understand or discover innovation; don’t judge, persuade. Learn their priorities not yours. •

We believe we understand everyone else’s business since our business has more complexities than others. But do we? What if a third party provider thinks the same – what

opportunities might they miss?

By Doug Hunter, [email protected]

First encounterIt started with a wholesaler of ‘fine wines and spirits’ that supplies functions, bars, restaurants, plus retail outlets of its own.

In a supply chain, I matter only if I do my bit effectively and collaboratively with the players I touch – suppliers and customers. But my service must match downstream organisations too. My customer matters but real supply chain thinking means helping my customer’s customers – in this case the executive function where booze must arrive early for beer and wine to cool before guests arrive. Despite being ordered by phone giving a three-to-six hour door-to-door lead-time.


as wITh any insourcing vs outsourcing debate, there are a number of pros and cons on both sides when it comes to SCM training.

Those supporting insourcing point to the variable standards of outsourced training, the financial instability of some private providers and the difficulties in assessing what is on offer. They argue that, by using their own subject matter experts, they can build training interventions that are not only targeted on the competency needs of their particular organisations, but that these interventions can be tailored to their unique organisational culture. Their most compelling arguments are that only insourced training is flexible enough to meet their company’s changing needs (very important for the uncertain environment in which we operate) and that it is only such training that can be used to transfer those skills to give the company its competitive edge.

On the side of outsourcing, proponents suggest the formal qualifications offered by outsourced training institutions are essential to both employees and organisations as objective benchmarks of competency. The economies of scale achievable through outsourcing are very persuasive and added to this is the question of the core business of the company: are we in the business of providing supply chain solutions or training?

The merits of each argument are what give training managers sleepless nights: it is suggested the dilemma can be resolved by looking at it from a different starting point.

Strategy is keyThe primary driver of the organisation’s training strategy is the overall strategy of the business. A thorough assessment of the business performance needs and desired bottom line outcomes leads to the identification of the competency requirements for each division within the organisation.

Many of these competencies are generic to the organisations that occupy each space in the supply chain, for example logistics and transport, procurement and supply, manufacturing operations, warehousing

The prickly SCM training dilemmatraining

and distribution. Included here is a strong requirement for compliance with local and international legislative measures, industry standards and local regulations, often bringing with it the need for formal, externally accredited courses.

It may be argued that the common nature of these technical competencies should indicate that training towards them should be outsourced. There is, however, a powerful counterargument that says it is excellence in these basics that gives companies their competitive edge and that there is therefore a strong case for insourcing the ‘company unique’ aspects of this training.

It is also true that organisations need to raise the bar in terms of rigour, evidence, and more structured and scientific approaches to identifying, assessing and developing leaders, a process that needs to start earlier in potential leaders’ careers. Leadership training may have its foundation in generic courses but it is the bringing of those competencies to bear in strengthening

the culture of the company and achieving active participation of employees in the values of the organisation. And that can only be honed within the organisation itself.

An exciting trendA pillar of successful SCM is collaboration – this principle applies as much to education and training.

There is an exciting trend developing: to address the problem of the unemployability

of institutionally trained graduates and to enhance the marketability of their offerings, public and private learning institutions are collaborating with businesses to an increasing degree in both the design and sharing of responsibility for the delivery of programmes that blend theory with practical, work-based experience.

When combined with accurate assessment of each individual’s skills gaps, this integrated model offers an end-to-end designed learning experience.

However, companies still face tremendous challenges in realising this vision. •

Are you interested in pursuing this topic? Join this discussion on www.charlesrdey.blogspot.com.

Something that keeps training managers in supply chain management (SCM) from sleeping at night is to know when to carry out training in-house and when it is

best left to others. This article aims to pacify the sleepless training managers and provide more restful nights.

By Charles Dey, www.charlesdey.blogspot.com

Leadership training may have its foundation in generic

courses but it is the bringing of those competencies to bear in strengthening the culture of the company and achieving active

participation of employees in the values of the organisation that can only be honed within the

organisation itself.


I’d lIke To elaboraTe on three findings from the paper that parallel our own experiences with implementing transport management systems.

The first finding was that many of the bids for 3PL work contained ‘bad, unrealistic data’. While the paper fails to define what exactly was ‘bad’ about it, I can hazard a guess. Unfortunately, many companies approach data as a thing to silo and store, rather than sift and cultivate.

The result is a kitchen-sink approach that presents, at best, an inaccurate assessment of your needs and, at worst, a dream from which you’ll be rudely awakened when the alarm goes off.

One of our consultants, extremely familiar with the process of sourcing, obtaining and analysing data and information from clients, has occasionally equated data maintenance with cooking and food preparation. Data should be flavourful, healthy and fresh.

“Good data,” he explains, “is flavoured with context.” For example, knowing that when a driver has two load sheets it represents two trailers rather than two trips, which can have huge ramifications down the line. ‘Healthy’ data is actually useful, rather than simply appearing so – the difference between knowing a client has an address and knowing that address consists of a single line reading, ‘Next to the big tree’. That data is ‘fresh’ and represents up-to-date rather than historical operations.

And it matters, because another finding from the paper is that 3PLs bidding ‘win’ rate is, on average, 20% – in other words, 3PLs will often pass on opportunities unless it’s clear that they have a higher degree of success. Good data can not only improve the number, but the quality of the submissions from 3PLs.

This leads into the second point, which is determining the criteria for evaluating 3PLs. I’m happy to note that, across 13 different categories, utilising a transport management system can assist 3PLs and companies in up to four of those, directly tied to operational costs (effective domestic transport operations),

Points learnt from 3PL selectionThe Global Supply

Chain Institute recently released a white paper entitled ‘Selecting and Managing Third-Party

Logistics (3PL) Providers’. It’s a worthwhile read

for anyone considering partnering with a

3PL provider – and I encourage you to do so.

By Rick de Klerk

innovation, strategic expertise and utilising the latest information technology. But the important point is that the criteria are clearly defined at the start of the selection process.

This selection criterion – which needs to be transparent to all those involved – helps both companies and 3PLs to know whether they’re on good fit for the project. More importantly, it serves as the start of setting up a base for what the paper identifies as another key factor of 3PL management, which is performance measurement and management.

Now, I do not know what the average statistic is around setting up performance management and measurement between businesses and 3PL partners, but I’m familiar with projects where the focus on implementation and completion overrides the project’s original purpose. In the drive to get the project done and rolled out, success is tied to the go-live, and a year on from that launch the business can’t objectively say if it’s in a better position than it was to begin with.

Proof of DeliveryDefining key performance indicators, sources of data and service level agreements will not only aid in implementing effective SLAs but also in measuring whether the project is a success. And because you’ll need to corroboratively determine what these performance criteria are, you’ll be working out how each other operates at ground level – for example, what the 3PL considers ‘proof of delivery’, or how they measure on-time deliveries.

There are various ancillary benefits – more efficient internal processes, marketing and public relations, defining unique qualities of excellence, a means for assessing yourself against your competitors.

But what I really liked about the paper is that, while focused on 3PLs, its advice is applicable to a host of projects and business partnerships … for example, implementation of a transport management system. •

To add comment, email [email protected]

3PL partnerships

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bookmark

The InvITed contributors now number 29 of which a number of the previous names again participated. However, some of the new names of note include Dorothea Carvalho of the Chartered Institute of Logistics and Transport; Dr Graham Heaslip of the business school at NUI Maynooth; and Dr Robert de Souza of The Logistics Institute in Singapore.

Tatham and Christopher introduce the new book with a recognition of what has changed since the publication of the first edition. They admit that in some ways there have been definite advances but in others more needs to be achieved. There is an increased understanding of the nature of the humanitarian logistics challenge as well as some welcome standardised processes to deliver improved inter-agency co-operation and more effective and efficient response.

On the other hand, although the annual number of complex emergencies has remained similar, the impact seems to be growing due to population increases, rising levels of urbanisation and the effects of climate change. The authors are also of the opinion that the advent of new players such as community groups and ad hoc NGOs is adding another level of complexity to logistics preparation and response, whilst the rise of new communications technology such as social media, is exacerbating rather than decreasing co-ordination challenges.

The first chapter has been rewritten by Larson and he covers the important concepts of quality and accountability in humanitarian logistics. He explains the need for standards and elaborates on Sphere standards as well as the Humanitarian Accountability Partnership (HAP) standards. The

title: Humanitarian Logisticssubtitle: Meeting the Challenge of Preparing for and Responding to Disasterseditors:Peter Tatham and Martin Christopher endorsement: The Chartered Institute of Logistics and Transportpublisher: Kogan Pageedition: 2014isbn: 978-0-7494-7087-6pages: 293-page softcoverprice/available:US$60.24 at www.amazon.comreviewed by: Gerard de [email protected]

Humanitarian logistics – responding to disasters

Two years ago I reviewed the first edition of this text book in Logistics News (April 2014) and it gives me great pleasure to review the second edition as well. The authors invited a few

new contributors. The contents remains 14 chapters of which nine were edited from the first edition and another five new chapters were included.

former includes people-centred humanitarian response; co-ordination and collaboration; assessment; design and response; performance, transparency and learning; and aid worker performance while the latter covers the most comprehensive and ambitious certification scheme.

The second chapter covers funding systems and is virtually the same as in the first edition, with the third chapter again looking at information technology in humanitarian logistics. Martijn Blansjaar and his colleague, Dr Fraser Stephens of Oxfam, share more detail on the Helios software system and very specific lessons learnt in the project.

The fourth chapter is new and Tatham and Spens provides some advice on how to crack the logistics co-ordination challenge, based on work done by the International Search and Rescue Advisory Group as well as the Foreign Medical Teams. They conclude that there is a clear measure of agreement over potential benefits of the adoption of a set of guidelines and certification processes that would improve inter-agency co-ordination. Unfortunately there seems to be determination within the NGOs to maintain their independence and hence little chance of success in better co-ordination.

The fifth chapter on humanitarian logistics and the cluster approach is the same as previously while Chapter 6 is a new addition on the increasing importance of services in humanitarian logistics. Dr Heaslip is of the opinion that the humanitarian relief community should embrace new strategies, techniques and technologies for improving productivity and quality in service operations. It starts well before disaster strikes and continues


through the crisis and response. The next chapter on the 2004 Thailand tsunami is also largely the same as previously although a section is added on the April 2012 tsunami warning and lessons learned.

Prof Buatsi joined forces with Prof Mbohwa with a revised version of Chapter 8 on an African perspective on the journey to humanitarian supply network management, while a new chapter is added on experience of international humanitarian organisations in Southeast Asia on emergency preparedness. Chapter 10 covers humanitarian logistics professionalism as in the previous edition although it is revised and Dorothea Carvalho added as author. They conclude that humanitarian logistics fits the definition of a profession well but for cognitive growth and recognition, it should be underpinned by a suitable body of knowledge.

Chapter 11 is a new contribution on the way forward for humanitarian logistics as it seems to be a duplication of the last chapter on the future of humanitarian logistics. However, the content is different and adds some additional value. The next two chapters are the same as in the first edition and address the co-operation between humanitarian and military logistics. As previously stated, there seems to be general agreement to co-operate with military forces but it is important to keep the political agenda separate from emergency relief. There are grey areas and not all humanitarian aid agencies are comfortable with working with the military as unfortunately the military could be seen as part of the problem in war zones.

The final chapter again concludes the book with a discussion on developments in humanitarian logistics and in addition to answering the question on ‘where next’, also discusses ‘what else has happened’ and ‘what else is expected to happen’.

As with the first addition, the topics cover most of the important issues in humanitarian logistics and provide a good overview on strategic level without going into detail. It is clear that the discipline of humanitarian logistics and the theatre of operations are not static or rigid, but constantly moving. Similar to the challenge of agility in emergency response, the body of knowledge requires the competency of being agile in responding to new technology, the reality of social media, the increasing complexity of displacement of internally as well as internationally displaced persons, and the threat of global warming and related implications of drought and other climate extremes.

One suggestion I made when reviewing the first edition, and which is relevant again, is that attention could be given to the different types of humanitarian supply chains that have been very well researched by Martin Christopher and John Gattorna, such as the fully flexible supply chain, agile supply chain, lean supply chain and continuous replenishment supply chain. Finally, much less important but it would be useful to have a glossary for the numerous acronyms used in the book. I enjoyed the book and look forward to future editions of this very interesting and relevant addition to the humanitarian logistics library. •DDL LN 130 x 210 + Bleed 2/9/16 12:16 PM Page 1

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The scIence of moving products globally is ever-evolving and increasing in speed, fueled by customers’ growing expectations. Companies face increased competition and new challenges for serving customers. In this environment, there is a greater need for innovation and ideas to create dynamic supply chains that can adapt to change and put the right strategies in place to provide a competitive advantage.

While every enterprise has unique needs and different internal staff strengths in logistics management, there are several common factors that can lead companies to consider outsourcing.Desire for more hard and soft cost savings. For most companies, saving is more than advantageous – it is a competitive necessity. The overall impact of transportation costs on most organisations has historically been considered a sunk cost. But today in some companies, the supply chain conversation has moved from the back room to the boardroom, and more CEOs and CFOs now target these costs for savings.More companies are realising that long term, it is unsustainable to continuously drive out only hard savings from a supply chain. Once hard savings have been removed, the focus can shift to soft savings and cost avoidance that occur through process improvement, visibility, and analysis.Logistics is core to brand reputation, but there is insufficient technology and/or resources to gain a competitive advantage. Cargo owners may choose to outsource logistics management or execution of tactical, day-to-day execution, allowing the company’s staff to pursue more strategic and value-centric assignments. Outsourcing can add specific capabilities to complement

Is logistics outsourcing right for your company?

feature

the company’s own expertise, particularly if the outsource provider has a deep client roster and a wealth of best practices at its disposal, and if they have faced and solved many of the transportation challenges that confront cargo owners.Need for an agile, scalable supply chain solution that can accommodate rapid growth through merger or acquisition, new products, or new markets. As distribution networks change or existing networks merge into one, imbalances and inefficiencies can result. The race begins to find synergies, efficiencies and savings. Companies may need to outsource the analysis – and execution – of these opportunities to a provider with an extensive, worldwide network of capacity and global

Today, organisations face tremendous pressures. Controlling costs and improving efficiencies remain high priorities. Yet, factors such as globalisation and gaps in supply chain talent

make it increasingly challenging to achieve goals and remain competitive.

Acknowledgement to CH Robinson


technology. Outsourcing to a provider can quickly enable disparate organisations to come together under a unified infrastructure.Adding headcount isn’t an option, or finding the right talent is proving challenging. Many companies pared back drastically on logistics staff in lean times and no longer have people with the right skill-sets to manage the supply chain. Other companies have returned to hiring, only to find that there are very few candidates available who can tackle the challenges of global supply chain management. For these reasons, some companies decide to outsource, rather than hire their own employees. In-house staff can collaborate with and learn from the provider’s experience and deep knowledge of industry best practices to help drive innovation, productivity and savings.Need best-in-class technology, but can’t afford a significant capital outlay. TMS technology is required for a highly efficient supply chain. Companies can purchase such systems, but they are expensive to buy, implement and maintain. Some outsourcing providers can add the latest global transportation technology to help the company obtain fast deployment and visibility worldwide, across all forms of transportation. Companies can outsource to obtain highly trained experts, who know how to derive the greatest value from the TMS and can configure it to fit the organisation’s needs.

Misperceptions about the realities of outsourcingCompanies may decide whether to outsource based on factors that may not reflect market realities. If outsourcing is undertaken for the wrong reasons, dissatisfaction with the overall outsourcing engagement can result. Such an outcome can be mitigated by examining some ideas that have taken hold concerning logistics outsourcing:Offload problems and issues associated with managing logistics operations by outsourcing. The company and its staff know the business, the customers, and what they want to achieve. While providers should be strong enough to solve many of the logistics challenges that confront the company, they will need the organisation’s guidance to understand and configure an outsourcing solution that aligns with the company’s supply chain strategy.Costs will increase if we outsource logistics. Companies should understand the true cost of staffing and maintaining their supply chain operation. These costs can be weighed against the benefits that can be achieved with outsourcing.Overall service levels will fall and customer complaints will increase if we outsource. Organisations that collaborate with the outsourcing provider benefit from the wealth of best practices that the provider brings from other outsourcing engagements. The provider’s processes and technology may actually do a better job of serving the company’s customers.We will lose control. The outsourcing model that is selected determines how much control the company has. A well-structured logistics outsourcing agreement can actually offer increased control.

How to decide between subtractive or additive outsourcingSubtractive outsourcing removes tactical functions from the organisation and transplants them to a third party. This approach is typically undertaken when the goal is simply to achieve cost savings. Historically, companies that choose this approach see finite benefits.

The savings plans often hinge on applying continued downward pressure on carrier costs – a practice that is unsustainable over the long term. Subtractive outsourcing presents potential risks to the company’s quality, customer experience, data security and reputation management after handing over supply chain functions to the third party.

Additive outsourcing creates a comprehensive solution and a greater alignment between the provider and the company. Additive outsourcing brings talent, processes, capacity and technology into the company for a highly configurable solution focused on achieving specific business outcomes.The benefits of the additive approach include:• Bringing into the company people with logistics

expertise and deep knowledge of how to improve supply chains. An outsourcing expert can collaborate with in-house staff, observing, asking hard questions and presenting proactive solutions and new ideas that can lead to supply chain improvements. These experts also provide strong logistics execution capabilities and compliance expertise.

• Adding standardised and improved processes. All process improvements are supported by the TMS’ automation capabilities. An additive outsource provider will help the company explore efficiency improvements and implement best practices from thousands of company engagements worldwide. As companies add greater consistency in operations across the globe, they can leverage purchasing, integrate supply chain partners and leverage spending for higher productivity at a lower cost.

• Delivering best-in-class supply chain technology. Technology can connect the company’s disparate operations and enable the company to exchange accurate data about worldwide operations, often for the first time. Global visibility can enable real time tracking and tracing of all shipments, whether they go by truck, train, ocean vessel or air freight, anywhere in the world. As business is conducted day to day, the provider’s TMS gathers relevant supply chain data, providing business reporting that measures what is most important to the organisation.

ConclusionAs competition heats up, more companies are likely to engage in collaborative relationships with proven supply chain outsourcing providers. Such providers can add expertise and visibility and act as an extension of the company’s logistics team. In this way, companies can reach higher levels of logistics capability and leverage the provider’s scale in ways that can lead to a competitive advantage. •


The modern supply chaIn is an increasingly complex and volatile network that often stretches across continents and supports numerous market segments. With this complexity, the impacts of change are harder to determine and the risks involved with being unprepared increase. Changes in demand, shifts in commodity prices, supply disruptions, variability in transportation availability, natural disasters, geopolitical change and regulatory issues all impact the flow of goods to market. Top supply chain officers across the industry agree their biggest barriers to effective inventory management are• ‘Difficult to optimise network holistically’. Often

inventory placement and policies are the last detail of the supply chain to be addressed. Rather than analysing the impact across the supply chain, companies are making decisions in a vacuum.

• ‘Demand volatility’. Product demand has become more volatile and hard to predict over time. How does one predict how much inventory to build when the demand cannot be predicted?

Similarly, executives identify operational complexity and demand volatility as major risk factors over the next five years. Without a way to digitally model supply chain operations and inventory policies, companies would need to experiment in the real world, which is time-consuming and extremely costly. Supply chain

Inventory modeling develops holistic strategy

Most companies are trying to achieve two things with an inventory strategy: service improvement and reduction in on-hand inventory/working capital. It’s often difficult and sometimes impossible to do both simultaneously. To overcome today’s biggest

inventory challenges are new approaches to achieve holistic inventory optimisation for ‘right-sized’ inventory levels.

Acknowledgement to LLamasoft

design enables companies to create living models of the end-to-end supply chain, encompassing physical infrastructure, policies, demand and inventory. These models provide a true holistic view of all the interdependencies and trade-offs with each supply chain question and enables true data-backed decision support instead of risky and often costly real-world testing.

Considerations for inventory strategy developmentMost people automatically think about safety stock when talking about inventory optimisation as a way to address demand and supply variability and uncertainty. However, that isn’t the whole story. There are many other aspects of stock that need to be considered in addition to safety stock.• For most companies cycle stock is a large missed

opportunity. So many overall supply chain design decisions affect cycle stock levels and accounts for lot/batch/load sizes, minimum order quantities, and production/replenishment frequencies and lead times. By not considering impacts on cycle stock, many companies are overlooking potential money saving adjustments.

• Prebuild inventory is to account for insufficient capacity to support seasonal demand spikes. Inventory needs to be prebuilt because the decision has already been made to not have the production

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capacity to cover all demand during seasonal demand spikes.

• Promotional inventory to account for created spikes in demand, driven by marketing and/or customers.

All of these stock considerations are interdependent and are directly related to supply chain network design decisions that often have already been made. It is essential to have tools that enable a company to not only look at these decisions from an inventory perspective but analyse how changes in inventory affect the entire supply chain network and performance.

Understanding demand patterns/variabilityHow well are the demand patterns understood? Has time been taken to look at and analyse demand and what signals are being sent into the supply chain? Is demand understood in conjunction with stocking locations where the inventory should be held? Many classic techniques for how safety stock will be determined assume a normal distribution of demand and supply. This makes for some very simple and easy math, but the truth is that most of demand is not normal. Most demand has high levels of variability and is not consistent from period to period. If decisions for inventory are driven on the classic method, inventory will be either overstocked or understocked depending on actual demand.

When making inventory decisions based on demand, focusing on just one individual customer will give a false reading on what correct aggregate demand actually is. If there are many customers that have erratic demand, considering the aggregate customer demand up to the distribution level will create smooth demand that is easier to analyse. A company can use this information to work with manufacturing to better understand how changes in production will affect inventory and service levels at each distribution centre.

Building an inventory strategy: where to beginUnfortunately, many companies begin looking at their inventory strategy development with a technology already in mind. Technologies are wonderful and have the ability to make a huge impact, but well before technology can be part of the equation one needs to understand what business problem(s) need to be solved. Understanding demand and the root cause of inventory issues should be next, then technology assessment and finally model development and scenario analysis. Creating inventory strategy needs to be thought of as a repeatable process and considered a best practice. Supply chains are dynamic. With constant changes, analysing inventory processes only every three to five years could be a huge competitive disadvantage and may mean a large waste of funds every year.

Choosing technology partners to support inventory strategy• Demand classification is of utmost importance.

Correct inventory decisions cannot be made without

first understanding demand. Using a tool that can help track and predict demand is essential.

• A tool that optimises inventory across all tiers of the supply chain or end-to-end optimisation is critical for success.

• For time-phased seasonality considerations, a tool to help make decisions on when to prebuild inventory, where to hold inventory, and whether building more capacity instead of prebuilding is necessary.

• What are the management techniques to manage current inventory, and make decisions on inventory in the future?

• Service level optimisation and stratification to help decide what the best levels of service are for all current product SKUs.

• Simulation will help to take the results of these optimisation solutions and model what these changes will do to the supply chain.

Benefit of testing optimisation results with simulationInstead of being wary of the optimal levels of inventory proposed by supply chain technologies, simulation helps support the validation of operational feasibility of inventory strategy in a locked down environment instead of having to test the strategy in real world situations. Simulation also provides detailed visibility of supply chain performance on a detailed daily/weekly/monthly view.

Putting it all togetherA good supply chain modeling platform enables companies to model their supply chain operations then run inventory policy experiments and optimisation scenarios to find actionable solutions.• Demand segmentation: Identify SKU-level demand

behaviours at each echelon of the supply chain, then categorise them based on their unique attributes.

• Inventory policy prescription: Prescribes the appropriate inventory policy for each demand category to help yield optimal service levels at the lowest total cost.

• Multi-echelon inventory optimisation: Identify the best possible inventory stocking levels for each product-site combination throughout the supply chain

• Simulation: Simulate each individual order, distribution, and replenishment action to track the overall performance of the supply chain under real-world conditions

This rigorous approach to inventory modeling that spans demand segmentation to inventory policy prescription to multiechelon inventory optimisation to simulation provides:• The most accurate and robust inventory strategy.• A strategy that can be feasibly deployed in the real

world.• The best balance between service and cost (working

capital). •


Moving goods reliably and quickly from the point of production to the point of purchase is what makes large scale retailing, manufacturing and even some types of farming possible. The supply chain becomes all the more critical when the freight is perishable or delicate, or

requires other forms of special handling – especially controlled temperature.

Acknowledgement to NFI

Evolving the cold chain: best practices and innovations

IT has been esTImaTed that significantly more than 10% of all fruit and vegetable waste that occurs annually happens during the distribution process. To be effective, a cold chain must be comprehensive, taking goods from the manufacturer or processor through to the final point of purchase. Temperature of the freight must be controlled at all times and should be kept within the range established by the cargo owner. Remote monitoring and adjustment capabilities are instrumental in maintaining continuous control of temperature.

It is advantageous to utilise a provider that can offer all of these cold chain elements or one that will co-ordinate all of the logistics and vendors and take responsibility for the freight throughout the entire transit process. This practice will shorten time in transit and create efficiencies that will move product reliably and within the necessary time frame for maximum shelf life.

Depending upon the product’s shelf life and the needs of individual cargo owners and retailers, the cold chain may include:Import / ExportIn addition to transportation, this includes management of any regulatory processes necessary to move goods across international borders. Handling, importing and exporting expertly can greatly reduce the time that goods are in transit, potentially saving some spoilage and reducing labour and fuel costs.Ocean and/or air transportationOcean and/or air transport modes are integral to the cold chain’s ability to move goods from offshore. It is critical to ensure temperature control while goods are moved between continents by setting standards for loading at the point of origination, cutting local travel times, maintaining standards at the unloading destination point, and maintaining visibility to each container throughout the trip.WarehousingSome refrigerated goods may be stored or cross-docked in warehouses or distribution centres along the cold chain. Cargo owners should identify warehouses that have adequate refrigeration, pallet spaces and, especially, cooler docks so that the cold chain is never compromised.Ground and intermodal transportationTrucking and rail transportation are essential to the cold chain. For decades, only dry goods could be transported using intermodal hauling that combines drayage – trucking

over short distances – and final mile trucking with railways to cut the cost and carbon footprint of long-haul transportation. Technology was then introduced to bring refrigerated containers into the intermodal system, creating significant new opportunities in several industries.

Evolution of the cold chainUntil 2008 the cold chain was limited in reliability and capabilities. Large industries, such as produce and frozen foods, were not able to take advantage of the many economic and environmental benefits available to dry goods businesses. However, technological advances, investment in infrastructure and improved management practices have combined to greatly upgrade the cold chain.

Today, the process of importing, exporting, warehousing, distributing and transporting frozen and refrigerated goods is much more cost-effective and efficient, and this efficiency can provide bottom-line savings, as well as being instrumental in opening new geographic opportunities for doing business.

The benefits of this shift have been felt throughout the global economy and the environment. Produce and frozen food companies are able to realise substantial cost-per-kilometre savings from reduced labour costs, reduced fuel consumption and increased transportation capacity, even as they are able to bring their goods to market sooner and keep them on shelves longer.

Advances in transportation have been matched by similarly impactful developments in refrigerated warehousing, which have improved the cold chain through engineering a mix of refrigeration levels. By introducing cooler cross-docks, goods can be unloaded from an inbound trailer or container, and immediately packed for final mile delivery in an environment that is completely temperature controlled. This keeps the cold chain intact.

Innovation and best practicesSome supply chain companies have invested heavily to maximise the advantages of an upgraded cold chain. Freight and railway companies have introduced new kinds of equipment to make the transition from trailer to rail wagon quicker and safer, and have taken steps to further increase capacity. Some have also developed new processes, policies and technologies to ensure the safety and freshness of goods.

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Performance and efficiency within the supply chain are of paramount importance. Businesses that utilise cold chains should ensure their providers offer these innovations:Telematics: Telematics is the ability to remotely monitor, operate or adjust each individual container while it is on a truck, rail wagon or even a ship. Some containers in use send real-time information about location and conditions via satellite as frequently as every 15 minutes while in transit. This level of real-time information ensures that proper temperatures are maintained at all times. Some systems are so advanced that adjustments to individual containers’ temperature or fuel usage can be made from any computer or mobile device. This is also useful in tracking the course of a trip and preparing for a shipment to arrive at a specific time.Refrigerated warehouse technology - Multi-temperature warehouses are preferable because they can store both frozen and refrigerated products in the same facility. Food grade refrigerated storage space is sanitary, free from chemicals, and should be constantly monitored.Cooler cross-dock - This is a temperature-controlled area of a warehouse where inbound trucks and containers can be unloaded and the goods reloaded for final mile deliveries, which keeps the cold chain intact even when containers are opened and goods are moving from one mode of transportation to another.Control ambient temperature - Conditions outside a container influence conditions inside it. A flexible cold chain can adjust for conditions to generate fuel savings, which benefits the environment and the bottom line.Insulation - Seek containers that are well insulated. Go beyond the industry standard. This will allow for climate control with slower fuel burn while in transit.Drop & hook - Containers should be pre-loaded and ready to go when the driver arrives at the warehouse. This eliminates hours of down time each trip, and is a good example of the synergy to be found when multiple divisions of a single company work collaboratively toward the client’s goal. It’s another way of keeping the cold chain intact throughout.Live unload - This option ensures a refrigerated container is unloaded in real time as it arrives, and sending it to multiple locations. This is a flexible alternative to drop & hook and reduces labour and fuel costs by sending the same refrigerated container to multiple locations.Accuracy - Choose a vendor that can reliably state when long lead shipments will arrive. Accuracy is critical with

perishables, and more so when the product is arriving from offshore.Fully integrated transportation - The cold chain originates as close to the manufacturer (or grower or processor) as possible, which reduces local transportation time and cost.

Future plansOpportunity is apparent in further developing infrastructure, such as expanding available refrigerated warehouse space and the number of refrigerated containers, to service far greater numbers of produce and frozen food manufacturers. These items include paints, cosmetics, pharmaceuticals, and any other products that require controlled temperature at all times and/or protection from the elements.

The global economy is creating more and better choices and opportunities for businesses and consumers, and strengthening existing supply chains or developing new ones makes all of this possible. There are many advantages and savings to be had through efficient utilisation and management of the different elements of the cold chain. •


Ford Motor Company is hoping to speed up vehicle

production rates via a new wearable

device that pairs with a smartphone

application to decrease unnecessary

in-house travel time for employees.

Acknowledgement to CSCMP Supply Chain

SmartBrief

Wearable device reduces assembly errors

employees aT The vehicle manufacturer’s facility in Valencia, Spain, have received devices to be worn on the wrist that use Bluetooth technology to deliver quality inspection requirements for each product being assembled. The original pilot programme saw human errors reduced and has decreased production time, leading to the decision to launch to other plants.

The precision of bluetooth technology allows the app to recognise the item in front of it as well as the exact location of that item. The creation of an app to streamline quality checks is acknowledged as a great step towards building an excellent production line as well as reducing the staff load.

This new wearable device for factory workers not only streamlines the production process but also pairs to a smartphone app for management to check on progress. The devices have removed the need for employees to walk back and forth to a desktop computer to control the line.

SpecificationUsers can check specification and quality as well as start and stop the physical assembly line on the wrist-worn device. It has been estimated that workers in the Spain facility would have to walk an estimated one kilometre a day before the introduction of the device, a factor adding time to production that the wearable device has now eliminated.

The device is a touchscreen and allows employees to immediately follow up and approve vehicles on

the assembly line. The app is available exclusively on Android devices.

Moving forwardFord Motor Company recently rolled out a slew of new connected car features, including enabling car owners and non-owners to remotely start their vehicles and pay for parking via an application, as well as piloting a new mobile-driven leasing programme.

The company also piloted an on-demand ride-sharing service that uses smart ride-hailing technology and customised shuttles as part of a bigger initiative to develop innovative and disruptive ideas for diminishing traffic congestion and making public transit more convenient.

Modern day technologyThe creation of this app is a significant step on the path to fusing modern day technology with running a more efficient company and its manufacturing facilities to creating better products for customers. The move is part of a broader trend of large manufacturing houses to use mobile apps to create more visibility and better quality assurance in their production.

While building an app for a manufacturing company requires substantial investment, it is easy to scale once it is built and can therefore provide substantial returns for large manufacturers. Ford Motor Company is hoping to continue the innovational attitude the company was founded on, exemplified by the well-known history of Henry Ford’s assembly line invention. •

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faw vehIcle manufacTurers sa’s export business has registered more than 90 units built locally for export into Africa. A growing number of Africa truck dealers who traditionally placed their orders on FAW China continue to move their orders to originate out of SA owing to the shorter lead time for delivery, the high levels of quality from the SA plant, and the reduced cost of sourcing FAW vehicles on the same continent.

Cheng Zhang, marketing and strategy manager, and spokesperson for FAW SA, explains: “There are many advantages of sourcing FAW products from our SA base – the most important being time-to-market in the Africa countries, and of course for the SACD and AU, the added advantage that comes from the import/export duty agreements.”

From the cost point of view, the African buyer can save complete vehicle import duty from 25% to 40%. Another advantage importing through FAW locally is that customers can take delivery of their vehicles within 30 days of order; much sooner than from China, which normally requires three months between order placement and delivery. FAW’s

news

Competitive edge for Imperial clientsImperIal cold logIsTIcs’ clients are reaping the benefits of the company’s investment in a new, state-of-the-art cold storage warehouse. It is enabling improved service levels and turnaround times, as well as supporting clients’ growth strategies by meeting the demand for sought-after chilled, frozen and super frozen storage space. The new 25 500 m2 warehouse was developed at a cost of R160-million. The project was undertaken by Imperial company Resolve Capacity, and was an expansive and

FAW SA exports nearing 100 mark

challenging extension and retrofit of an existing ambient warehouse. Situated in Linbro Park, Johannesburg, it is now one of the largest cold storage facilities in Africa, housing 37 000 pallets, and operating 24/7.

The facility offers both bulk (long term) and secondary (short term) storage, effectively delivering a ‘one stop service’ to clients, thereby minimising their concerns and enabling them to optimise their service to customers to gain a competitive edge. The warehouse design boasts six high density storage areas, two standard racking chambers ranging from -20°C to -30°C and receiving and dispatch areas at either +2°C or -8°C. Excellent space utilisation and high pallet density has been achieved through the use of mobile and static racking systems. The optimisation of space is crucial due to the high cost of refrigeration storage, and the facility can achieve 2,2 pallets per m². A significant feature is the warehouse’s high tech security system, which includes full CCTV camera surveillance throughout the facility, monitored by dedicated personnel. The cutting edge facility has successfully completed the Food Safety Audit (FSA) – achieving a score in excess of 93%.

expansion into Africa continues to increase demand for FAW support in customer workshops and customer technical training. FAW SA continues to give Africa dealers full technical support where needed. “It is much more efficient than sending their technicians to China to be trained or to wait for FAW China to come to Africa to sort the technical problems,” adds Zhang.

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Indoor industrial application excellenceIf a company Is serIous about developing and maintaining accurate, up-to-the-minute warehouse management data, then serious consideration should be given to Cipherlab’s world-renowned 9700 series mobile computer, which performs with versatility and functionality, while maintaining industrial ruggedness. These mobile computers are distributed in SA by Kemtek Bar Coding Solutions.

Fully protected to IP65 standards, the 9700 series’ multiple reader options of laser, 2D imager, extended range laser and near/far 2D imager give users numerous data collection choices. The computer’s three keypad options deliver easy usage at all times. In particular, the 53 alphanumeric keys serve as an alternative for terminal emulation and, with 20 function keys, it can assist as an alternative for Terminal Emulation of VT220, TN3270 and TN5250 systems. Its compact ergonomic design offers great mobility and comfort for users and, paired with a pistol grip option, it ultimately minimises the burden on intense scanning demands with easier operation. The 9700 series also provides two battery options in 3 600 mAh and 5 400 mAh batteries, which allow extended operation time beyond a full shift period.

Instant and safe data transmission is made possible with CCXv4 certified IEEE 802.11 a/b/g/n. The 9700 mobile computer operates on the Windows platform and TI OMAP 1GHz CPU, enabling fast and easy application development.

Users can receive real-time quality data transmission with the Bluetooth communication Class II, V2.1, which is also fully compatibility with printers, accessories and peripherals. Furthermore, Push-to-Talk is a feature designed to provide better workflow and communication efficiency by supporting one-to-many features under WLAN conditions. Essential accessories such as software support also make operation simple with this handheld terminal.

April 2016 • Logistics News 2733504 Airlink_TPFC Cargo_TransportWorld-P.indd 1 2016/03/02 12:16 PM

from 31 may to 03 June CeMAT – the world’s leading fair for intralogistics and supply chain management – will open its doors to a trade audience from round the globe.

Jungheinrich, one of the world’s leading providers of material handling, warehousing and material flow equipment, will showcase numerous innovations and enhancements from the world of intralogistics at the Hanover based event.

For Jungheinrich, the CeMAT is traditionally the most popular exhibition, serving as a launching pad for new innovations. This year under the banner “Connecting Your Business”, the Hamburg–based company is presenting innovative technologies, leading edge products, efficient systems and flexible solutions for streamlining internal logistics to an international audience.

Jungheinrich highlights at CeMAT 2016 include:

• A new unmistakable, distinctive design• Jungheinrich easyPILOT control for significantly

improved order picking performance• The EKX Series 4 narrow-aisle stackers, featuring

new motor technology and vibration damping• The world’s shortest universal stacker – the EMD 115i,

featuring lithium-ion technology• Diesel and LPG powered stackers for handling up to

5 tonnes in extreme conditions

Jungheinrich ranks among the world’s leading companies in the material handling equipment, warehousing and material flow engineering sectors. The company is an intralogistics service and solution provider with manufacturing operations, which offers its customers a

Jungheinrich presents entire world of intralogisticsnews

comprehensive range of forklift trucks, logistics systems, services and advice.

Jungheinrich South Africa is a wholly owned subsidiary of Jungheinrich AG, Germany, and opened its doors in South Africa on 01 October 2015. The company has its head office at 55 Lake Road, Longmeadow Business Estate North, Edenvale, with branches in Durban, East London and Cape Town. The infrastructure in South Africa mirrors what Jungheinrich has in other countries, from product availability, premium after-sales service and administrative support.


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BidShip to become Uber of logisticsrIon hennIng, founder and managing director of BidShip, started his journey in the logistics industry some 13 years ago and has worked for some of the largest SA logistics companies in various roles. In 2009/10 he won the SA Freight Forwarder of the Year Award (Logistician) and later went on to represent SA in the international version of the award where he received the runner-up position.

Henning expanded on how BidShip operates: “The idea around BidShip started in April 2013. Having spent many years in the logistics industry, I realised that transport is very traditional and has not changed much in the past 20 years. I saw the opportunity to design a platform or marketplace that connects cargo owners and transporters. Essentially it’s offering an auction marketplace where transporters with excess loads or space available on their trucks could offer this up to customers that want goods transported. If one looks at how Uber has disrupted the taxi industry and how Airbnb has disrupted the accommodation and hotel industry, then it should be clear that there is a massive space between the traditional environment of suppliers and consumers. The other fundamental characteristic of these types of marketplaces is that they are not like traditional asset or capital intense business models.

“BidShip is a business-to-business (B2B) online transport marketplace that offers cargo owners and

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transporters a platform to acquire transportation services in the most efficient and cost effective way. The process is easy: transporters and cargo owners simply register on BidShip. The cargo owner lists shipment requirements that allow qualifying transporters, registered for the BidShip services, to bid on the consignment. This introduces a massive saving. The marketplace also offers ample opportunities for transporters with a small portfolio, which are sometimes overlooked, the opportunity to compete to transport these consignments.”

Acsa aims to avoid default with tariff hikes

news

a fInal fIve-year airport tariff is at last on the cards, which state-run Airports Company SA (Acsa) hopes will reduce the possibility of it defaulting on its R11-bn debt book. Since October, Acsa – which runs SA’s nine commercial airports, including OR Tambo International – has not changed the airport tariffs it charges airlines. A new tariff plan has now been submitted to the Department of Transport though details have not been made public.

Last year, Acsa said a hefty drop in tariffs (proposed by the airports regulator) would significantly decrease its cash collections, resulting in the company breaching loan covenants it had with lenders. A breach in one credit agreement would make its entire R11-bn debt book immediately payable, compelling Acsa to seek a bail-out or government guarantees to make its payments.

Fitch Ratings has indicated it would maintain its negative outlook on Acsa, citing “continued uncertainty on price regulation”. Fitch justified its decision on the airport regulating committee’s recommendation of a tariff decline of 42% for the year ended March 2016. The tariff proposal released by the regulator last year said the 42% decrease in tariffs would be followed by increases of 4,1% and 15,8% in the following two years, respectively. In the fourth year, it proposed a 15,9% increase, followed by 4% in year five.

“The regulating committee has not yet publicly issued a final decision. Fitch expects any changes to the pricing regime to be implemented only in the next financial year,” the ratings agency said.

Following comments from stakeholders, including Acsa and airlines, changes had been made to the initial draft tariffs released in May last year, chairman of the airport regulating committee Unathi Mntonintshi has said. But he would not say if the changes were in Acsa’s favour, saying the matter was ‘sub judice’ until the minister had signed off on the tariff proposal. He said the regulator and the Department of Transport had been engaging on the matter, with comments and letters passing between the two bodies.

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sTandard bank fleeT managemenT’s Transaction Authorisation system, which saved fleet managers more than R350-million in the past year alone, has been taken to the next level with the launch of its iPhone IOS app called Fleet Authorisations.

Fleet managers are now in control of the fleet card transactions of their entire fleet from their mobile phones, in real time. “One of the most urgent needs of a fleet manager is to know when someone is trying to commit fraud with one of the company’s fuel cards, and to be able to sort it out on the spot. Finding out tomorrow, or later today when you’re back at the office could simply be too late,” says Dr David Molapo, head of Standard Bank Fleet Management. “With our new Fleet Authorisations app, we have put this power into the pocket of the fleet manager – without adding to their administrative duties.”

The Fleet Authorisations iPhone app, which launches simultaneously with a mobi site to give the same power to fleet managers with Android phones, is the latest technological advancement in a system developed by

Fleet Authorisations app puts fleet managers back in charge

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Standard Bank Fleet Management that has drastically reduced fuel-card fraud in the fleets of its clients.

The system, which is available to fleet managers who use Standard Bank fleet cards, vets every card swipe automatically against 30 different criteria. For example, it checks: Has the card been reported lost? Has the card been cancelled? Is the driver trying to buy more fuel than the tank capacity of the vehicle? Is the driver trying to fill up too often?

If a transaction oversteps any of the 30 parameters set for a specific card, the transaction is automatically declined and the fleet manager notified. It is then up to the fleet manager to decide whether to override the automatic decline by authorising the transaction.

news

sTaTe-owned freIghT and logistics company Transnet says it is applying different models to test private-sector participation on branch lines. The company was speaking to various government departments to ‘enhance’ the strategy and models to be applied to branch lines, it said. Branch lines are secondary railway lines running from the main rail line. Finance Minister Pravin Gordhan said in his recent budget speech that Public Enterprises Minister Lynne Brown was in talks with Transnet leadership to accelerate private-sector participation in the parastatal’s ports and rail projects. Brown has ‘instructed’ all state-owned companies under her watch to urgently identify opportunities for public-private partnerships. In the case of Transnet, this included new ports, as well as branch lines. Transnet has long mooted the idea of bringing in the private sector to operate its branch lines under concessions.

Transnet explores options for branch lines

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TransneT engIneerIng is to embark on research and development aimed at the manufacture of commuter train rolling stock. Apparently, it has its eye on the second half of the programme drawn up by the Passenger Rail Agency of SA, for which the Gibela consortium is currently building 600 six-car trainsets. A further 600 are to be ordered when the first complement is finished.

Transnet Engineering is currently also building a diesel-powered locomotive suitable for use on branchlines and in shunting yards. According to chief executive Thamsanqa Jiyane, launch of the unit – to be known as the TransAfrica locomotive – is scheduled for June.

Meanwhile, Botswana Railways (BR) discontinued passenger service in 2008 when the rolling stock in use, in need of major overhaul, was sold to Mozambique. Recently new coaches were ordered from Transnet Engineering (TE) in Pretoria. According to president Ian Khama, these will enable the railway to complement existing road and air services, providing greater mobility, and thereby strengthening and stimulating the economy. Stations are to be upgraded at Gaborone and Lobatse. Services are to be branded ‘BR Express’, operating between Lobatse and Francistown. Altogether 22 new coaches were delivered to BR in March. A further 15 are due in May.

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Amazon launches air cargo servicenews

onlIne reTaIl TITan Amazon is starting up its own air cargo service, laying down a challenge to companies like Fedex and UPS, which deliver much of its goods.

Aircraft leasing firm Air Transport Services Group said Amazon’s Fulfillment Services unit will lease 20 Boeing 767 freighters, to be operated by ATSG, to serve Amazon customers in the United States. “A dedicated, fully customised air cargo network can be a strong supplement to existing transportation and distribution resources,” said ATSG chief executive Joe Hete. “We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.” Dave Clark, Amazon senior vice-president of worldwide operations and customer service, said the move was to “ensure air cargo capacity to support one and two-day delivery for customers.” It could boost Amazon’s standing with customers, especially during the heavy shopping of the end-of-the-year Christmas period.

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for afrIcan counTrIes to achieve their economic growth ambitions, it is crucial for them to come up with new innovations in areas like ports, terminals, related logistics and transport industries. Countries throughout the continent need an efficient transport and logistics environment to beneficiate and export its commodity assets.

In the area of smart ports in particular, there are opportunities to combine business process re-engineering with the introduction of smarter technology across the total facility: such as geolocation/geofencing, connected objects and devices, Cloud-based services, mobility services, and Big Data analytics.

With limited ability and the financial implications to expand geographically and political pressure to lessen their environmental impact, ports are continually striving to generate better efficiencies and higher productivity. They require technology that caters for the ‘just in time’ nature of land-to-sea logistics, helps reduce dwell time and congestion, minimises damage and theft and ensures strong security and protection of national borders.

Trusted outsourcing partners can demystify much of the complexity around new technology – working with ports to define the best solutions to address specific challenges, showing how technology has transformed other ports operations, and ultimately delivering and managing the services. For example, a port operator could pull together real-time information from various players in the ecosystem: truck drivers, hauliers, parking space operators, port road management and vessel tracking systems. By integrating this data into smart analytics platforms, it can inform the scheduling of trucks entering, off-loading, on-loading containers, and exiting the port.

With embedded sensors on vehicles and assets recording every movement in the port, patterns start to develop and the port’s operations can be automatically adjusted based on past experiences, and expected activity within the port.

Technology and smart ports fast track Africa

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souTh afrIca’s premIer bulk port commemorated its 40th anniversary in April, with further celebratory events planned for the remainder of the milestone year. The Port of Richards Bay was established in 1976 and – despite being one of the ‘newcomers’ to the industry – has expanded to include a variety of exports, earning it a reputation as one of the most successful of its kind within SA’s shores.

Chief executive of Transnet National Ports Authority, Richard Vallihu, said: “When one considers that this area was once seen as one lacking in potential as a harbour, the rise of the port and the town as a whole becomes that much more remarkable. The success of the Port of Richards Bay over these past 40 years demonstrates the capabilities of the country and our ports in providing a system of growth that is beneficial to the surrounding communities, promoting careers and business opportunities in the maritime industry.”

The Port of Richards Bay was created for the purpose of transporting locally-mined coal to international shores. Today it routinely handles a diverse mix of commodities inclusive of magnetite, chrome ore,

Port of Richards Bay celebrates 40 yearsnews

alumina, coking coal and ferro alloys – all this in addition to the port’s main line of export, coal.

Its existence has led to the creation of other industries within Richards Bay, providing thousands of direct and indirect job opportunities for the people of the city and in turn, transforming the small fishing village into an industrial hub, while supporting big businesses such as Richards Bay Coal Terminal, BHP Billiton, Richards Bay Minerals and Foskor.


Forthcoming EventsfleeT managemenTEvent: Fleet Management ConferenceDate: 4-5 MayVenue: Indaba Hotel Fourways, JohannesburgContact: Intelligence Transfer Centre, tel 011-326-2501

road freIghT assocIaTIonEvent: RFA Convention 2016Date: 22-24 MayVenue: Legend Golf and Safari Resort, LimpopoContact: Catherine Larkin, email [email protected]

sapIcs 2016Event: 38th annual conference and exhibitionDate: 12-14 JuneVenue: Sun Sky Village, Sun City, North-West ProvinceContact: Upavon tel 011-023-6701/2/3, email [email protected]; [email protected]

cape logIsTIcs 2016Event: The Cape’s distribution, transport and handling expoDate: 13-15 JulyVenue: Cape Town International Convention CentreContact: Saki Magoxo, tel 011-783-7250, email [email protected]

InnoTrans 2016Event: InnoTrans 2016: The future of mobilityDate: 20-23 SeptemberVenue: BerlinContact: Project organisers, tel +49 30 3038 6754 / 2376 / 2034 / 2124 / 2011

easTern capeEvent: Eastern Cape Maritime Summit 2016Date: 26-28 OctoberVenue: Hemingways Mall, East LondonContact: [email protected] or visit www.maritimesummit.co.za

laaEvent: 28th Annual Logistics Achiever Awards 2016Date: 13 OctoberVenue: Montecasino BallroomContact: Dianne Holton, tel 011-784-7697, www.logisticsnews.co.za

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Publishing Editor:Dianne Holton

Editorial & advertising:Tel: 011-784-7697Fax: [email protected] O Box 784621, Sandton 2146, South Africawww.logisticsnews.co.za www.supplychainonline.co.za

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The publisher is notresponsible for the opinions expressed by individuals. © No part of the publication may be copied or reproduced by any mechanical or electronic means without the written permission of the publisher.33rd year of publication.ISSN 1025-0492

Logistics NewsDirectory of supportingindustry associations

industry

Celebrating 33 years as the independent voice of the Supply Chain industry

CGCSAConsumer Goods Council of South Africa0861-242-00 • www.cgcsa.co.za

CILTSAChartered Institute of Logistics and Transport SA011-789-7327 • www.ciltsa.org.za

CIPSChartered Institute of Purchasing and Supply Southern Africa012-345-6177 • www.cips.org/southernafrica

CSCMPCouncil of Supply Chain Management ProfessionalsSA Round Table011-678-1820 • www.cscmp.org

RFARoad Freight Association011-974-4399 • www.rfa.co.za

SAAFFSA Association of Freight Forwarders011-455-1726 • www.saaff.org.za

SAEPASA Express Parcel Association011-390-2172 • www.saepa.org.za

SAIIESouthern African Institute of Industrial Engineering011-607-9557 • www.saiie.co.za

SAPICSThe supply chain network011-023-6707 • www.sapics.org.za

Logistics Newsthe independent voice of the Supply Chain industry

April 2016

ALSO: meaningful outsourcing • inventory modeling for holisticstrategy • cold chain best practices • strategise forinnovation • sustainable retail reverse logistics •

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