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Jacomine Grobler 03 October 2014.

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Presentation on theme: "Jacomine Grobler 03 October 2014."— Presentation transcript:

1 Jacomine Grobler 03 October 2014

2 Agenda Thoughts on the economy & cost drivers Actual cost of logistics Supply chain trend analysis State of infrastructure Improving efficiency through innovative regulation The talent gap

3 The logistics piece in the economic puzzle Ulrich Joubert Economist & advisor

4 International factors influencing logistics in SA Growth prospects Unemployment Inflation Interest rates Commodity markets Energy

5 Local factors influencing logistics in SA Balance of payments Budget deficit The Rand Inflation Interest rates Human resources

6 Logistics costs and efficiency Prof Jan Havenga Zane Simpson Stellenbosch University

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14 Moving towards integration Dr Dinesh Kumar KPMG

15 Supply chain trends analysis Person-to-person interviews with supply chain directors of 80 companies from the KPMG network A broad cross-sector of industries and sectors were presented: – Consumer packaged goods – Retail – Diversified industries – Logistics providers – Utilities – Telecommunications

16 Various aspects were considered such as… Customer focus: – Essentiality accepted – Declining customer levels over last decade – Two constraints to customer focused businesses are lack of skills and silo-based corporate cultures due to ineffective change management Agility in supply chains: – Not a big focus – Only 50% of retail organizations are barely or partially incorporating agile design – 68% of manufacturing organizations are barely or partially incorporating agile design Collaborating with supply chain partners: – 46% of organizations will never or rarely collaborate with SC partners – 46% of SA supply chains are only partially managing to collaborate Supply chain trends analysis

17 Supply chain maturity: – 62% of FMCG supply chains considered themselves as mature – 44% supply chains in other industries considered themselves as mature Supply chain trends analysis

18 Technology in SC: – Use of fragmented ERP systems were evident – Most companies focused on incremental upgrades, tweaking & customization – High focus on financial functionality Planning, forecasting and replenishment strategies: – Lack of planning capabilities one of the greatest challenges for South African companies – Use of supply chain coordination control methods specifically noted in the manufacturing industry Inventory management: – High levels of buffer stock evident in retail, manufacturing and mining – Inventory carry cost contribution to total logistics cost on the rise Supply chain trends analysis

19 Future trends Demand-driven supply chains: – Supply chain partners are tuned in to the demand signal that originates at the furthest points of consumption – DDSC has greater alignment, responsiveness and efficiencies impacting on customer satisfaction. – 1 – 4% improvement in revenue and 20-30% reduction in working capital. Cloud-based supply chain management: – Real time access to critical information, transparency, cost reduction, scalability and flexibility – The most important barrier relates to data security Talent: – Well qualified talented people required in all functions at all levels of the company

20 Future trends Collaboration – Close collaborative ties result in optimized inventory and logistics processes. Also greater responsiveness to volatile customer demand. – Joint innovation & R&D activities in future – Pooled warehousing, distribution and transport resources.

21 Nissan SA case study In 2011 Nissan spent 27% more on production parts logistics than their benchmark global competitor. High inefficiencies due to high transport costs due to the landlocked position of the plant and frequent production line stoppages due to a lack of parts availability. Douki Seisan system implementation – customer driven production philosophy that syncronizes SC partners to cut lead times. Implementation of Nissan Manufacturing UK (NMUK) mainframe ERP system which seamlessly integrates with global Nissan systems Re-evaluate status quo transport decisions such as: – From Ro-ro vessels to containerized vehicles through their on-site vehicle containerisation facility – From Road transport to containerized rail transport for imported production parts.

22 Nissan SA case study After 12 months: – Full delivery timing visibility for all customers – Flexible vehicle ordering capabilities allowing changes in specs up to 4 weeks before production – Finished vehicle inventory reduced by 20% – Domestic market volume flexibility from 20 to 12 weeks – Domestic market-mix flexibility from 15 to 4 weeks – In 2011 Nissan spent 27% more on production parts logistics than their benchmark global competitor – A 21% reduction in supply chain CO2 footprint – A R387 million improvement in free cash flow – A R206 million year-on-year logistics cost reduction

23 Logistics infrastructure capacity Hans Ittmann HWI Consulting

24 State of roads

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26 Decades of underinvestment in maintenance and expansion left a huge infrastructure backlog. SANRAL has been relatively effective in addressing this backlog, but still room for improvement Poor roads lead to increased vibrations and potential structural damages to vehicles, leading increased vehicle maintenance & repair costs & higher logistics costs. Certain road roughness – what is the percentage increase in VOCs. Model changes in cost of logistics based on changes in quality of roads. State of roads

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28 State of rail

29 Mostly Iron ore, coal & manganese & agricultural dry bulk sector Long haul general freight business is challenging with service delivery the issue 11.4% (2011) to 12.1% (2013) w.r.t. tonnage 29.5% (2011) to 30.5% (2013) w.r.t. tonne-km Investment, productivity, efficiency & skills development required Road-to-rail

30 Iron ore, coal & manganese Agricultural dry bulk sector Long haul general freight business is challenging; service delivery the issue 11.4% (2011) to 12.1% (2013) i.t.o. tonnage 29.5% (2011) to 30.5% (2013) i.t.o. tonne-km Investment, productivity, efficiency, skills development – reduce cost of logistics State of rail

31 State of air freight

32 State of pipelines

33 State of maritime

34 Greater road efficiencies through innovative regulation Dr Paul Nordengen CSIR

35 Fatal truck crash per 100 million vehicle kilometres travelled Source: OECD report, Moving Freight with Better Trucks, 2010 Heavy Vehicle Fatal Crash Rates

36 36 PERFORMANCE-BASED STANDARDS APPROACH Prescriptive StandardsPerformance-Based Standards What the vehicle looks likeWhat the vehicle can do Governs mass and dimensionsGoverns actual on-road performance Constrains productivityAllows heavier and/or larger vehicles Constrains innovationPromotes innovation Prescriptive StandardsPerformance-Based Standards Images courtesy of the Australian National Transport Commission

37 Prescriptive StandardsPerformance-Based Standards What the vehicle looks likeWhat the vehicle can do Governs mass and dimensionsGoverns actual on-road performance Constrains productivity Allows heavier and/or larger vehicles Improved productivity Fewer trucks required on the road Fuel and emissions savings Constrains innovationPromotes innovation Prescriptive StandardsPerformance-Based Standards (PBS)

38 Baseline vehiclePBS vehicle Three trailers Four trailers (higher payload, improved productivity) Very poor “rearward amplification” performance (whipping effect on the rearmost trailer causing it to rollover). Meets all performance standards (including rearward amplification). A more stable and safe vehicle. Road-Train, Mining Computer simulations performed by, and animations courtesy of, Wits University

39 Baseline vehiclePBS vehicle Current vehicle in operationAxles relocated to increase wheelbase Poor “rearward amplification” and “yaw damping” performance. Sustained oscillations in response to a severe steer input. Meets all performance standards. A more stable and safe vehicle. Computer simulations performed by, and animations courtesy of, Wits University Bi-Articulated Bus

40 Baseline vehiclePBS vehicle Six pallets of timber. Seven pallets of timber (higher payload, improved productivity). Very poor “rearward amplification” performance (whipping effect on the rearmost trailer causing it to rollover). Meets all performance standards (including rearward amplification). A more stable and safe vehicle. Computer simulations performed by, and animations courtesy of, Mechanical System Dynamics, Australia Timber Vehicle

41 High-speed lane-change manoeuvre, used to measure “rearward amplification” and “high-speed transient offtracking”. Trailer overshoot and yaw damping response have improved. Computer simulations performed by the CSIR Car-Carrier (1 of 3) PBS vehicle (increased trailer wheelbase) Baseline vehicle

42 Speed is increased on a constant-radius curve until rollover occurs. Vertical arrows signify vertical tyre loads (colours as above). The increased trailer wheelbase has increased the initial vertical load on the drive axles. Without any changes to any other vehicle parameters, this results in delayed rollover (improved “static rollover threshold”). Computer simulations performed by the CSIR Car-Carrier (2 of 3) PBS vehicle (increased trailer wheelbase) Baseline vehicle

43 Low-speed 90° turn. Used to determine how much road-space a vehicle utilises when turning. The increased trailer wheelbase has reduced its rear overhang, resulting in improved “tail swing” performance. The rear corner of the PBS vehicle swings out less than half that of the baseline vehicle. This is important for pedestrian and cyclist safety. Computer simulations performed by the CSIR Car-Carrier (3 of 3) PBS vehicle (increased trailer wheelbase) Baseline vehicle Top view

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46 The talent gap Rose Luke Gert Heyns University of Johannesburg

47 The talent gap

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53 The way forward Jacomine Grobler CSIR

54 The way forward ?

55 Jacomine Grobler 03 October 2014


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