Jacomine Grobler
Jgrobler@csir.co.za
03 October 2014
Agenda
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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
The logistics piece in the
economic puzzle
Ulrich Joubert
Economist & advisor
International factors influencing logistics in SA
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Growth prospects
Unemployment
Inflation
Interest rates
Commodity markets
Energy
Local factors influencing logistics in SA
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Balance of payments
Budget deficit
The Rand
Inflation
Interest rates
Human resources
Logistics costs and
efficiency
Prof Jan Havenga
Zane Simpson
Stellenbosch University
Moving towards integration
Dr Dinesh Kumar
KPMG
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:
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Consumer packaged goods
Retail
Diversified industries
Logistics providers
Utilities
Telecommunications
Supply chain trends analysis
• 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
• 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
• 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
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
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.
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.
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
Logistics infrastructure
capacity
Hans Ittmann
HWI Consulting
State of roads
State of roads
State of roads
• 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
State of rail
Road-to-rail
• 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
State of rail
• 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 air freight
State of pipelines
State of maritime
Greater road efficiencies
through innovative
regulation
Dr Paul Nordengen
CSIR
Heavy Vehicle Fatal Crash Rates
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Fatal crash rate
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Aust
8
Can
France
6
Denmark
USA
South Africa
4
Switzerland
2
0
2001
2002
2003
2004
2005
2006
Year
Fatal truck crash per 100 million vehicle kilometres travelled
Source: OECD report, Moving Freight with Better Trucks, 2010
PERFORMANCE-BASED STANDARDS APPROACH
Prescriptive Standards
Performance-Based Standards
Prescriptive Standards
Performance-Based Standards
What the vehicle looks like
What the vehicle can do
Governs mass and dimensions
Governs actual on-road performance
Constrains productivity
Allows heavier and/or larger vehicles
Constrains innovation
Promotes innovation
Images courtesy of the Australian National Transport Commission
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Prescriptive Standards
Performance-Based Standards (PBS)
Prescriptive Standards
Performance-Based Standards
What the vehicle looks like
What the vehicle can do
Governs mass and dimensions
Governs 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 innovation
Promotes innovation
Road-Train, Mining
Baseline vehicle
PBS 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.
Computer simulations performed by, and animations courtesy of, Wits University
Bi-Articulated Bus
Baseline vehicle
PBS vehicle
Current vehicle in operation
Axles 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
Timber Vehicle
Baseline vehicle
Six pallets of timber.
PBS vehicle
Seven pallets of timber (higher payload,
improved productivity).
Very poor “rearward amplification”
Meets all performance standards (including
performance (whipping effect on the rearmost rearward amplification). A more stable and
trailer causing it to rollover).
safe vehicle.
Computer simulations performed by, and animations courtesy of, Mechanical System Dynamics, Australia
Car-Carrier (1 of 3)
Baseline vehicle
PBS vehicle (increased trailer wheelbase)
• 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 (2 of 3)
Baseline vehicle
PBS vehicle (increased trailer wheelbase)
• 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 (3 of 3)
Top view
Baseline vehicle
PBS vehicle (increased trailer wheelbase)
• 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
The talent gap
Rose Luke
Gert Heyns
University of Johannesburg
The talent gap
The talent gap
The talent gap
The talent gap
The talent gap
The talent gap
The way forward
Jacomine Grobler
CSIR
The way forward
?
Jacomine Grobler
Jgrobler@csir.co.za
03 October 2014