A lack of supply chain skills has not hampered performance of South African organisations, found Barloworld Logistics’ Supplychainforesight Survey 2016. However, this is contrary to perceptions in previous years’ surveys where skills were identified as a major inhibitor to growth and sustainability.
The disparity in results may be attributed to skills development initiatives whose full impact or value is not yet being realised. Skills development in supply chain logistics was among the areas that survey respondents indicated had a high adoption rate, but full impact or value thereof is not yet being realised.
Respondents indicated the same for supply chain technology.
Similarly, even though supply chain outsourcing is shown to have a positive impact for companies, the adoption rate too seems to be low. This is interesting to note and is in contrast to general shifts seen in the market both locally and internationally.
“Outsourcing also appears to be off the radar for future strategies, which raises the question of whether the true nature and value of the concept of outsourcing is understood?” The perception seems to be based primarily on the ability to better control functions if run internally as part of the company, said the survey.
A diverse range of supply chain factors is delivering significant value, found the survey.
Universally, the alignment of the supply chain strategy with the business strategy has become more critical and is delivering “very positive results for South African businesses”.
Integrating customers into the supply chain was recognised as an approach that delivers improved customer centricity, enabling improved performance and satisfaction levels.
Furthermore, while outbound distribution is seen as being of potential high impact, it is low on adoption. Similarly, inbound materials management’s high level of potential impact was met low adoption, noted the survey.
The lowest scoring supply chain elements rated by survey respondents were inbound material management and environmental optimisation. Previous surveys have noted that “environmental issues are raised as a priority regularly, yet adoption remains limited in practical application except where financially justified or where other direct benefits can flow.”
Inbound global materials management was such a low rated supply chain issue when, in relation to the level of costs and complexity involved, it can have a significant impact on the supply chain and business performance, said the survey report.
“It is those companies that effectively manage inbound flows that gained financial and service level improvement to enhance competitive advantage.”
Future importance of supply chain
Whilst supply chain management is evolving into an integral part of overall business strategy integrated throughout an organisation, the perception of its importance is still key to competitive advantage, efficiency, effectiveness and sustainability, indicated the survey respondents (see chart).
Interestingly, the survey indicated that the level of strategic performance to date has, in most instances, not achieved its anticipated goals. The survey linked this with the application of broad strategies, such as cost cutting, which is often a frequently-followed route to counter down turns, but is in some instances a simple broad strategy that often fails to take into account the value being eroded or gained.
“All costs incurred are relative to the value they create. The future determination of strategies and priorities is likely to include a better understanding of the costs to serve and where value is created or eroded in each element of the business venture,” said the survey.
There remains a lot of work to be done before we see South African businesses gaining the full and real value from their supply chain and business strategies, noted the report.
However, over the last 13 years that the Supplychainforesight programme has tracked SA’s supply chains, it has become evident from the feedback of respondents that the supply chain has become an integral part of the business strategy.
“Alignment of the supply chain to the business strategy, customer integration, supply chain collaboration, sourcing and supplier integration are all elements of the supply chain that have created the most positive impact on businesses in South Africa to date.”