Building supply chain resilience

MEDIA RELEASE

23 JUNE 2021

Building Supply Chain resilience – what we have learnt from the Covid-19 Pandemic

Supply chains are constantly evolving, from home delivery trends through to logistics considerations for vaccine distribution, the transformation is rapid. The past year has only served to accelerate these trends, with the South African supply chain landscape – and the strategies required to succeed  – looking quite different. In a recent webinar, RMB spoke with Ken Osler, CEO of Inhance Supply Chain Group, to gain insights into global trends in the supply chain landscape, how these impact our local industry and what local supply chain companies can do to succeed in the current climate.

COVID-19 has provided us with a unique opportunity to benchmark supply chain resilience in companies across the globe, said Osler. According to Capgemini, more than 80% of global organisations reported negative supply chain impacts associated with the COVID-19 crisis. Whilst some companies have struggled with the supply and demand shocks experienced, companies with the best performing supply chains have thrived during this period.

Globally, the key trends and disruptors include online ordering and the use of omni-channels, and the automation of key logistics processes at every point on the value chain. Crypto-currency payments are edging into the mainstream and there’s a drive for supply chain processes to be greener.

In the South African logistics environment, there’s 4% CAGR predicted over the next 5 years. That demand growth will need to be serviced by an industry facing challenges such as the impact of COVID-19 on logistics and freight, political instability and corruption,  a backlog of infrastructure investment and skills shortages. South African companies are holding an average of 3 extra days working capital due to port delays, and transport costs are higher than international peers due to the high % of road transport vs rail.

The impact of the global economy on the supply chain sector in South Africa is mixed.  Although the macroeconomic environment remains extremely challenging, GDP growth prospects have improved in recent months Ettienne le Roux, Chief Economist at RMB added. Risks abound, but buoyed by faster growth in world trade volumes, a spectacular rally in US dollar commodity prices and the beneficial trickle-down effects related to booming exports, the country looks poised for around 4% growth this year. Relative to last year’s 7% GDP contraction, it will take time before output will return to pre-pandemic levels though.

Osler states that, if logistics companies are going to succeed in our current economic and infrastructural environment, they need to focus on a clear strategy on differentiating in the market, and design for agility and adaptability to meet shifting demand patterns. From a process point of view, leading logistics companies will focus on customer integration and collaboration, and create a digital supply chain and process automation that reflects this focus. Any plans for the future must be underscored by relevant ESG strategies. Sustainability is not just a check box, it has to be a clear part of a company’s plans and measures.

Simon Woodward, RMB’s Sector Head of Auto and Logistics concludes: “While the supply chain environment comes with its own challenges, it is ripe with opportunities to satisfy a growing demand for e-commerce, and upskill the unemployed to increase logistics capacity. With the right strategies and investment, companies can realise this potential.”

End

Contact:

Kate Kelly l Rand Merchant Bank l kate.kelly@rmb.co.za l 079 637 4663