Page 10 - Logistics News Oct Nov 2020
P. 10

Opinion


              Supply chains full of woe





                                                                           By Doug Hunter, doug.hunter@za.syspro.com
                Old habits die hard, but good Samaritans still help communities recover while others
                            chance a sneaky profit – for the shareholders you understand!



            SIX MONTHS in a dining room chair, glued to Zoom      Some food outlets/restaurants moved through
            or a cell phone… and I’m free. Lockdown Level 1 –   soup kitchens for the destitute or struggling,
            visiting the office, meetings with real people and,   through take-away/home delivery options,
            for me, taking a break in the bush. After a four-hour   adding booze when they could, and now have
            game drive and first beer, recollections of lockdown   special menus to use what’s available.
            are easing.
                                                               • Engineering and fabricated metals
            Pricing affects supply chains                      Steel imports stopped from China and may
            Costs rose during the pandemic for certain         not restart, or will they? China supplied the
            industries – those still operating. But some prices   second major global virus, so how cheap has
            were unreasonably high – some were fair and some   supply really been for you, your employees and
            reflected unscrupulous suppliers, manufacturers or   customers? How long were you closed? How
            traders’ customer/business attitude of ‘me-first, not   many staff did you put on furlough or retrench?
            you’.                                              How many projects stopped? And how many
                                                               unnecessary deaths?
            Industries differ
            • Food                                             Bush drive summary
            After a visit to a local Quick Shop, I got home and   As consumers or producers, COVID-19 vividly
            checked the five basic items that cost almost R400:   shows us how one global supply chain disruption
            butter spread pre-COVID was R74; into lockdown     forces leaders’ rapid innovative adaption, but
            it was R96, plus there were other overpriced items.   also small actions that reshape channels to shine
            I’ve experienced bad owner attitude there before,   or damage the brands that are part of them. It’s
            so 20 years of buying fuel for two cars and R300-  time to look over channel fences to check that
            a-bag top-up groceries are over – that’s R60k a    customer service and brand value aren’t being
            year, or was… I’ve stopped using that outlet. One   eroded by ‘partners’.
            entity kills one customer’s lifetime value for a whole   When it comes to product costing, adapt
            supply chain. Do other chain players see this effect   from discount per item/bottle. Tie me in with a
            from badly timed R20 overpricing?                  discount per purchase/year – the more the better
               My local beverage store took a chance. Instead   – and push me to put new stuff in my ‘shopping-
            of adding one percent tax increase to a bottle of   basket’ that makes you a better margin and me
            wine, it added 20 percent. It’s a great business,   happy.
            great people, but do that to me again and loyalty     Then there is bush learning from my host,
            may suffer.                                        whose town is near the Kruger Park, where 350
               Then at Pick n Pay – the star retailer for my   people (and families) had no pay, meaning over
            family – there was easy e-commerce ordering,       1,000 people were affected and the supply chain
            reliable notified home delivery, always OTIF (on   disseminated locally. Then other families with
            time in full) and value for money, even considering   earnings out of town become sole breadwinners
            new DC order picking and other processes, extra    for their relatives and friends – those who have
            delivery and thermal box costs – thank you.        share with those who haven’t, so everyone
                                                               survives.
            • Hospitality                                         Can’t we do this for industry supply chains?
            Those able to reopen have had slow ramp up of      Share the pain to survive and then seek the gain
            guests, but surely international travel constraints   together. Is the ‘China Factor’ pushing you to
            provide an opportunity to get South Africans to    find alternate supply from different countries as
            South African destinations? Think immediate and    you add the true costs of ‘low price’? Or will you
            long term. Adapt through survival to marginal to   source/make locally and advertise this – what will
            profit again. That approach just got me out the    that do for consumers or engineering brands?
            dining room to the bush.                           Add value/volume and justify price. Let’s do it. •



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