If there is one good thing to emerge from the current COVID-19 crisis, it is the fact that the rise of the supply chain profession is underway given that COVID-19 has highlighted the vital role that supply chain management plays in virtually every aspect of every industry. Supply chain management’s vital role in business hasn’t been widely recognised in the past.
This is the opinion of supply chain and operations specialist and executive coach, Dave Hudson, a member of the Professional Body for Supply Chain Management (SAPICS), who says that looking ahead to beyond the pandemic to when the focus will be on rebuilding and re-growing businesses and economies, it will be clear that supply chain proficiency and competence is a catalyst for economic growth.
Amid the Covid-19 crisis, supply chain professionals have been responsible for maintaining South African supply chains; ensuring the efficient supply and distribution of food, basic goods and medicines and mitigating the risks posed by the pandemic. They have also had to manage the challenges of the lockdown regulations and the associated extraordinary consumer behaviour like initial stockpiling and panic buying. Remember the rush on toilet paper!
According to Hudson, the Covid-19 crisis has highlighted a number of lessons for this sector, one being a lack of supplier development in South African supply chains. This has, for example, contributed to shortages of critical pharmaceutical components like the Active Pharmaceutical Ingredients (APIs) in medicines.
“The South African pharmaceutical industry is experiencing shortages of APIs. Certain pharmaceutical packaging that is sourced internationally such as tubes and ampoules are also in short supply,” he says, adding that supply chain professionals are scrambling to source from alternative suppliers with limited success. “This is due to the lack of supplier development that has taken place over the past 10 to 20 years.”
Hudson stresses that a lesson that must be taken from this crisis is that business risk assessments need to include the detailed mapping of supply chains and suppliers.
“Very often, manufacturers look at first tier suppliers and forget about second, third and beyond. To mitigate the risk of supply chain disruptions, the strategies of businesses must include the development of alternative suppliers and batch sizes. The alternatives are sometimes limited, especially for the older pharmaceutical generics in the market. Very often there is a single supplier source and a single option for batch sizes that match the current producer. Unit cost can no longer be the overriding factor in setting up supply chains,” he states. “Geographical risk is also very important to continuity of supply.”
Hudson says that the coronavirus crisis has also put supply chain management education into the spotlight and has underscored the need to add impetus to addressing South Africa’s supply chain skills deficit and the regulation and professionalisation of the supply chain management profession.
“Many businesses still fail to see supply chain and operations management as a critical function that requires constant up-skilling. The result is that not enough is spent on education and training. This is one of the reasons that some supply chain management personnel are scrambling to mitigate the impact of the Covid-19 crisis. They have not been exposed to alternative theories and practices,” says Hudson.
The benefits and importance of international certifications, such as those offered by SAPICS through its partnership with the US-based Association for Supply Chain Management (ASCM), is that they are built on global standards for supply chain management. They teach globally recognised supply chain best practices and methodologies which are crucial.
“We must start thinking about the cost savings and efficiency enhancements differently. The traditional approach has limited gains, whereas new methodologies open avenues for exploiting weaknesses and promoting effectiveness along with efficiency.
“This can only be achieved with improved supply chain management knowledge, education and skills. Business needs to recognise and understand how strong, reliable, resilient supply chains and capable, qualified supply chain professionals are essential to mitigate the impact of supply chain disruptions like Covid-19.”
Culture of partnerships
Adding to the positive outlook for the future, Mungo Park, past president of SAPICS and senior key account director at DSV, says that while the supply chain industry faced a number of new challenges in getting through Level 5 and Level 4 lockdowns, he believes South Africa’s supply chain industry and supply chain management professionals are well-placed to rise to the on-going Covid-19 challenges.
“I have observed the strengthening of relationships and the development of a culture of partnership between service providers and customers who are working together to address the challenges. Service providers are demonstrating remarkable flexibility in terms of managing debtors’ books. The strengthening of relationships is fundamental for service providers and their customers and they must work together to identify potential points of failure in supply chains and to build resilience and redundancy to mitigate further disruption due to Covid-19. This will enable them to better manage future supply chain disruption,” he says.
Also encouraging, Park notes, is how well the supply chain profession in South Africa has responded during this challenging period.
“Service providers have been innovative in creating solutions for customers. Internal logistics operations are successfully guiding businesses in the adoption of different approaches to managing supply chain costs. These are testing times but supply chain management professionals have risen to the challenges. Some of the short-term activities, innovations and interventions have proved so successful that they will become standard operating processes going forward.”
FleetWatch has always stated that the trucking industry has never been afforded its due recognition as a vital sector in South Africa. Based on the above comments – and on the critical role the trucking sector plays in the supply chain – this must change. Let’s change it.