South Africa has passed the half-way mark of the 21 day nationwide lockdown and while many lessons have been learnt from this drastic but necessary action taken by the President to stem to spread of the coronavirus, one thing stands out clearly, namely, that supply chain management has played a key role in exactly the manner the Professional Body for Supply Chain Management (SAPICS) called it on the day of the lockdown.
FleetWatch received a statement from SAPICS on March 26th, three days after President Ramaphosa appeared on national television to announce the lockdown and mere hours before the midnight deadline for commencement of the lockdown.
It was on that day that South Africa was turned upside down and we were all trying to unravel the Regulations announced just over 24 hours before the midnight deadline to determine how the entire supply chain sector would fit in; from FleetWatch’s side, in particular, how the trucking industry would fit in. I decided to keep the SAPICS statement and have a look at it later.
That ‘later’ is now here and not only did that statement show the accuracy of the predictions but it also served to highlight some of the areas that have needed to be managed that few have probably even thought of.
Commenting on the lockdown, Keabetswe Mpane, president of SAPICS, predicted that supply chain management would pay a critical role in ensuring South Africans continued to have access to food, basic commodities and medical supplies. It sure has.
On top of that, she said the spotlight would also fall on the measures that would be implemented by transport, distribution and logistics organisations to ensure the safety of drivers and staff who would provide essential services during the 21-day lockdown. She was spot on. Here’s other highlights from that statement.
“Our country and all South African people are facing an unprecedented challenge. As supply chain professionals, we are under even more pressure. Our profession is at the frontline in the fight against Covid-19. Many SAPICS members and member organisations are responsible for ensuring that the production, distribution and supply of food and basic goods continues in South Africa; and for transporting food and medical supplies around the country. Right now, we need skilled, qualified, professionally designated and ethically accountable supply chain professionals more than ever before,” Mpane stressed.
Mungo Park, SAPICS member, past president and senior key account director at DSV, said that supply chain professionals and service providers would help to keep essential services operational. He also added another good point, namely, that the significant drop in demand for anything other than food during the Covid-19 pandemic would cause a new supply chain challenge: the problem of over-supply.
“This is leading to warehouses being unable to cope with the volume of inbound product with insufficient space for storage. This is exacerbated by the need for warehousing staff to work split shifts to reduce the risk of infection resulting in a decline in productivity. The demand for storage in bonded warehouses to postpone the payment of customs duties and VAT is increasing, but with limited bond space available and a three month lead time – the average for the creation of a bond store – most businesses are faced with the problem of paying for their purchases with little chance of recovering the cost of sales for the foreseeable future.”
Park also said that new challenges were also being faced for the distribution of goods and components. “As a precaution, to protect drivers and assistants from infection, protocols of no-contact deliveries are being implemented by couriers and distribution service providers.
“Another challenge to supply chains is the significant increase in air freight rates as a result of the cancellation of flights. On some routes we are already seeing increases of over 200%, which is likely to continue for some time and will put inflationary pressure on prices from online retailers who, as yet, have to see a drop in demand for their products, although no significant increase in demand has been reported in that segment.”
SAPICS director MJ Shoemaker accurately contended that the biggest threat to supply chains during this pandemic would be panic buying – and we all saw that happening. “This causes supply and demand patterns that are out of the ordinary and need to be managed. Ensuring that there is no panic down the chain and executing planning based on the risk management outcomes will support business continuity.
“Demand reviews must be done more often in a structured way, with strong communication between all teams. Businesses need to do a short and long term risk management assessment based on the current and future needs of the market and prioritise plans to cater for this,” she stresses.
The statement said that South African businesses need to up their game on this front. “The tendency in South Africa is to use tools that are more manual or work around an existing system. It creates an environment whereby they cannot act fast enough and spend too much time data crunching. Organisations need to work well together across the departments and use data driven decisions to support the business. There must be clear processes and procedures to avoid ‘shoot from the hip’ decision making within silos,” Schoemaker said.
Lessons to learn
Park predicted that supply chain risk management lessons would be learnt from this crisis. “Supply chain risk is something that has been spoken about for some time and SAPICS has provided a number of learning opportunities for supply chain professionals in the past. Until now, however, it has only been one or two industries that have embraced supply chain risk management.
“Organisations will need to build robust risk monitoring systems to evaluate and assess all types of risk. Organisations cannot rely on tier one suppliers to control and manage their risk and ensure stability from tier two, three and four suppliers. Organisations will need to have more insight into their supply chains, insight that they can trust.
“It will be important to identify the right partners and to build trusted relationships with all of their suppliers, including logistics service providers. Organisations will recognise the need for collaborative planning and execution with their supply chain partners, and service providers will be expected to be far more involved in the articulation of supply chain strategy and planning of execution.”
Looking beyond the COVID-19 crisis, Park said there would be an important role for supply chain professionals and service providers to play in the normalisation of logistics operations and services once the situation began to stabilise.
“Recovery plans will need to be put in place quickly to address the huge backlog of unfulfilled shipments and deliveries. This will be an opportunity for the profession to demonstrate the value that it has to offer in the recovery of economies and the rehabilitation of logistics operations.”
What this all proves is that while the COVID-19 crisis and subsequent lockdown has been one of – if not the – most disruptive impacts to hit South Africa, we can stand tall and proud in the knowledge that we have professionals at every link in the supply chain who are there to support the country through a crisis. And wow – is this one a crisis! Hats off to all of you. You rock!