South Africa operates in the global community and it is essential that we position ourselves as being globally competitive in order to compete in this expanded arena. To do so, we need to know how other regions are faring in the supply chain and logistics arenas.
FleetWatch thus welcomes the fact that Barloworld Logistics has taken its well-known supplychainforecast survey beyond our borders into the Middle East in order to ascertain the state of play in that part of the world.
This is in line with Barloworld Logistics’ firm belief that for all businesses in this globalised economy in which we live, the supply chain is a key enabler of a successful business strategy. An efficient and effective supply chain now needs to be cognisant of issues affecting supply and demand all over the world.
The findings of the survey , termed the 2013 GCC supplychainforesight survey – were released by Barloworld Logistics Middle East at the Ritz Carlton, Gate Village, Dubai International Financial Centre with the intention of providing a snapshot of the current perceptions of the status of supply chain and logistics in the GCC region.
GCC is the acronym for the Cooperation Council for the Arab States of the Gulf, a regional organisation set up in 1981 with six members: Bahrain, Kuwait, Oman, Qatar, the Kingdom of Saudi Arabia and the United Arab Emirates.
Respondents to the survey tell a story of an exciting, evolving and dynamic region with many opportunities and challenges in dealing with rapid change. “The focus on expansion and diversification is evident throughout,’ says Barloworld Logistics Middle-East managing director John Wylie.
The survey shows that the UAE ranked significantly ahead of other GCC countries on all the parameters in the World Bank’s 2012 Global Logistics Performance Index. The UAE also ranked ahead of countries such as Norway, Australia, Ireland, Taiwan and Korea and ahead of larger emerging markets like China and India.
Qatar, the UAE and Saudi Arabia ranked the highest among the GCC countries in the World Economic Forum’s 2013-2014 Global Competitive Index in terms of basic requirements such as efficiency enhancers, innovation and sophistication.
As is the case globally, with the fast pace of change, companies in the GCC region are facing the challenges of unpredictable order volumes, constant pressure to reduce costs, exposure to higher levels of risk and (South African companies will relate to this), finding and retaining skilled people.
Respondents are looking to increase revenues by growing in existing markets and expanding into new regional and international territories, with the wider Middle East and African countries being top priority – and by introducing new products and services to these markets.
They say constraints to achieving these goals include frequently changing shipping rates of service providers, constant changes in government rules and regulations, inconsistent cross-border trade rules within the region and congestion at ports. Here again, South African companies will relate to those constraints.
At the same time, GCC governments are making large investments in infrastructure developments such as ports and railways to improve efficiency and connectivity. Respondents also rank increased competition from regional and international companies and the unavailability of skilled resources as top constraints to achieving business objectives.
Key supply chain objectives include improving customer service, minimising costs reducing complexity, increasing efficiency and performance and upgrading and integrating fragmented IT systems. Almost half of the survey respondents have an evolving understanding of supply chain management and the majority are developing a clear supply chain strategy.
Twenty nine percent of respondents believe they have an advanced understanding of supply chain management and use the latest IT systems to integrate logistics functions. “These are large businesses, including export oriented multinationals that integrate with their principals in other markets,’ says Wylie.
At the other end of the scale, 23% of respondents have a basic understanding of the supply chain, indicating that they view it as individual logistics functions rather than the holistic processes of the flow of goods from source to consumption.
The survey shows that 58% of companies across the GCC countries outsource part of their supply chain activities to third party service providers. “Successful businesses acknowledge that other companies exist that are better equipped to perform certain functions or serve specific market needs,’ says Wylie.
Overall, respondents rated the quality of infrastructure in the GCC countries as above average, expressing most satisfaction with the road and air infrastructure. They expressed the lowest satisfaction with existing port infrastructure although, as mentioned, this is being addressed through large investment and development of ports.
A GCC-wide railway network and standardised customs procedures are the most desired infrastructure developments in the short term, with progress in this regard already underway.
“This will provide a further dimension to the GCC countries’ existing logistics capabilities.’ says Wylie.
Editors Note: What FleetWatch finds interesting is that the race by GCC countries to expand their offerings into other markets is on and the sooner South Africa realizes this, the better will be our chances of capturing other markets. We are not alone in wanting to expand globally but it often seems that our priorities are more internally than externally focused. South Africa is dominated by internally focused political wrangling rather than on growing the economy. This is giving our global competitors a huge jump-start advantage and that has to change – especially when one realizes who we are competing with. The survey shows some of what , and who – we are up against. This country needs to catch a big wake up!