Supply Chain Snippets

Traders Den

By Loray Daws of Mega Solutions

Supply chain management as defined by the Council for Supply Chain Management Professionals (CSCMP):

“Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.”

Logistics Management as defined by the Council of Supply Chain Management Professionals (CSCMP):

“Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and
execution – strategic, operational, and tactical. Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, manufacturing, finance, and information technology.”

“South Africa’s unemployment issue will not be solved simply through intervention from big business – the mainstream economy is limited in its reach. In addition, people outside the mainstream economy will always be forced to engage in entrepreneurial business activities to sustain some form of livelihood. It is therefore imperative to create an environment that is conducive to entrepreneurship so as to enable the unemployed to become economically active within the small business environment. There is, however, a significant logistics divide between medium to large industries located within major industrial-logistical hubs and small and emerging businesses located within resource-poor environments with poor access to the major logistical hubs and corridors.”

Unemployment in the country will only be addressed by the creation of large numbers of small businesses both in rural and urban areas. There is no focused, formal and central effort by anyone to assist such enterprises, through supply chain management services, to get their goods, products, etc. transported and distributed to the demand points. There are examples of very successful small enterprises which manage very effective and efficient supply chains on their own.

These are, however, the exception. Government needs to intervene in some kind of way. An aspect that has been discussed recently is the issue of rail branch lines – rail infrastructure that serves many of the rural areas. These would be ideal to use for goods from small businesses in rural areas. The critical aspect is who will operate them, who will pay for them and run them in a financially sustainable manner. This is a very complex and sensitive matter that requires careful consideration.

Over the years, against a background of increasing worldwide public and government concerns for the environment, companies have come under mounting pressure to reduce the environmental impact of their logistics operations. The impact of logistics on climate change has attracted increasing attention while research has revealed that global warming presents a much greater and more immediate threat than previously thought. For example, it is estimated that freight transport accounts for roughly 8% of energy-related CO2 emissions worldwide (Kahn, Ribeiro and Kobayashi 2007).

The logistics/supply chain management area is a critical one with many aspects that require further research to find appropriate solutions. Most of these will have a positive impact on costs, i.e. they will reduce costs if tackled properly while at the same time endeavoring to enhance performance in supply chains. Some of these were reported previously (CSIR 2005; Ittmann, King and Havenga 2009). A few additional ones are listed below:

• Commodities that are currently transported on road that could potentially move to rail;
• Measures to get such commodities back to rail;
• Cost implications, and savings, of transporting the above commodities by rail;
• Intermodal solutions required;
• Benchmarking of costs for companies in specific industry sectors, i.e. more micro-level cost calculations and comparisons;
• The effect on logistics costs of service-oriented industries;
• The effect of toll roads on logistics costs;
• Drive to Green Logistics
• The feasibility of re-introducing the rail branch lines; and
• The feasibility of more government-led initiatives to encourage industries, especially those that want to export, to locate closer to coastal areas and ports.

The logistics costs as a percentage of GDP in South Africa are too high. It may be impossible to lower this percentage to the level of countries such as Brazil, but even a small percentage decrease will be significant and will imply millions in cost savings. This should be the aim of all concerned. In parallel there should be a conscious effort to move certain classes of freight from road to rail, especially on the long-distance corridors. Again this will imply considerable cost savings. Why this is not already happening is difficult to understand. The bad state of roads in the country is already adding to logistics costs and this will deteriorate if the situation is not attended to. Aspects such as tolling of certain roads and the non-maintenance of roads will increase logistics costs, while efforts around Green Logistics could add value without necessarily adding costs. Finally, when all aspects are considered, the logistics sector in South Africa is doing fairly well.


With a pass rate at 33%, ludicrous to say the least, plus high failure rate; low standard of education, we are creating a framework for failure throughout the whole economy. Even Business is guilty of not implementing continuous Training and Redeployment of employees/staff in an attempt to improve BOTH employee productivity AND operational profitability – bar the upper echelon naturally! I wonder why?

For more information contact Loray at email

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