2

The KZN Clothing and Textile Cluster (KZNCTC) is a not-for-profit, public-private sector partner-ship designed to enhance the competitiveness of apparel, textile, footwear and affiliated man-ufacturers in KwaZulu-Natal. The cluster has firm-level members, ranging from machine sup-pliers to design/logistic houses, CMT’s, clothing and home textile manufacturers, textile mills and retailers. The member firms employ approxi-mately 11 000 employees and our database extends to over 300 individuals representing a diversity of companies and other stakeholders in the value chain.The structure of the cluster is such that it is gov-erned by an executive committee comprising representation from local and provincial gov-ernment, tertiary education institutions, clothing associations, other clusters or special purpose vehicles, manufacturers and retailers. The Clus-ter is funded through government grants, retail-er donations and membership fees as well as manufacturer membership fees. The Cluster is a registered company with directors and is run as a “by industry for industry entity”, focusing on competitiveness enhancement and job creation/retention. The cluster runs programme content through three core programmes, namely World Class Manufacturing, Value Chain Alignment and Capacity Building. The KZNCTC is powered by B&M Analysts an organisation that provides high valued support services to advance indus-trial development.

3

Cluster facilitation services are provided by Bench-marking & Manufacturing Analysts SA (Pty) Ltd (B&M Analysts), an organisation that provides high value specialised support services to drive sustainable in-dustrial development. Over the past 15 years, B&M Analysts has developed methodologies and skill sets that allow it to play a unique role in relation to supporting the competitiveness of value chains and the growth of industrial sectors. These services are tailored to support the industrial development goals of government organisations, private sector organ-isations and public-private partnerships (PPP). B&M Analysts is a verified Level 2 B-BBEE contributor under the Codes of Good Practice for Broad-Based Black Economic Empowerment (B-BBEE).For more information on B&M Analysts please visit www.bmanalysts.com.

4

Contents

Recent Events 5Peer Review - John Whittle 6CIP Awards at the Cape Lean Best Practice Tour 8Feature Article South African Retailer Fabric Demand Survey 10Upcoming Events 33Industry News 34

5

Recent Events

Date Event

18/19 August 2014 Cape Lean Best Practise Tour

18 August 2014 Turkey Study Tour Briefing at Cape Tour

9 September 2014 CIP - Peer Review John Whittle

22 October 2014 Executive Session – Textile Mapping Study Find-ings & Implications

22 October 2014 Executive Committee Meeting

6

Peer Review - John Whittle

10 KZN CTC members attend-ed the 3rd peer review hosted at John Whittle. The focus of the peer review was on John Whit-tle’s Lean journey, with a partic-ular emphasis on visual perfor-mance measurement currently being implemented in the factory. Supervisors are responsible for recording applicable indicators on visual management boards at each line or department. All of this data feeds into an excel database which tracks important lean mea-sures such as machine downtime, absenteeism, and output. As a re-sult, John Whittle has ‘eyes’ to see where significant wastes occur in

production and are able to make strategic decisions to save costs, and improve productivity. Peer reviews are a vital part of the CIP as they promote learning through the review of a factory’s visible and measured lean improvements. Firms are encouraged to attend quarterly peer reviews, participate in discussions of the host firm’s progress and provide feedback of their own firm’s lean initiatives and challenges.

7

8

CIP Awards at the Cape Lean Best Practice TourA number of employees at the various KZN CTC member firms participating in the Competitiveness Improvement Programme (CIP) received Individual Lean Implementation Awards for significant contri-butions and progress in implementing lean production philosophies and processes.

Confidence Shandu from Celrose Clothing’s Isithebe factory has iden-tified and reduced numerous wastes in her line, especially around motion, flow and conveyance. She has also been extremely diligent in recording repair rates, assisting in the facto-ry’s ability to identify problems early. Confidence also shows initiative to take action in problem areas.

9

Speratus Ngubo (also known as Spero) from Dyefin Textiles has played an inte-gral part in developing a system to en-sure all visual boards are updated daily, whilst also monitoring and measuring lot change overs exceptionally well. This has had a significant impact of Dye-fin Textile’s ability to identify and reduce wastes in these areas of production

Gladman Ntoyakhe and Fikiswa Phephe from Saddler Belts have persevered with numerous lean production projects de-spite a number of manufacturing man-agement changes in the factory. Both have been integral to implementing nu-merous lean production improvement projects on the factory floor.

10

Feature Article

South African Retailer Fabric Demand Survey

By Justin Barnes and Kyle Ballard

11

12

1.1. Introduction and Study context

Research completed in Turkey and elsewhere has highlighted that Quick Response (QR) retailing and associated supply represents a major strategic opportunity for Cape Clothing and Textile Cluster (CCTC) and KwaZulu-Natal Clothing and Textile Cluster (KZN CTC) members with the potential to sustain over 150,000 jobs in the SA clothing and textiles industry (Barnes, 2012, 2014; Barnes & Terreblanche, 2012).

Fabric supply has however been identified as the “Achilles Heel” of the South African clothing and textiles supply chain in respect of QR supply. This is largely due to the lack of local dyeing and finish-ing (including printing) facilities to convert greige fabric according to in season customer demand.

A Textiles Mapping Project completed for the DTI in 2012 highlighted major misalignment between the fabric demand profile of SA retailers and local fabric production capabilities, including:

Knitting deficiencies (outside of cotton);• Very limited local woven production, especial-

ly of light and medium weight synthetic fabrics typically used in the ladies fashion market;

• Limited dyeing and finishing capabilities, in-cluding an inability to print on synthetic fabrics at scale.

Only 55 million meters of retailer fabric purchases were included in the DTI survey. This was due to the retailers’ inability to identify the fabric used in their garment orders. To correct the limitations of the 2012 DTI survey it was agreed at the joint KZN

CTC-CCTC retailer-supply chain Imbizo of 16-17 August 2013, that the seven major retailers would again be asked to accurately calculate the fabric used in their garment orders (ensuring that house-hold textiles are excluded).

Only four of seven retailers provided B&M Ana-lysts with their fabric use, with one of these four providing the fabric used only by their own design house. This led to the survey capturing 187 million meters of fabric use over two seasons (Summer/Spring; Autumn/Winter over 2012 and 2013) on which the retailers were able to calculate usage. The total fabric use captured was based on a total of 34,324 garment orders averaging 4,540 units per order, based on 1.2 meter fabric rating per garment.

Each retailer needed to calculate average fabric ratings for each garment order, which represented a major task. We would therefore like to gratefully acknowledge the support of the 4 retailers in this study.

13

1.2. Study methodology

The survey questionnaire, compiled in October 2013, focused on the amount purchases (in me-ters), in the following categories and sub-catego-ries:

The survey was completed by the retailers over the period from November 2013 to April 2014, with B&M Analysts reviewing the data and rais-ing queries in May, and then coding the data and preparing this report through June and July 2014.

14

2. Fabric demand findings

The tables below detail various breakdowns of the data from this study according to fabric type, weight, and country of origin. These findings are then summarised below, followed by implications and recommendations for the South African textiles industry.

2.1. Aggregated fabric use by type and country of origin

Cotton and poly-cotton clearly dominate the profile of overall fabric demand from domestic retailers. Furthermore the largest portion of supply is from outside South Africa and Africa at 67% of total sup-ply. South Africa supplies only 16% of the current domestic demand for fabric.

15

2.2. Cotton fabric use by weight and country of origin

Within cotton demand, medium fabric weights (161-240g) are most common, with the top 3 cotton types being the Single jersey (15 million meters), twill (8 million), and denim (7 million).

16

2.3. Cotton–other synthetic and Cotton-other natural fabric use by weight and country of origin

The medium weights are most common in the cotton–other synthetic and cotton-other natural cate-gories, with the top 3 types being used for the single jersey (6.5 million meters), cotton-viscose (3.5 million), and sateen (3 million).

17

2.4. Polyester-cotton fabric use by weight and country of origin

Polyester-cotton fabric is also dominated by the medium weight category with the top 3 types being used for denim (19 million meters), single jersey (3.9 million), and fleece (1.8 million).

18

2.5. Polyester fabric use by weight and country of origin

The top 3 types of polyester fabric are georgette (2 million meters), chiffon (1.5m), and polar fleece (1.5 million) with medium weights most common.

19

2.6. Polyester-other synthetic fabric use by weight and country of origin

Other polyester synthetics are once again dominated by medium weights with the top 3 types being poly-viscose (3million meters), ponti (2 million), and single jersey (1.5 million).

20

2.7. Other synthetics fabric use by weight and country of origin

Viscose (8 million meters), acrylic (3 million), and nylon (2.5 million) are the top three types of other synthetics in demand, with medium weights most prevalent.

21

2.8. Other natural fibres fabric use by weight and country of origin

The vast majority of other natural fibres are sourced from outside of South Africa at 84% of the total demand.

22

2.9. Other fabric use by weight and country of origin

Other fabrics are also primarily sourced internationally as opposed to domestically.

23

2.10. Unknown fabric use by weight and country of origin

A relatively small amount of unknown fabrics are sourced from primarily international sources.

24

2.11. Woven fabric use by type, weight and country of origin

South Africa supplies only 7% of the total woven fabric demand for domestic retailers.

25

South Africa supplies only 7% of the total woven fabric demand for domestic retailers.

26

2.12. Knitted fabric use by type, weight and country of origin

27

South Africa supplies 23% of the total knitted fabric demand for domestic retailers.

28

2.13. Knitwear fabric use by type, weight and country of origin

29

South Africa supplies 10% of the total knitwear fabric demand for domestic retailers.

30

3. Summary of Findings

It is important to analyse the findings from this study focussing on retail demand (Barnes, 2014), along with the findings from the previ-ous study, mentioned above, which focused mostly on domestic and regional capacity of manufacturers (Barnes, 2012). Understanding both sides (supply and demand) of the textiles industry provides greater insight into the op-portunities for the South African textiles indus-try.

3.1. Major findings from domestic supplier capacity study

(See Barnes, 2012 for more detailed findings and recommendations)• There is a clear level of misalignment be-

tween the demand profile of apparel re-tailers, design houses and manufacturers, and the supply capability of regional textile manufacturers.

• The weaving portion of the value chain has very limited capability, in respect of synthet-ic fabric supply, especially when demand re-lates to light weight synthetic fabrics.

• The regional textiles industry is most com-petitive in cotton knits, with the major threat to South African suppliers coming from Mauritius, rather than the East.

• The two most notable deficiencies in syn-thetic apparel and household textiles ca-pability relate to (a) the lack of water jet weaving capacity in the industry, despite this being the most cost efficient weaving technology for synthetic fabrics, and (b) the lack of dispersion and/or reactive printing

capabilities.• The dyeing and finishing sub-sector of the tex-

tiles industry has failed to develop more ad-vanced capabilities in respect of dyeing and (most importantly) printing light weight poly-esters and other synthetic fabrics.

• Without the above mentioned capability there would appear very little reason for South Afri-can retailers, design houses and manufactur-ers to source local polyester and/or polyes-ter/cotton knits or wovens. This is the reason for the disproportionate level of importing of these fabrics into the region.

3.2. Major findings from domestic retail demand study

• A wide breadth of fabric construction is used by domestic retailers with an almost 50% split between woven and knits.

• Cotton and poly-cotton dominate the types of fabric supplied, constituting over 55% of all fabrics used.

• Across the fabric types, substantial variances occur between light, medium, and heavy fab-ric requirements, although medium weight fabrics (161g-240g) clearly dominate at nearly two thirds of the total fabric demand.

• The source of supply for woven and knit is fun-damentally different. South African manufac-turers supply only 7% of total woven supply, with 83% sourced from outside Africa. South Africa supplies 23% of the knit requirements, with 19% from Africa (excluding the South Afri-can Customs Union), and 52% is supplied from outside Africa.

31

4. Implications

Based on the study representing an accurate spread of fabric being used in the formal South African re-tail market, and representing 50% of total South African retail demand, it is clear there is huge potential domestic apparel fabric demand – estimated at around 370 million meters.

Through the lens of Quick Response retailing, these findings present a valuable opportunity for South African manufacturers. Quick Response is a retail model based on flexibility and an ability to quickly identify and react to emerging fashion trends based on point of sale data. Production is adjusted contin-uously based on this information to ensure a constant flow of high-demand designs to an unpredictable fashion market. Local manufacturers are best placed to meet the quick response requirements of retail-ers, but their flexibility is constrained by the lack of access to local fabric manufacturing and conversion capabilities. Apart from dyeing and finishing opportunities, data suggests major opportunities for weav-ing capacity development in South Africa (only 7% of woven fabrics are sourced locally), especially for medium and heavy weight cotton and poly-cotton fabrics. Also substantial opportunities exist across the knitting range, particularly in medium weight cotton, po-ly-cotton and cotton-other synthetic.

By aligning to Quick Response requirements, clothing and textiles manufacturers can achieve an inter-national competitive edge by exploiting their natural location advantage. They will be able to compete on total value package and not just price, and can become strategic partners with their customers. Furthermore, based on research within the KZN CTC and CCTC, this model has the potential to conser-vatively maintain around 150,000 clothing and textiles jobs (Barnes, 2014).

If South African retailers were to convert 40% of their buy to Quick Response (which is the recommend-ed level identified through KZN CTC and CCTC research), demand for Quick Response fabrics would equate to 148 million meters (40% of 370 million meters), of which approximately 74 million meters each would be knitted and woven (Barnes, 2014). Clearly sufficient demand exists for a set of large scale dyeing and finishing (printing) operations in South Africa.Apart from dyeing and finishing opportunities, data suggests major opportunity for weaving capacity development in South Africa (only 7% of woven fabrics are sourced locally), especially for medium and heavy weight cotton and poly-cotton fabrics. Also substantial opportunities exist across the knitting range, particularly in medium weight cotton, poly-cotton and cotton-other synthetic.

32

5. Recommendations

This fabric study has clearly established the extent of potential fabric demand in the formal South Af-rican retail market, with a major set of opportunities appearing to exist, however major investment is required. It is recommended that the Industrial Development Corporation (IDC) and/or other invest-ment institutions complete a viability study on the commissioning of, and/or support for investment in, a large scale dyeing and finishing plant in South Africa to support the establishment of emerging Quick Response retailing and associated supply chain management model.

This feasibility study would need to follow three stages in development: 1. Consolidation of existing research on current domestic fabric capacity, demand, as well as existing

programmes in this industry. 2. Clarifying the specific Quick Response requirements to be developed in terms of fabric supply. 3. Development of a strategy outlining the types of capabilities that are required (down to which

specific machines, broader infrastructure, and technical skills), costs for investing in these types of capabilities, and a proposed implementation plan.

References

Barnes, J. (2012) Status quo of the textile industry in South Africa, SACU and Zimbabwe: Mapping exercise and strategic South African textile industry considerations. B&M Analysts.Barnes, J., & Terreblanche, J., (2012). An Analysis of Mauritian Trade in Clothing and Textiles 2008 – 2012. B&M Analysts.Barnes, J. (2014). Turkey study tour briefing note for the KZN CTC and CCTC. B&M Analysts.

33

Upcoming Events

12 November 2014 CMT Manufacturer/Retailer Tour

34

Industry News

Make Customers Want to Buy OfflineHarvard Business Review Blog Network by Sohrab Vossoughi. June 23, 2014.

Showrooming, once a worry primarily for consumer electronics retailers, is expanding into markets we might have thought exempt. Today we can investigate everything from cars to books to groceries in person and then proceed to order them online, often with greater ease and significant savings.Chalk this up to the efficiency of digital retailers, who’ve systematically dismantled every obstacle to online shopping. Shipping is fast and cheap, returns are a snap, and customer service is often better than what you find in a store. Price competition these days is a guaranteed losing strategy, especially with Amazon, whose long cash floats and high inventory turnover allow them to stay profitable even with no margin. Stores like Best Buy and Walmart once seemed unstoppable as they displaced inde-pendent retailers; now the Goliath has become David.Yet for each Radio Shack and Barnes and Noble fighting for its life, there are still those beloved corner stores and discount chains that manage to thrive. Many keep a close eye on the prices being charged by their digital competitors, and work to keep theirs from straying too much higher. Most learn to em-phasize their advantage in immediacy. More than anything, these successful brick-and-mortar stores know to compete on experience.

A satisfying real-life retail experience is something Amazon can never duplicate – but the trick is trans-lating that satisfaction into dollars spent on-site. We should see this as an experience design problem. A look at retailers who succeed despite showrooming reveals three design imperatives.Design for empathic expertise. When a shopper uses a physical retail setting as a showroom, what are they looking for? A better look at the merchandise, and the benefits of touch and feel – but even more, for expertise that could guide their choice. You probably have a business you patronize for exactly this reason, whether it’s the boutique that knows what’s on trend, or the specialty grocer who can advise on preparation of a dish, or the wine seller who can recommend the right bottle to go with that meal. Backcountry.com and Zappos, for example, are excellent online retailers, but they haven’t displaced REI or the local shoe store, because people value that hands-on expertise. Especially when the purchase is something we really care about, we’re willing to pay extra for a trusted advisor helping us make the right choice.

35

How could the shopping experience be designed to emphasize your expertise – and get it paid for? The challenge begins with improving staff hiring and training. Good people also need good informa-tion. If you can create a data system to give employees quick access to information about products and customers, you can equip them to advise as experts. Conversely, if shoppers perceive that the kid behind the counter knows little more than they do – or worse, has an incentive other than the consum-er’s interests to steer them toward certain choices – they will have no qualms about leaving the store and buying online. Design your retail setting to be a showroom for your empathic experts even more than for the products you sell.

Design for whole solution provision. When you buy a new computer, you may also need new periph-erals and software to accomplish what you’re hoping to do with it. A new bike often means a new helmet, lock, and lights. A new coat calls for a matching scarf and gloves. Especially in the consumer electronics category, where technologies shift with blinding speed, customers are often happy to take care of these purchases all at once, in person, even if it means spending a few dollars more. Concerns about compatibility are certainly part of it (how do you choose wisely if you can’t tell USB from HDMI, or a Schrader valve from a Presta?), but so are perceptions of price. Spending an extra five or ten dol-lars seems reasonable when investing in a solution that costs hundreds or thousands. The desire to assemble a combination that works, right away, can derail an obsession with paying the lowest price.For retailers, this has implications not just for the expertise you need in problem solving, but also for the products you stock and how they are displayed. The extras here are very different from the im-pulse buys we make while waiting in the supermarket checkout line. They’re considered purchases that weigh current and future needs against budget, and must respect the requirements of the central product they work with. They can also add up to hundreds of dollars.

This means designing your store to serve as a source for solutions, both now and in the future. Again, heightening your staff’s expertise helps immensely. So does offering customers a complete ecosystem of secondary products, rather than simply hanging some earbuds and cases within easy reach. Design with an eye to the outcome the customer is seeking, whether that’s more reliable transportation, more exciting entertainment, or higher productivity. Deliver a system of products and services that works with their primary purchase to provide those outcomes, and they’ll reward you for it, rather than try to reconstruct it all for themselves online.

36

Design for community. Portland, Oregon, where Ziba has its headquarters, is so saturated with bike-ori-ented businesses that when a newcomer, Velo Cult, announced in 2012 it was moving its bicycle repair shop here from San Diego, observers wondered loudly whether it had any chance of success. It didn’t help that even the local mainstays were being challenged by online competitors discounting the prod-ucts they sold at retail.

Rather than compete on price or selection, though, Velo Cult works “to be equal parts bike shop, venue, and bar” – in other words, a community. The large space they occupy is open plan, with long tables and benches, repair stations along one side, and a beer and coffee bar along the other. They offer the space up to local organizations for seminars, meetings, and parties, whether bike-related or not. Within months, Velo Cult became a de facto community center for many of the city’s two-wheeled enthusiasts. It also became a profitable business.

It’s an unusual model, but a great design solution in a saturated market. Any shop can sell you a rack or floor pump, or tune up your road bike; for consumers, the decision of where to shop (online or off) comes down to convenience and trust. By establishing itself as a community hub, Velo Cult showed thousands of potential customers that it was easy to get to, pleasant to visit, and aligned with their own values. If you visit a store three times to attend an event or grab a drink, your fourth visit could be to buy a new pair of tires…even if you could’ve ordered them from Amazon for a few dollars less.Not every retail environment can be a community center, of course, but the demand for such spaces is huge and unmet, and there are endless ways to build community — even in surprising environments, like financial institutions. Since its “Slow Banking” redesign in 2003, Oregon-based Umpqua Bank has provided ample seating, free coffee, and wifi to its customers, and offered up its branches for meetings, workshops, and concerts. In that time, it’s grown from less than 70 branches to nearly 400, becoming the largest regional bank in the Western US.

Both Umpqua and Velo Cult succeeded by orienting their spaces around community first, and sales second. Companies looking to emulate their success should realize that the visual differences are rel-atively small, but policy shifts can be fundamental, from encouraging events that generate little or no revenue, to changing the way employees are incentivized and trained.One fundamental point deserves to be underscored, because it informs all three of these design im-peratives: shopping is emotional. The internet offers many functional advantages: selection is endless and endlessly searchable, prices are excellent, and there’s none of the hassle of going to the store. Most purchases, though, aren’t purely functional, and a well-designed shopping experience works with that by heightening the positive emotions and countering the negative ones.

37

More than just satisfying emotional needs, shopping is part of how we form identity. The decisions we make about how we will spend our money are part of how we present ourselves to the world. Offer customers an experience that deepens their sense of identity and reflects positively on it, and you’ll earn the higher margin you’re asking them to pay.

38

The next three challenges for lean

By Daniel T. Jones, Chairman of, Lean Enterprise Academyhttp://www.planet-lean.com/the-next-three-challenges-for-lean

39

How can creativity and standards coexist? How do we move beyond silos? How do we fully understand the voice of the customer? Dan Jones reflects on three key questions for the lean movement.I am often asked to comment on what I see as the future of lean. I have addressed what in my opinion will be the movement’s biggest challenge, learning how to thrive in the so-called ‘digital age,’ in a previous article here on PlanetLean. But the challenges don’t stop there.I am impressed by the progress lean has made over the past couple of decades: not only has it taught us what respect for people means and given us the tools to improve our processes; it has also helped us to understand what the role of leadership should be in a company that aspires to change.The methodology has gone in all kinds of directions, extending its reach to most sectors of the econ-omy (granted, more can be done in many of them) and to all layers and functions within organizations, from top management to the front line, from product development to procurement.But there is much more to do, and lots of questions that remain unanswered.

With this in mind, I would like to discuss three pressing challenges that the lean community must ad-dress:• Clarifying the interaction between standardization and creativity;• Going past silos and changing the role of experts in organizations; • Fully understanding the voice of the customer.

40

CREATIVE, LEAN

Over the centuries, our approach to the knowledge of work has changed substantially – I believe we can identify three main stages of evolution. The earliest one was craftsmanship. Dating back to medi-eval time, it was characterized by a learning-by-doing approach and by people’s tendency to keep the “secrets” of their work to themselves.

Then came the Industrial Revolution, which took all of those secrets and systematized them, building knowledge of the work into machines. We could call this industrial knowledgeToday, we are in a new phase, which puts an interesting hybrid between technical and social knowl-edge into the spotlight. This approach allows us to work with others to manage processes (which is what lean ultimately teaches us).

It is a bit hard to give it a name, but I think we can call it technical and social mastery. Even better, we can call it organizational mastery.What we are seeing, however, is that associates in the digital world (IT plays an increasingly important role in our society and businesses) appear to be somehow stuck in the craftsmanship phase. IT pro-fessionals tend to feel overprotective with their knowledge and expertise, and seem to favor those approaches that, in their minds, grant them the freedom to be creative and protect them from those who want to treat them like industrial workers. Agile is perhaps the clearest example of this: it was born to give software engineers a place to work “creatively.”

This is where the problem lies for the lean community these days: we cannot afford to go back to craftsmanship, especially in a digital environment (systematizing and standardizing software is neces-sary to improve it); instead, we must learn how to use technical mastery in a shared context.One of the main struggles we face as humans is the idea, which we grow up with, that creativity cannot co-exist with standard procedures and codified behaviors. We tend to convince ourselves that rules, any rule really, will destroy our ability to be creative.

The reality is that, as we become masters, we can work together to standardize routine activities and, in doing so, free up time for creativity. Agreeing on a set of guidelines and procedures that can help us make sense of the processes we run will remove the frustration that comes from fire fighting. With it, we will also eliminate the distractions and misunderstandings that take so much of our time, make our work so difficult, and actually pose a threat to our creative drive.

41

Perhaps the issue lies in the definition of the creativity. To me, creativity means knowing how to com-bine standard elements into a new solution.Standards build shared knowledge, and ensure routine activities don’t take too much of our time. They don’t detract from creativity; they enable it.

SILO THINKING IN LEANIn essence, relying on standards can allow us to harness our people’s creativity in a sustainable way. But in this context knowledge must be seen as an asset shared by everybody involved in a process, which leads me to discuss the second big challenge that lean must overcome: silo thinking is still very prevalent in our companies.What I often see in multinationals is very smart and talented people trapped in silos, fighting political battles that result in a lot of noise and unnecessary cost.Instead of allocating resources through a political process, we should find a way to collaborate – within a hoshin process- across vertical silos to improve the value streams. In a siloed organization, functions only work towards the optimization of their own activities, not to improve the business as a whole. We must revisit this, and bring a more holistic view of our organizations to the fore.Inevitably, in a more holistic, horizontal environment the role of experts would change dramatically. Would categories and functions like lean marketing, lean procurement, lean HR, etc. still be relevant in a scenario in which an organization has a value stream view and no silos? No, they would not.So how do we focus on the horizontal as opposed of being trapped in the chimneys of the vertical func-tions? We don’t have an answer to the dilemma yet, but perhaps what we need is a few open-minded multinational organizations who are willing to carry out a few experiments with us to prove the validity of this approach.

42

THE REAL VOICE OF THE CUSTOMER

The profile of the average 21st century customer changes constantly, and at a very fast pace. If we want to keep up and be successful, we must develop the ability to truly think back from the customer, which is one of the foundations of lean thinking. It is possibly the hardest thing to do, but understand-ing and embracing the voice of the customer really is critical to ensuring the future of our businesses.The lean startup movement, with its quick learning loops and its focus on experiments, has taught us a valuable lesson here: traditional QFD-like analysis is relevant to large projects that take place infrequently, but not to today’s customer expectations. In our world, improvements to products and services are incremental and increasingly based on customer feedback (think of the beta version of a mobile application).

The good news is that our production systems are more flexible than ever (particularly thanks to lean thinking) and have now the ability to quickly adapt to changes. All we have to do is starting a dialogue with our customers.Take supermarket chain Tesco as an example: the company has several ways to listen to shoppers, from observing store sales to relying on big data and feedback clinics, from having senior manage-ment spend a day a week on the floor to setting up a system in which promotions are launched and tested locally (to gather customer feedback) before they are rolled out nationally.

The lean movement has spent a lot of time improving companies’ existing systems and assets. But what if, instead of fixing something that is broken, we could start all over again, this time with the voice of the customer clear in our minds from the beginning? Surely, it would be easier for us to utilize user feedback to fulfill customer requirements.

It is not too late, and a good way to start is educating key customers and turning them into partners with whom we can develop the next generation of products and services. We have a long way to go, but the challenge is definitely exciting.

43

Dube TradePort is officially an Industrial Development Zone

http://www.dubetradeport.co.za October 07, 2014

The launch of the Dube TradePort Industrial Development Zone (DTP IDZ) represents a significant milestone in reaffirming Dube TradePort’s role as an engine for sustained economic growth for South Africa, in line with the country’s Regional Industrial Development Strategy contained in the Industrial Policy Action Plan.South Africa’s Trade and Industry Minister designated Dube TradePort an IDZ on 1 July 2014. Today, 7 October 2014, President Jacob Zuma officially launched the Dube TradePort Industrial Development Zone.

44

“Dube TradePort is a key priority Infrastructural Development Project for the Province of KwaZulu-Na-tal. This status carries with it responsibility for the development of an Integrated Aerotropolis Strategy, the development of a Provincially-driven airlift strategy and the implementation of the KwaZulu-Natal Provincial Growth and Development Strategy. Dube TradePort enjoys further support by forming part of South Africa’s National Infrastructure Plan, as outlined in the Presidential Infrastructure Co-ordinat-ing Commission (PICC) under Strategic Infrastructure Programme 2.

Government’s backing and our bold vision of a 60-year master plan, gives investors the security of sustained growth and development,” remarked Mr Michael Mabuyakhulu, MEC for Economic Devel-opment, Tourism and Environmental Affairs for KwaZulu-Natal.

Over the past five years, Dube TradePort has grown to a size of 2840 hectares and in that time it has successfully managed to attract over R 900 million in private investment. In the process its impact on job creation has been estimated to create 16 527 new job opportunities across the country and this will increase with new development opportunities.

“Against the backdrop of exceptionally pleasing private sector interest in and uptake of investment opportunities at Dube TradePort, we are excited by the designation of Dube TradePort as an Industrial Development Zone which will allow us to further target local and foreign investment. Work on this front is ongoing and we anticipate forging synergistic relationships with other identified industrial economic hubs for the benefit of the entire Province and its business community.

Dube TradePort is Africa’s first purpose-built Aerotropolis and has central to it an International Airport. This freight-orientated Aerotropolis coupled with IDZ designation will certainly quicken the pace of development at Dube TradePort and, I would confidently add, increase demand for greater levels of airlift out of Durban to domestic, regional and international markets. This would, in turn, augment efforts to grow our strategically influential location - together with two of Africa’s major seaports - to become a truly viable and sustainable alternative gateway to South Africa, Africa and the world,” com-mented Dr Zanele Bridgette Gasa, Chairperson of the Board of Dube TradePort Corporation.

The Dube TradePort IDZ is located within a strong economic region, close to major complementary transport and freight links and boasts world-class infrastructure. As a secure, purpose-planned airport city and master-planned business environment, infrastructure has been designed in line with freight-ori-entation and cargo and is supported by the state-of-the-art, King Shaka International Airport.

“IDZ status is incredibly prestigious, as it carries with it a range of benefits for enterprises. DTP IDZ benefits – which include both fiscal and customs incentives – are specifically geared, at this stage, for

45

agri-processing and manufacturing enterprises located within Dube TradeZone and Dube AgriZone. This represents the first phase of Dube TradePort Corporation’s roll-out and will cover some 300 hect-ares of agri- processing and industrial activities, growing to more than 700 hectares into the future,” noted Ms Saxen van Coller, Dube TradePort Corporation’s Chief Executive Officer.

46

The Dube TradePort Industrial Development Zone will have a set of priority sectors that will comprise the core of its clustering approach, through which it will drive growth. These sectors include:

1. Aerospace and aviation-linked manufacturing and related services,2. Agriculture and agro-processing, inclusive of horticulture, aquaculture and floriculture,3. Electronics manufacturing and assembly,4. Medical and pharmaceutical production and distribution,5. Clothing and textiles.

Such targeting is not limited exclusively to the identified priority sectors and supplementary sectors include:1. Freight-forwarding and aviation services,2. Warehousing and storage,3. Logistics and distribution,4. Light manufacturing and assembly,5. High-tech and automotive industries,6. General manufacturing,7. Renewable energy,8. Aquaculture and Cold storage.

Industrial Development Zones have made crucial contributions to the economic success of many de-veloping nations including the miracle that has seen China emerge as a global economic powerhouse. South African policy makers have worked tirelessly to successfully test the market economy business and have created these Industrial Development Zone designations in line with the country’s industrial development strategy. The aim being to bring in new institutions that will contribute significantly to gross domestic product, employment, exports, and attraction of foreign investment, as well as the adoption of new technologies and management practices helping to create a model for the rest of the country to follow.

47

your ideas:

If you have any ideas for improvement or would just like to get in touch, please contact:

The KZN CTC 031 764 6100 (office)

kznctc@bmanalysts.com