2015supplychainforesightEMBRACING CHANGE FOR A SUSTAINABLE FUTURE
The certainty of uncertainty.
Are we geared for the age of change?
Logistics
Logistics Newsthe independent voice of the Supply Chain industry
March 2015
TransportALSO: S L A
A :
Survey 20152 supplychainforesight 2015 … harnessing talent,
managing change
Supply chain4 MUST-HAVE CAPABILITIES … to achieve global SC
visibility
RFID6 RFID HAS QUIETLY … crossed the chasm
Logistics8 HORSES FOR COURSES … hub and spoke in rural
Africa
Training10 EXCITING TIMES … harvesting our youth
dividend
Transport12 TRUCK DRIVERS … obsolescence or
opportunity?
14 THE AGE OF SELF-DRIVING VEHICLES
… is looming
Safety16 HUMAN ERROR AND
ACCIDENTS, … and the role of self-
regulation
Product20 HINO LOOKING FOR … increased sales in 2015
Regulars18 BOOKMARK22 NEWS31 FORTHCOMING EVENTS32 INDUSTRY ASSOCIATIONS &
EDITORIAL DIRECTORIES
March 2015
Since its inception in 2003, the supplychainforesight survey has grown in size and stature, achieving a thought provoking mechanism that has found favour with businesses, academia and public enterprises. It has provided a measure of performance and identification of trends and opportunities for SA businesses and their supply chains.
COVER STORY
16Human error and accidents, and the role of self-regulationCompanies using third party contractors to move their goods are confronted with many challenges including a high rate of accidents. In an environment with one of the worst accident rates in the world, something different needs to be done, but what?
4Must-have capabilities to achieve global SC visibilityGlobal complexities have a profound effect on supply chains, and a multitude of forces drive today’s need for greater visibility into the supply chain. Global supply and demand networks introduce distance, cultural and time-zone challenges that create increasing complexity, which is difficult to see into and manage.
14The age of self-driving vehicles is loomingWith so much attention being paid to the development of self-driving cars, little notice has been given to the prospect of self-driving leviathans of the highway – the long-haul truck. In terms of near-term impact, the self-driving semi could make a bigger splash.
CONTENTS
2015supplychainforesightEMBRACING CHANGE FOR A SUSTAINABLE FUTURE
The certainty of uncertainty.
Are we geared for the age of change?
Logistics
2
2
research
This first part of a three-part serialization of the supplychainforesight 2015 research reflects
that, while transformation and progress have been features of the business world for
decades, the pace of development and change has undoubtedly accelerated.
New technology, new competitors, a hyper-connected and globalised system, and a vastly
different consumer landscape are all key drivers of rapid and relentless change.
Harnessing talent, managing change
BASED ON independent research conducted by Frost and Sullivan on behalf of Barloworld Logistics, the 12th annual survey of the South African supply chain and logistics market sought to understand just how South African organisations are responding to this change, and where the threats and opportunities lie.
“While we found that change is firmly on the radar of executive leadership, organisations appear to lack the skills, expertise and embedded systems that are required to identify game-changing trends and harness new and emerging opportunities,” explains Kate Stubbs, executive: Marketing & Communications at Barloworld Logistics.
The report, ‘Embracing Change for a Sustainable Future’, collected the views of over 370 professionals representing companies across SA – providing a statistically accurate representation of SA’s business and industry leaders.
More than two-thirds (66%) of the respondents hold a director level position, demonstrating the relevance that supply chains play in business today. The widespread industry representation and the variety of senior roles and positions of respondents also reveals how the supply chain is seen more and more as a critical backbone of business – and is no longer a mere support function.
Respondents to this year’s survey represented a broad variety of companies by size, ranging from those turning over R1-bn per annum or more, right through to smaller entrepreneurial businesses with a turnover of less than R50-m. Views of respondents from a broad cross-section of traditional industry sectors were received, and there was a significant increase from respondents in the ‘other’ category – representing new and emerging industries such as solar energy, waste management and humanitarian sectors.
A key business objectiveChange is firmly on the leadership agenda with respondents selecting ‘identifying and managing change’ as the top-ranking strategic business objective for 2015. ‘Growth and
expansion into new markets’ ranked second, and is a continuing theme from 2014, as opportunities in Africa and abroad become potentially more feasible and lucrative.
The ‘cost of doing business’ is the top-ranked constraint by respondents, up from second place in last year’s survey. With most input costs increasing, high levels of uncertainty, competition from low-cost producing nations and a relatively stagnant economy, companies are focusing on cost effectiveness to remain competitive. The ‘cost of doing business’ is typically only a factor where a company
3
has a competitive disadvantage in relation to its competitors.
With regards to supply chain objectives over the next 5-10 years, the top three rankings in this section are consistent with last year’s survey: ‘Improvement of service levels to customers’ remains the foremost supply chain objective, while the ‘integration of technology’, ‘improving the flow of business intelligence’, ‘lowering procurement costs’, and ‘reducing order lead times’ are also focus areas.
When questioned about supply chain challenges, respondents ranked the top supply chain challenge as the ‘willingness to change/breaking old habits/relationships’. The issue may well be identifying the need to change before being forced by circumstances to do so – which relates to the role of seeking change for continuous improvement.
Change management skillsWithout a doubt, one of the key findings was a concerning shortage of leadership, visionary and change management skills within organisations. Whilst in all the previous supplychainforesight surveys the lack or shortage of skills has been viewed as a major business constraint, it is the first time that a lack of necessary leadership and visionary skills has been identified as a skills gap at managerial level.
With the current speed of change and rising trends, this response supports the view that most companies do not yet see the need to raise the profile of managing, predicting and creating change (or are too busy with existing challenges to take the time to do so). This results in a short-term, tactical focus rather than strategically anticipating and planning for the future.
With regards to capabilities to implement change within organisations, 45% of respondents believe it is well executed but needs improvement, and only 7% responded that it is extensive and comprehensive. With these activities being vital to the success and sustainability of businesses in today’s environment, mediocrity or the lack of high levels of competence
is concerning. Furthermore, 68% of respondents believe that the health of their companies is at risk in the face of current and potential changes in global market structures and transformational technologies.
When viewing change in the supply chain, 36% of respondents said there is a controlled and deliberate process to managing change in their supply chains, while the remaining 64% said their companies either react or change when required to respond to market needs, or see little or no development potential of their supply chains.
Whilst in all the previous supplychainforesight surveys the lack or shortage of skills has been viewed as a major business constraint, it is the first time that a lack of necessary leadership and visionary skills has been identified as a skills gap at managerial level.
“These views underscore that organisational change is hard – and the greatest challenge is to change people,” adds Stubbs. “Leaders need to create the right context and environment for change to effect change successfully.”
Internally, it appears there is little faith in the ability of organisations to identify and respond to trends. Only 42% of respondents said their organisations are constantly in touch with anticipated shifts in the market and predicting game-changing trends.
This year’s survey also sought to understand respondents’ views on the emerging megatrends, and their potential impact on supply chains, businesses and industries.
The major finding is that all the megatrends are viewed as opportunities and less so as threats. The biggest perceived opportunity is from ‘technology innovation’, and the greatest threat is seen as ‘the rise of Asian economies’.
“The report highlights the extent to which visionary leadership will be critical to managing change and leveraging new opportunities,” concludes Stubbs. “By addressing the need for skills and talent in specific areas, organisations can harness market shifts and changes to
4
IN TODAY’S economic climate, businesses are under constant pressure to cut supply chain costs and improve cycle times while meeting customer expectations. Ongoing mergers and acquisitions create even more complexity as each new division finds itself operating in silos and unable to leverage economies across the organisation.
Such complexity makes it difficult to see what’s happening in an international supply chain in real-time. This can jeopardise supply chain performance in the management of critical activities with suppliers, and undermine the ability to meet customer demands and compete in the marketplace.
Must-have capabilities to achieve global SC visibility
Global complexities have a profound effect on supply chains, and a multitude of forces
drive today’s need for greater visibility into the supply chain. Global supply and demand
networks introduce distance, cultural and time-zone challenges that create increasing
complexity, which is difficult to see into and manage.
Acknowledgement to Amber Road
These complexities result in global supply chain challenges, and include:
the supply chain
international suppliers
shipments
supply chain nodes
corporate costs.
supply chain
6
AS WITH MOST NEW
went through an awkward stage while true believers looked for anyone who would use their new
phase, companies try to gain users by flooding the market in waves of unasked-for new technology, products and buzzwords. With the Internet of Things,
corporate websites, one might think we’re not yet done with that; but there’s reason for optimism. Some key trends are emerging
outgrown its awkward adolescence and that 2015 will be a growth year.
We have a ‘Killer App’
most retailers now. The basic handheld solution is not hard to understand, delivers real ROI and has a relatively low investment hurdle. Employee training and compliance can sometimes be a hurdle, but this is true for many jobs in retail, and it does not change the fact that significant sales uplift is not only possible, but typical.
so strong that it is surprisingly insensitive to the price of tags. Retailers with a high proportion of replenished items like basics can expect sales uplift just from having well-stocked shelves. For those with fashion and seasonal items, avoidance of markdowns from better inventory visibility will boost gross margin. Both can expect reduced shrink from better ability to discern loss patterns. Beyond this
RFID has quietly crossed the chasm
Despite distractions like the Internet of Things and the Cloud, the RFID industry has quietly
crossed the chasm, and many signs of maturity and reasons for optimism for 2015 have
emerged.
By Scot Stelter, ChainLink Research
is an asset for retailers implementing omni-channel strategies.
accelerate as the number of brand owners and retailers using it grows. In some cases, retailers are deciding to tag all general merchandise.
The whole product is filling inAccording to industry commentators, early adopters are willing to experiment with immature technology when it’s still full of bugs. That was certainly true during the
tags was acceptable. Back then users encoded case tags with rigs that would be considered primitive by today’s equipment standards. Eventually those were replaced with much faster printers.
Much has changed. In 2013 already a machine was launched that encoded 75 000 hang-tags per hour, detecting and rejecting bad tags at speed. This year
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CONSIDER THE initial significance that self-driving trucks might have on the road: based on the most recent data
in 2013, many of which belong to the more than 33 000 commercial fleets on American highways.
Europe and the East and the potential simply balloons. Realistically, the concept of self-driving vehicles must be presently confined to countries that already have sophisticated highways that can be adapted and upgraded with the necessary infrastructure to support the automated vehicles.
While enticing individual owners of private vehicles to put self-driving cars in their driveways could take decades and only change one car at a time, truck fleet owners could replace potentially dozens of vehicles in a single stroke, particularly considering the potential of economic incentives and regulatory mandates.
For an autonomous system, highway driving is far easier than navigating cities. There are no cyclists or pedestrians to watch out for, speeds are steady, and turns are minimal. The ‘piloting’ system would combine several already established technologies that will maintain lane position and following distance using cameras and radar. The sensors fitted would provide full coverage of the truck’s surroundings.
Another feature would include vehicle-to-vehicle communication technology connecting the truck to other vehicles on the road, providing their exact locations and speeds. The truck doesn’t need this data to drive autonomously, but it’s helpful for things like moving aside for emergency vehicles or detecting stationary vehicles up ahead.
Transport experts promise economic benefits in the form of reduced fuel consumption and emissions through more efficient routing and smoother driving, longer routes than people can safely drive, and less space taken from private drivers on the road. Trucks also have to deal with fewer stop-start, frequent turn scenarios, and fewer road obstacles, meaning a possible less daunting learning curve for self-driving systems.
The age of self-driving vehicles is looming
transport
Google roads
Rudin Center for Transportation Policy & Management, envisioned one of four scenarios in future transportation in America called ‘Re-programming Mobility’. The study, which imagines distinctly different ways that our lives, cities and movement patterns might change, focuses on outcomes driven by automation: everything from co-working journeys to city streets handed over to delivery drones at night. In the study’s ‘Growth’ scenario, Townsend sees a push for self-driving trucks partly as a result of converging economic, technological and regulatory factors. In this world, by the 2020s, Google proposes partnering with the federal government to overhaul the road system, creating ‘G-Roads’. This massive investment, made for explicitly economic reasons, trickles down to self-driving cars, laying down the technology consumers would need to make owning a private self-driving car more valuable.
Writing from the perspective of 2020, Townsend describes the evolution that takes place in this future. “The first step [in rebuilding a stagnant economy] was a crash programme to automate long-haul trucking,” he writes. “With the driver shortage that had grown throughout the 2010s, and the continued expansion of e-commerce, trucking companies were increasingly struggling to keep goods moving. Citing national security concerns, the federal government established an aggressive timetable for full conversion. Freight haulers were only too happy to comply, and tens of thousands of vehicles were upgraded, with significant cost savings, emissions reductions and, most importantly, fewer accidents.”
However, in the study’s ‘Collapse’ scenario, this collaboration is resisted by unions and car manufacturers not keen on having Google gain the same leverage over mobility as it has today over internet search. In this scenario, resistance to such a big shift looks more like a slowly emerging French-style blockade, gumming up roads of 2020 America in protest of poor planning. As a result, “there were more trucks on the roads than ever, and they were a major disruptor to the formation of computer-controlled platoons that could speed the flow of traffic,” writes Townsend.
With so much attention being paid to the development of self-driving cars
(even Apple is getting into the game), little notice has been given to the
prospect of self-driving leviathans of the highway – the long-haul truck. Industry
watchers and tech followers are salivating at the potential of making their
commutes or jumping between meetings in autonomous people-movers, yet,
in terms of near-term impact, the self-driving semi could make a bigger splash.
By Scott Smith, Changeist
16
Companies using third party contractors to move their goods are confronted with the
challenges of poor economic growth, ever increasing transport costs and high rate of
accidents. In an environment with one of the worst accident rates in the world,
where accidents cost the economy an estimated R300-billion annually,
something different needs to be done, but what?
By Andrew Crickmay, director, Crickmay & Associates
Human error and accidents
and the role of self-regulation
EXAMINING THE problem of high road accident rates at a supply chain level argues there is culpability throughout the supply chain. Road safety and efficiency are closely related in the supply chain, and the twin benefits of improved safety and reduced cost will result from improving efficiency.
Culpability of driversResearch shows that 90% of all accidents have some human error involved, and 57% are entirely due to human error, in terms of use of alcohol, recklessness, fatigue, poor reactions, poor anticipation and other factors. Interestingly, 80% of accidents are caused by 20% of drivers, which makes the identification of drivers with risky profiles and unsuitable skills important.
Culpability of transport companiesMany people would agree that driver wellness of the average SA commercial truck driver is extremely poor, leading to fatigued and unhealthy drivers, the effects of which inevitably compound the errors being made at a driver level. It is a fact that poor driver wellness, which is largely the responsibility of the transporter, has a direct impact on fatigue and on a driver’s ability to see, decide on and react to situations on the road.
Culpability of consignorsJust as transport companies compound driver error and often have a disregard for or only a limited understanding of the conditions their drivers work under, so it is that many consignors and consignees of goods have the same
safety
18
THE FUNCTION OF transport has traditionally been addressed from a transportation engineering perspective, which includes transport planning, infrastructure and traffic management, or from a transport economic perspective, which includes operations and the business of transport. Transport economics has to a large extent been incorporated into logistics and supply chain management, where the transport function accounts for the largest cost component.
Each chapter comprises sections on concepts, methods and a case study to allow modular teaching. The nine chapters cover specific topics and a final conclusion on issues and challenges in transport geography.
The method section of the first chapter covers some basic items such as the definition and properties of graph theory as well as measures and indices of graph theory for the purpose of explaining geographic information systems (GIS) for transportation. Although somewhat theoretical, it provides for interesting reading on the development and use of GIS in transportation. The discussion moves on to transportation and the spatial structure with focus on the historical geography of transportation and a section on the importance of location of ports, airports, roads, railroads and telecommunications.
The third chapter addresses the economy with specific attention to transportation and economic development, transport as a factor of production, commercial geography, costs, and supply and demand of transport. The method section deals with the application of linear programming in solving the transportation problem.
Chapter four concentrates on modes and explains the diversity of road, rail, pipelines, water and air transportation. The concept of intermodal transportation and the
TITLE: The Geography of Transport SystemsAUTHORS: Jean-Paul Rodrigue, Claude Comtois and Brian SlackPUBLISHER: RoutledgeEDITION: Second edition; 2009ISBN: 978-0-415-48324-7PAGES: 52-page softcoverPRICE: R307-00 at www.kalahari.comREVIEWED BY:Gerard de [email protected]
The geography of transport systemsThis is my first encounter with this outlook on transport from a geography perspective
and it includes some interesting discussions that are not found in the more traditional
curricula. The book is aimed at an undergraduate audience and provides
an introduction to the geography of transport.
development of the container in intermodalism and maritime transport is clearly discussed and explained. Methods in this chapter include technical performance indicators on macro, traffic and economic levels and reference to symbolisation of transport features in a GIS.
The next chapter follows logically with transportation terminals and discusses the nature and function of passenger and freight terminals for all modes. The location of terminals such as port sites, airport sites, rail terminals and hinterland facilities are covered.
The second part of the book starts with international trade and freight distribution where trade and the global economy, global trade patterns and international transport get their turn. Commodity chains and freight transportation are also discussed.
The discussion turns to urban transportation, land use models and urban dynamics with a discussion on the evolution of urban mobility and the different forms of urban transit systems. Methods include brief reference to traffic counts and traffic surveys as well as transportation/land use modelling. City logistics is the topic of the case study. The important interaction between transportation, energy and the environment, as well as sustainability, deals with transportation planning and policy. Subjects such as the nature of transport policy, the policy development process and implementation are included with separate discussions on the transport planning process and transport safety and security.
The final chapter shares some thoughts on issues and challenges in transport geography and includes topics such as congestion, infrastructure, environmental challenges, management of transport systems, energy, safety and security
bookmark
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Forthcoming EventsAUTOMECHANIKAEvent: Automechanika Johannesburg 2015
Venue: Johannesburg Expo Centre, NasrecContact: email: [email protected] or visit www.automechanikasa.co.za
RFAEvent: Road Freight Association Convention 2015
Contact: RFA, Tel 011-974-4399 / 011-966-0000 or visit www.rfa.co.za
SAPICSEvent: 37th SAPICS Annual Conference and Exhibition
Venue: Sun CityContact: SAPICS, Tel 011-023-6701; email [email protected]; visit www.sapics.org.za
AFRICAN PORTS EVOLUTIONEvent: African Ports Evolution 2015
Contact: Sean Manson +27 21 700 4331/4312
LAAEvent: 27th Annual Logistics Achiever Awards 2015
Venue: Montecasino Ballroom
www.logisticsnews.co.za
SAAFFEvent: SAAFF Annual Congress 2015
Contact: Catherine Larkin at CVLC on 011-789-7327/083-300-0331 or e-mail [email protected]
JIMSEvent: Johannesburg International Motor Show co-located with Johannesburg Truck and Bus Show
Venue: Johannesburg Expo Centre, NasrecContact: NAAMSA, Tel 012-807-0152, e-mail: [email protected] or visit www.jhbmotorshow.co.za
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