Lynda Loxton
In today’s world, competitiveness is everything but no company can hope to be in a world class competitive position unless its suppliers deliver on time — and in South Africa that can be a major problem.
With 60 percent of its turnover based on exports, Epping-based marine and general engineering company Petrel Engineering has spent the last few years dreaming up incentives to get its suppliers to deliver on time. Today, for example, it will present a floating trophy to Air Liquide of Cape Town for being its top supplier in the first six months of 1995.
Air Liquide won the highest ranking because of its innovative just-in-time delivery system, which helped it achieve 100 percent on-time deliveries.
Petrel group materials manager Colin Seftel said that one of South Africa’s “key shortcomings in the manufacturing field is the unreliability of the supply chain.
“Four years ago, only about 50 percent of our materials were arriving on time and we tried to do various things to improve this,” he said.
Seftel found an effective approach was to get a staff member to monitor all deliveries due and phone the firms two days beforehand to remind them. Deliveries jumped up to 80 percent on-time.
“They were late not because they did not have the goods, but they had forgotten they had orders from us,” he said. Considering that Petrel buys goods worth about R12-million a year from the market, that is a lot of forgetting to do.
He said Petrel could instead import most of its needs more cheaply from much more reliable foreign suppliers, but the lead times involved were longer and it had to source at least 60 percent of its inputs locally to benefit from the general export incentive scheme.
Seftel blamed the general slackness of some local suppliers on “the South African disease of complacency, lack of competitiveness and bad management practices”.
Air Liquide customer services manager Doug Cox said its good delivery record was due to its own information network, AL-Net, which kept track of the rate at which clients used gas and delivered it to them even before they needed new supplies.
The only time the system could fail was if a client increased production without telling Air Liquide, “but we can still deliver in a couple of hours. They are also learning that they must tell us if there is a difference in production,” Cox said.
Air Liquide was able to offer this service because it had invested in a special division dealing with customer care. For some companies it was cheaper to have poor service than make this investment, Cox said.
Professor of Manufacturing and Operating Management at the University of Cape Town’s Graduate School of Business Norman Faull said Petrel’s decision to award a trophy to the best supplier was “very clever and probably one of the first in the country specifically linked to delivering on time.
He agreed with Seftel that South African industry had “an enormous backlog to catch up. It has sat behind tariff barriers, sanctions and protectionism for far too long. Local customers have been only too pleased to get what they can while industries have over-diversified and become not very sharp and not very competitive.”
Faull said he now noticed a “significant scramble” by industries to upgrade the way they operated rather than merely investing in new plant and machinery. The problem was the lack of expertise to identify and deal with problem areas.
Faull now plans to organise a series of problem- solving workshops next year through its Best Practices Initiative for workers and management in conjunction with Japanese experts. If successful, these could serve as a pilot model for courses that could be offered by the government.
He is also working with Britain’s Cranfield Business School to develop a best factory award. As the jargon puts it, it is time for South Africa to “work smart”.