The South Africa motor sector is being let down by the country’s unending labour strikes, port delays due to weather and congestion, unreliable rail infrastructure, and high costs for road transportation.
An expert has described these factors as ‘uncontrollable’, and called for an effective supply chain management to boost the ‘ailing’ sector.
Long and painful labour strikes bring production to a standstill, badly affecting productivity and causing loss of revenue.
Rob Williams, DHL South Africa business unit director of automotive supply chain, said: “Production stoppage results in lost vehicle production and lost revenue. It also results in the production not being able to meet the demand.”
He added: “In an environment where strikes plague the industry, not only in the automotive manufacturing sector, but also the transport and fuel industries, it is very difficult for the manufacturers to be consistent.
“Stringent policies therefore need to be put in place when it comes to supply in the sector.”
On transportation, he said: “South Africa is a large country, and as a result significant distances need to be covered by suppliers transporting parts.
“In addition, local component manufacturers need to manage both local and export demands carefully in order for the supply chain to be effective.”
Furthermore, he said that as most local Original Equipment Manufacturers (OEM’s) within the automotive sector do not compete with each other, but rather with their sister plants in other countries, it is imperative that they fulfil their export order obligations.
Sub-Saharan Africa was fast becoming the next market which automotive clients are expanding into, and many are contemplating opening manufacturing plants in the region, according to Williams.
“Sub-Saharan Africa is at the moment predominately a distributors business, as opposed to the OEM’s full ownership,” he explained.
He urged supply chains to be ever more resilient and agile in order to survive the ‘butterfly effect’.
This means, he said, where a small change at a localised point in the supply chain can result in much wider consequences for the business, such as loss of customers or brand reputation, and billions off their bottom line.
Williams also said that companies risk critical damage to their business if they are not in a position to anticipate and respond to the increasing unpredictability and vulnerability of their supply chains in light of economic volatility, natural disasters and political unrest.
This is something that affects the automotive industry in South Africa frequently, he said.
”Companies that ignore or lag behind in addressing supply chain volatility do so at the peril of their bottom lines and their shareholder confidence,” Williams said.