The importance of efficient supply-chain logistics in Retail

The importance of efficient supply-chain logistics in Retail

A Case Study

Clinton White, Managing Director of CEVA South Africa

Shopping & Retail SA recently met with the world-renowned CEVA Logistics company with a view to gaining insight into this crucial aspect of Retail. Clinton White, Managing Director of CEVA South Africa, provided us with considerable detail around the following recently completed project.

At the outset
This project began some five months ago where an existing CEVA client required assistance with bulk warehousing and forwarding and clearing solutions due to existing operational and planning issues which were imposing serious delivery constraints.

Kraft-Heinz imports a significant volume of products and also manufactures locally at its factories in Wellington and Atlantis in the Western Cape.

In consultation with Kraft-Heinz, CEVA initiated an in-depth supply-chain value assessment – at their own cost – in order to demonstrate to the client what level of improvement, and importantly, cost-savings, could be achieved with a professional forwarding and clearing and warehousing strategy.

“With this approach the client was able to see and interact with our strategic direction, leading up to what is clearly a win-win scenario – one which vastly improved and stabilised their entire logistic scope,” said White.

The objective:
The primary focus points of the project were as follows:
– improve cash flow;
– reduce stock holding;
– operate using the Just-in time- model (JIT);
– get the optimum product mix into the distribution centres (DCs); and
– ensure that the many facets of the project work smoothly and seamlessly together.

(Photo by Scott Olson/Getty Images)

The process:
Working in close collaboration with the Managing Director of the Kraft-Heinz Company in Southern Africa, Morné Fourie, the CEVA team of five interviewed over 30 Kraft-Heinz staff, touching on every aspect of the Kraft-Heinz forwarding and clearing operations, warehousing and product distribution.

“Buy in from top management in Kraft-Heinz was as imperative prerequisite for the success of implementation and ongoing smooth operation of the project,” continued White. “During our preliminary confidential interviews with staff operational problems and issues were identified which required to be addressed and overhauled.”

For example the inefficient application of transport between Johannesburg and Cape Town was costing the company dearly, as not only was there an inordinate number of transport contractors – over 30 in all – but also in many instances trucks were returning to or from their delivery destinations empty – resulting in costly futile trips.

The CEVA team focused on the two primary categories of the client’s logistical product supply-chain, namely:
the “ambient” – or non-perishable product line, such as bottled and canned products; and
the “frozen” – or perishable product line, which includes pies, sausage rolls, dough and so on.

The current supply-chain configuration was plotted and analysed, with reverse logistics being applied to establish solution options.

The solution
Within three months CEVA presented a solution which would satisfy and surpass the following criteria:
reduce stock-holding;
focus on specific “final mile” distribution to retail; and
realise measurable cost-savings – this being key to the project overall.

A CEVA manned and operated “control tower*” was put in place at the client’s Western Cape premises to directly manage and operate the following:

– warehousing and distribution centres (DCs)
– forwarding and clearing operations
– end-to-end transport management
– sales and operations planning (S&OP) was to be kept in-house with Kraft-Heinz

* A “control tower” in the logistics sector is jargon for a flat-structured management team, in this instance comprising CEVA specialists working in close collaboration with the Kraft-Heinz Logistics Manager. Globally CEVA runs massive control towers for numerous individual companies.

As the control tower is designed to operate as a separate entity, it is important that is remains totally objective in all its functions. To achieve this, control tower staff and management must – in all their actions – always be consciously unbiased, objective, transparent and aware of the bigger picture. In addition, high visibility of their activities, openness and strong collaboration with the client are also key factors.

The outcome
Two bulk facilities were proposed – which opened up much-needed factory space for Kraft-Heinz. In addition, the number of transport service providers was reduced to 10, enabling an exceptional level of efficiency. Much improved use of available transport and bi-directional loads was achieved together with far greater ease of management of this function.

After five months the Kraft-Heinz logistics function has been overhauled from end to end with all related disciplines now functioning smoothly as one.

As a result significant cost savings have been realised throughout, particularly in transport.

“The importance of a recognised professional external company taking control of the entire logistical chain is an essential element for suppliers and manufacturers for the retail sector,” says Fourie. “What CEVA has achieved for Kraft-Heinz has been remarkable indeed, and one can only look on in awe at the level of professionalism and efficiency they have applied in the roll-out of this project.”

CEVA Logistics makes business flow. As one of the world’s leading non-asset- based supply-chain management companies, CEVA designs and implements industry-leading solutions in both freight management and contract logistics.

Over 42 000 dedicated employees, working in 17 regional clusters around the globe, deliver operational excellence – to provide viable answers to the most challenging supply chain questions.

CEVA applies its renowned operational expertise to provide best-in-class services across its integrated worldwide network, where our focus is equally on general business and the specialist needs of the automotive, consumer and retail, energy, healthcare, industrial and aerospace and technology sectors.

 

Broll reveals state of play in SADC property market

Broll reveals state of play in SADC property market

For a prospective investor or developer who has set their sights on expanding a retail or commercial property portfolio in Southern Africa, or one who is entering the region for the first time, the way forward may appear complex and uncertain. Conflicting reports, dubious statistics and misconceptions can cloud their route. So how can an investor or developer who wants to spread their investment wings in Southern Africa make an informed and strategically sound decision?

Broll Property Group’s latest research report on certain SADC (Southern African Development Community) countries, entitled SADC Market Snippet 2018, is a powerful and invaluable tool, designed to assist with understanding some property market conditions in the region.

Lyttelton Shopping Centre, one of many managed by Broll

The SADC was established in Windhoek in 1992 to grow the economies of Sub-Saharan African states and foster cooperation and peace amongst its members. Broll Research has put a group of SADC countries, where property investment opportunity presents itself, under the spotlight, and has crafted a brief report which looks at:

  • Country facts;

  • Economic indicators;

  • Global rankings on indices e.g. corruption or competitiveness; and

  • Key indicators in the retail, office and industrial property markets.

 

Research that’s key to investment

Broll Research specialises in converting property data into market knowledge, providing clients with decision-making research that spans the retail and commercial property sectors.

Broll’s research teams across sub-Saharan Africa enable the company to add value to clients’ portfolios, by partnering with them to make well-informed decisions and grow the performance of their investments.

In Mauritius average rental yields of 7.75% – 8% are being achieved within the retail market”

The Broll SADC Market Snippet Q1:2018 takes each of the countries in turn and presents an easily readable and accessible six-part picture to guide the investor on property market conditions in each country.

Investors get the big picture

By extracting data such as GDP alongside ease of doing business rankings, as well as office rentals and yields, there emerges an absolutely fascinating picture tailor-made for investors. As an example –

Country

Real GDP Annual Growth Rate (%)

Real GDP per Capita/ US $

Ease of

Doing

Business

2018

(Rank/190)

Commercial Market

Prime Net Achieved Rent (US$/m²/month)

Average Yield (%)

Average Vacancy Rate (%)

Botswana

4.3

7,767

81

10

8-9

N/A

Madagascar

5.0

429

162

14

14

20

Malawi

4.4

492

110

10

9

20

Mauritius

4.0

10,568

25

13

8.5-9

4-10

Mozambique

4.8

528

138

28

9.5

65

Namibia

3.1

5,935

106

15-18

9

2

South Africa

2.0

7,571

82

15-17.5

8-9

5-15

The report is packed with a wealth of critical data for investors and decision-makers. Taking a closer look at a particular country in the report, for example Mauritius, one finds a country of 1.3 million people, rating well on the democracy index, which is managing to keep corruption levels at bay and is high on the best-countries-for- business index. This ranks it as a favourable location in the SADC region in which to do business.

Mauritius with 58.6% of the population urbanised, intense mobile phone usage at 142 phones per 100 people, internet access with 46.2 users per 100 people and a Real GDP annual growth rate of 4.0%, offers potential for investors and developers. Asking rents are being achieved within the retail market with average yields of 7.75% – 8% being evident. The average yield for offices is generally a bit higher at 8.5% – 9% and demand within the market is forecast to be stable with supply increasing over the next 6 months.

The Broll SADC Market Snippet 2018 is an outstanding guide for retail and commercial property investors, packed with useful data and statistics that will make decision-making that much easier.

To download the “SADC Market Snippet 2018” report go to www.broll.com/publications