Capital Equipment News May 2018

TRANSPORT & LOGISTICS NEWS

It’s all about the right fit

The many benefits of outsourcing logistics to a specialist have been widely documented. However, many businesses still grapple with deciding who to appoint to provide critical transport logistics services. “Complicating this process is the fiercely competitive nature of the industry,” says Quinton de Villiers, MD and founder of Bridgewater Logistics. “It comprises large third-party logistics (3PL) providers that have chosen to special- ise in specific fields and charge a premium for this expertise through to those many small owner-operators who are willing to provide their services at a vastly reduced rate. However, there are many consider- ations that will help businesses make an in- formed decision on whom to partner to help drive efficiencies in their supply chains.” De Villiers suggests businesses first es- tablish a team dedicated to 3PL evaluation. It should comprise representatives from the finance, supply-chain and logistics, informa- tion technology, sales and purchasing de- partments. Their decision-making processes

should be guided by what is considered to be the most important requirements of their client base. In addition to inspecting the 3PL’s port- folio of related clients and businesses, the team also needs to consider the potential supply-chain partner’s track-record in allied industries. Importantly, it will want to know whether the 3PL has the necessary expertise to provide consistent efficiencies and reliabilities. He says that a reputable 3PL will also have strong references and “glowing re- views” from its clients. Warehouse security, technology, dependability and flexibility will be among the many standout traits of the service that has been provided to other companies. De Villiers warns that a decision to ap- point a 3PL transcends price. This has often clouded strategic decision making, consid- ering that a suitable partner will be able to add value beyond the cost of its service. “The team also needs to consider the financial status of the 3PL as this has a

Quinton de Villiers, MD and founder of Bridgewater Logistics.

direct bearing on the sustainability of transport and logistics operations. There has been a lot of cost-cutting in the industry, especially during the recessionary economic environment. Due diligence is, therefore, an imperative, and should include assessing whether the rates of the 3PL will cover the contract period. No business wants to appoint a new service provider in the first few months of the contract as this will disrupt operations.” b

Importers need look beyond the VAT hike

Given the challenging economic environment, many have dreaded the recent one percentage point increase of VAT in South Africa. And while this will have a significant impact on already under pressure households, businesses will not walk away unscathed especially those operating in the import and trade sectors. According to Dr Greg Cline, Head of Corporate Accounts at Investec Import Solutions, even though VAT is one of the most efficient methods of tax collection and encapsulates most forms of consumption, smaller businesses have now been forced to increase prices to consumers. “Already, many retail outlets have put up notices about the VAT hike and how they must adapt pricing. While these are still early days to measure the knock-on effect this will have on the economy, cynics are sceptical about its merits. Irrespective, businesses and consumers need to deal with the reality of the situation and adjust their budgets and forecasts accordingly.” Importers need to find more ways to extract value out of the supply chain. With each partner and service provider in the link required to adjust pricing, this will be no easy task – but it certainly is possible. “Given how operational budgets are already tight, the increase will require a careful management of imports to mitigate some of the risks of the higher costs involved. Optimising stock levels will become even more of a priority to keep acquisition costs low,” adds Cline. Of course, this extends to more than just financial plan- ning. Systems need to be updated to apply the new VAT rate. And while a percentage point might not seem significant, the extent of the changes required are. From primary systems used for billing all the way through to secondary ones that incorporate back-end data analysis, the changes have been a critical step. b

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