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BusinessDay: SA supply chains weather the storm

By Johan Steyn, 14 June 2022

The global supply chain network is playing a more critical role every year. A rapidly growing world population in need of goods and services is driving the demand for increased efficiencies and lower costs. The use of technologies such as artificial intelligence (AI), smart sensors providing real-time insights, autonomous decision making and predictive analytics will play an increasingly important role.

Despite the robustness of the modern supply chain, it can be disrupted by many factors that will result in shortages or even famine. One factor is climate change. Scientists expect that climate-related disruptions will worsen as the world warms. Ports, railway lines, roads, and other transportation and supply infrastructure will be endangered by sea level increases of 0.6m-1.8m — and probably more — by 2100.

Sea freight to the majority of the world’s 2,738 coastal ports, whose docks are just above sea level, is under growing threat of disruption as flooding will threaten the bulk of these coastal ports in the near future. Few port administrators have implemented countermeasures against the threat of increasing sea levels, and even fewer have bothered to assess it.

The other factor is armed conflict. Russia’s invasion of Ukraine and the resulting sanctions have a significant influence on global supply chains. Ukraine provides about 50% of the neon gas used to manufacture semiconductor chips. Governments and major enterprises are now rushing to secure other supplies.

The ongoing crisis has had a startling influence on European automobile production. Volkswagen and BMW have been reducing assembly lines in Germany due to a lack of wiring harnesses manufactured by German company Leoni in Ukraine.

The third factor affecting the global supply chain system is human error. I often say to my clients or conference delegates that, despite our use of powerful new technologies, we can never automate stupidity.

The Suez Canal was shut for six days in March 2021 after the 400m container ship Ever Given ran aground. The canal authority initially blamed “high winds and a dust storm” for the obstruction, but later found that human error was to blame. The result was a cascade effect along global supply chain pathways for several months. The projected value of commodities lost due to delays was $400m an hour.

Over the weekend I was a speaker at the annual SAPICS Conference in Cape Town. The event, hosted by the professional body for supply chain management in SA, was attended by professionals from all over the world. Under the banner “Bounce back stronger”, leaders discussed ways to ensure that global supply chains remain strong after the disruptions caused by the Covid-19 pandemic.

I was impressed by how well the event was organised and by the large number of senior supply chain leaders in attendance. After speaking to many of them, I realised that the supply chain in SA is resilient despite the many challenges we face. These leaders are committed to using the best technological platforms to deliver the goods and services our country needs. Many are focusing on programmes for societal good by creating employment and some told me how they train and offer work to disabled people.

The future of the supply chain is exciting and well worth considering as a career. We often only realise the important work done by this community when the essential food and products we need are no longer available.


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