Saturday, July 3, 2010

Servicing the Needs of Every Barloworld Logistics Customer

At Barloworld Logistics, we’re proud to have an industry-focused and strongly client-facing skill set in all of our markets. This means that, in each of the industries in which we operate, we’re able to ally our supply chain capabilities with our considerable expertise, to better service your specific needs.

The Mining and Heavy Industry Sector

If you’re in the mining/heavy industry sector, you’re probably looking for cost reduction and increases in stock availability to enable better, more efficient production. And we’re looking to collaborate with you.

As the market leader in inventory optimisation, materials management and Maintenance, Repair and Operations (MRO), Barloworld Logistics has a track record based on delivery. We offer substantial data visibility and proven methodologies, complemented by top expertise and tools – and while we analyse, design and implement your distribution network, we also focus on adding value in key areas:

· reducing costs per ton of production,

· increasing availability and service levels to support production,

· optimising the supply chain, and

· creating real competitive advantage.

To do this, Barloworld Logistics offers you a range of solutions – from optimal warehouse design and procurement solutions to ‘green-field’ and ‘brown-field’ expansion design and implementation.

Case Study: Mining and Heavy Industry


Barloworld Logistics was recently appointed by a major international mining and heavy industry company with two aluminium smelters in Richards Bay. The task: to survey the company’s stockholding of maintenance spares to support plant operations, with a view to optimising stockholding and resource allocation and sustaining gains in inventory levels and availability from a previous optimisation exercise.


Inventory optimisation was needed to reduce redundant stocks, increase stock availability and sustain the improved levels as the plant expanded and upgraded its facilities. Barloworld Logistics sought to:

· improve stock availability to 95%,

· reduce the inventory investment base value by R4.8 million, and

· reduce surplus orders by R300 000.


In terms of tools and methodologies, Barloworld Logistics addressed the following key areas:

· improving inventory management expertise with manufacturing resource planning (MRP),

· providing formal and one-on-one training to enhance skills,

· producing tools, and a materials management module, to facilitate inventory optimisation,

· enhancing performance measures and visibility,

· cleaning up SAP data,

· improving the use of exception- based reports, and

· facilitating workshops with end-users to enhance involvement.

Two phases

Maintenance availability calculations were carried out and demand forecasted for all of the smelter’s line items, and the implementation of the optimisation exercise was then split into two phases:

The first preparatory phase focused on cleaning up the existing system, identifying critical items, and ensuring that no stock-outs occurred, while providing training for buyers and a thorough review of slow or non-moving items. The second phase involved the implementation of improved processes and software tools – primarily Barloworld Logistics’ inventory optimisation software, Optimiza – to manage commodities, clean up orders and reservations, and identify and flag critical and insurance spares.


Not only were all of the client’s major project objectives achieved, they were well exceeded. More specifically, Barloworld Logistics was able to exceed the benchmark targets as follows:

· an increase in reported availability of stocks from 79% to over 98%,

· an R8 million total reduction of investment on base, from R80 million to R72 million, and

· a reduction in surplus orders to the value of R784 000, against a target of R300 000.

The Automotive Sector

A major supply chain and logistics challenge for automotive interests in South Africa is their physical distance from major markets. Although this industry is one of South Africa’s highest profile and most established sectors, with sustained demand from the domestic market as well as a significant export capability, it is at a distinct disadvantage compared to competitors. Enter: Barloworld Logistics.

Barloworld Logistics has achieved tremendous success in helping automotive clients to respond to this challenge, via our automotive industry vertical. Our goal is to design, implement, manage and operate logistics and supply chain solutions throughout the supply chain – adding value from original equipment manufacturing (OEM) to retail; wherever logistics and supply chain spend is significant.

Case Study: The Automotive Industry


One of South Africa’s largest auto manufacturers (part of a global business that is the world’s third largest OEM) engaged Barloworld Logistics to reduce its logistics costs and improve its outbound distribution service levels. Because the company manufactures new vehicles, imports certain models, offers after-sales parts and accessories and has a substantial export business, integration was important.


The manufacturer aimed to integrate all supply chain activities for the OEM and after-sales businesses, reduce costs and improve efficiency throughout the supply chain, as well as increase new vehicle production. Therefore, Barloworld Logistics’ major objective was to achieve sustained cost savings for the manufacturer over a three-year period. We also wanted to augment service levels and efficiency.


Barloworld Logistics experienced certain challenges to the achievement of these goals; namely:

· outbound domestic distribution cost 3.1% of turnover,

· emergency orders took 24 to 72 hours,

· stock orders took 5 days,

· account reconciliation of various transport carriers was very complex,

· there were some difficult-to-manage proofs of delivery (PODs),

· service levels were not consistently recorded,

· dealer queries were directed throughout the organisation,

· staff were constantly involved in outbound issues,

· exports were treated as a separate entity, and

· there were different IT integrations through various carriers.


Barloworld Logistics adopted the entire integrated supply chain and logistics management function on behalf of the manufacturer, to which end we implemented the following systems and processes:

· single invoice issued to manufacturer – all transport carriers paid by Barloworld Logistics,

· simplified billing,

· integration of various carrier IT systems, providing one connection to the manufacturer,

· tracking and managing all parcels,

· managing all POD exceptions,

· sending all daily orders overnight, and

· recording and managing service levels, for improvement.


As a result of Barloworld Logistics’ supply chain and logistics management, service levels increased from 96% to 98.5% and costs expressed as a percentage of turnover dropped from 3.10% to 2.28%.

In addition, Barloworld Logistics gained two valuable key lessons from working with this client: specialist service providers add real value to outbound distribution management and reliable IT and electronic control of processes enables a consistent focus on service levels and cost reductions.