As systems become more finely attuned, and as elements of problems are identified, supply chain solutions need to be ever more efficient

Since at least 1985, computerised systems have been proposed to address the problems (challenges, if you will) faced by the transport and oil and gas industries. And all the solutions proposed have ‘worked’, in that they have identified the problem areas and have presented methodologies for resolving the difficulties.

Yet, whenever the role-players in the industries convene to discuss the situation, the same problems seem to appear under slightly different guises and the same solutions seem to be presented, although the terminology may differ and the matrices may have different angles or have been tweaked in different ways.

Supply chain optimisation is a laudable goad: all companies would wish to make each element of the supply chain as efficient as possible in order to minimise costs associated with the delivery of product from raw material, through the beneficiation process, and to the point of distribution to the customer.

At a seminar held under the auspices of the Transport Special Interest Group at the University on Johannesburg on 9 September 2010, two very well-researched and presented papers were delivered, which highlighted the processes of optimising the supply chain and which (once again) show signs of being able to work.

The question is: Will the same ‘challenges’ be presented in 2020, and will the proposed solutions look very similar? The proof of the pudding will, it appears, be in the implementation.

In the first instance, Louis Volschenk of Pragma discussed the Shell retail network case study.

Pragma had been tasked with the management of Shell’s fuel station network related maintenance across southern Africa. The scope ranged from tracking and monitoring performance of all physical assets within the network, to managing the entire order-to-pay procurement cycle for technical maintenance services.

Essentially, Shell had said it wanted one bill at the end of each accounting cycle and would remain ‘hands-off’ as far as any interaction with “Level 3” stakeholders was concerned. Shell designated itself as “Level 1”, Pragma was “Level 2” and the myriad suppliers and technical assistance providers were regarded as “Level 3”.

Pragma tackled the task with enthusiasm and competence and the result was a process whereby the client, Shell, is presented with a single bill for the process and no longer has to worry about the minutiae involved in dealing with the “Level 3” operatives – be they transport providers, distributors or product users.

The methodology presented had been tested and worked within the parameters set by the client. A system of bonuses had been included at the behest of the client as had a system of maluses (the opposite of a bonus – where payments could be withheld or clawed back where products or services failed to meet service level agreement requirements).

Sound new? No, one would not think so. The process of out-sourcing has been around ever since people decided not to keep a cow in the back yard and rather to buy milk from the corner shop.

What Pragma has done is to take an established concept and refine it to a point where every link in the supply chain has been identified and the responsible parties have been made aware of the service level requirements and where the client no longer has to concern itself with the day-to-day dealings with the internal suppliers and can concentrate rather on the core competency or producing product ready for consumption.

In the second instance, Straus Oosthuizen of Volition spoke on how his organisation assisted Sasol Oil with defining and implementing a new supply chain strategy. On-board computing, automating proof-of-delivery (POD) transactions, is one of the new supply chain capabilities introduced.

Once again, the problems identified as requiring solution were not new. They were the maximisation of vehicle use, the control of driver downtime and the accuracy of delivery of product.

The whole question of ensuring that product is delivered to the right consumer in the shortest space of time possible has been discussed, pondered, workshopped and resolved for years – and yet it is as perennial as the grass.

Strauss’s proposed solution, which has been accepted by Sasol (and which will be implemented as soon as the design of the devices has been refined in one or two areas), involves the use of a hand-held (or dashboard-mounted) device that looks not unlike a cellphone.

The reason for the design is that the vast majority of drivers are familiar with cellphone use, and the training process will be very simple.

One of the greatest advantages is that the device will inhibit delivery of product to the wrong customer (or to a ‘non-customer’, to use a euphemism). The possibility of this is very real where a distributor has two depots on either side of a busy freeway – very often, the delivery goes to the northbound filling station where it was meant of the southbound one. And very rarely would the mistaken customer refuse delivery of fuel when it lands on his/her doorstep.

The device allows for movement monitoring and for an assessment of the mean time between deliveries, thus contributing to both the efficiency of the vehicles and of the drivers.

Once again, the system works; and once again, the methodology behind the solution is not new.

POD systems have been around since most of us can recall and, whereas this solution does tighten up on many of the loopholes (most notably driver ‘error’), one cannot help but wonder whether a similar solution will be proposed in response to a ‘challenge’ 10 years hence.

The real question may well be: Are we hopelessly bad at implementation, or is there an element within the supply chain that benefits from the failure of the systems?

It would not seem to be the former. If it is the latter, the same or similar solutions will have to continue becoming smarter and smarter – but locks are designed for honest people.

John Doolan