Adding value through enterprise development in the transport and logistics industry
B-BBEE is a controversial subject. Some see it as a necessary process in the normalisation of our country, while others believe it is a blunt tool which, until now, has benefitted only a fortunate few. Almost no one is neutral on the subject.
In a refreshing example, Cargo Carriers and Lafarge have concluded a deal which supports the real sprit of the concept. And innovative thinking is at the heart of the solution.
In a logistics industry where optimisation, high levels of SHEQ and critical mass are often required to manage productivity upwards and costs and risk down, these two organisations have found a way to create a safe and value-creating gap without sacrificing the holy grails identified above.
Since 2003, Cargo Carriers have been introducing the concept of owner drivers to contracts where opportunities presented themselves, to create enterprises that could flourish under their guidance. And this guidance is by no means paternalistic; Cargo Carriers source the business opportunity, provide the benefits of management systems that they use in their own business, and then allow these businesses to flourish with mentorship and training to a point where they are self-sufficient.
Thus, the Lafarge owner drivers are not subject to the same risks and failure rates as stand-alone new businesses. The most recent of these owner driver schemes started discussions in 2012, where Lafarge saw an opportunity to develop an empowered enterprise to provide a transport service to them with respect to an increase in volume of their bagged cement products in the Free State, Northern Cape, and North West Province.
As an existing customer of Cargo Carriers, they approached the company to help them set up an enterprise development initiative.
“This is a slightly different version of our Owner Driver Scheme, because up until this contract with Lafarge, owner drivers were contracted directly to us with a service agreement – we assisted them with everything and we could then claim for preferential procurement and enterprise development. In this instance the owner drivers are contracted directly to Lafarge and Lafarge benefits from the B-BBEE benefits of the scheme,” says John Sprenger, Cargo Carriers Owner Driver Manager.
Cargo Carriers appointed the owner drivers from within their own company to ensure that the drivers had the right qualifications. The drivers also underwent intensive training covering contractual issues, operating parameters, accounting matters, budgeting principles, business management and communication. One of the key conditions for participating in the scheme is the requirement to comply with the rigorous Lafarge South Africa safety standards for driving and maintenance of the vehicles at all times.
To further increase their B-BBEE rating, the owner drivers appointed black female partners.
Because of this structuring, Lafarge can now claim at three different B-BBEE levels: at the overall level, at the EME / QSE level, and at a black female shareholding level. This example of co-operation between Lafarge, Cargo Carriers and the team of owner drivers has no losers.
“We believe our Owner Driver Scheme is a win-win initiative. It is about a continuing partnership where the drivers are empowered to determine their own success and future, while at the same time leading to increased productivity and enhanced service levels,” says Tim Nelson, Lafarge Cement’s Supply Chain Manager.
With the Owner Driver Scheme and its evolution to suit the specific needs of Lafarge, Cargo Carriers prove that providing innovative supply chain solutions can go beyond the obvious areas of application, such as performance and safety, to deliver value to their customers in other areas such as B-BBEE solutions within the transport and logistics industry. This is what happens when innovation meets B-BBEE. The results are truly transformative.