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Mastering the supply chain October 15, 2014 | Road Ahead

Supply Chains are growing and complex, with companies coming under daily pressure to cope with increasing volumes, volatile demand patterns, escalating sourcing, warehousing and distribution costs.

Customers are demanding higher levels of service, while supply chain technologies are rapidly evolving. To extract maximum value from your supply chain, you need high capability and a continuous improvement philosophy that requires an experienced, strategic partner with a firm grasp of logistics and a culture of innovative thinking.

Knowledgeable marketing director for Cargo Carriers, Andre Jansen van Vuuren, provides some useful insights into their success in building and retaining strong client relationships within the industry over the years, while keeping up with the ever changing face of technology, during a recent interview with Road Ahead editor, Gregory Simpson.One such company, Cargo Carriers, has managed to navigate these challenges, coming out the other side with a healthy balance sheet. They have been at the forefront of innovative new efficiencies for effective supply chain management for half a decade. So what has been the key to their continued success?

“To us it’s about relationships and how we retain our customers. We apply the principle of “face time”, to continuously understand the customer’s needs, and to continuously interrogate how we are going to do things better for them, with continuous improvement. Retaining customers through delivering a high-quality service and building relationships is key” says Van Vuuren.

With recent reports of South Africa’s logistics industry receiving very good ratings internationally, Van Vuuren unpacks how South Africans approach business differently.
“It’s an extremely competitive market and companies are realising that it’s not all about price. We need to go beyond price; we need to look at continuous innovation. Referring to the quality of product, think of the most popular brands you know. How do you convince the customer that they’re going to pay more for a quality product? That is really the challenge.”

He continues, “It’s all about operational excellence and it is really about setting yourself up for success. Things like Safety, Health, Environment and Quality (SHEQ), Broad-based Black Economic Empowerment (B-BBEE) and having a team of key accounts managers is an expense which somehow needs to be recovered. You can prove that by ensuring high service levels, and in that process you could actually protect margins.”

Skills management

Hanging onto skills in South Africa is never an easy task, especially when you are dealing with highly flammable cargo that requires specialised expertise.
After rising fuel costs, the shortage of skills is the major challenge faced by road-freight service providers and an area that we identified a couple of years ago. Cargo Carriers’ fully-fledged training centre at our Sasolburg facility engages five to seven apprentices a year. Here they undergo a three-year diesel mechanic trade, where they go through a very stringent training process upon which they write an exam every year. Once qualified, they have the opportunity to join Cargo Carriers, which invariably they do due to the scarcity of the skill.

“Secondly, we have a training management programme from which we employ in the region of five trainee managers per year. These trainee managers undergo training in every aspect of the business: marketing and sales, operations, technical, HR, SHEQ, admin and finance.”

Moving with technology

In the modern age of logistics, technology is never far away, with real cost-saving potential for companies that fully embrace it. Various telematics devices have been seen to save companies between 10-20% in costs, and not to be left behind, Cargo Carriers has embraced the future.
“Technology goes hand in hand with the whole concept of innovation. We are using technology on both ends to enhance our business from a profitability perspective and streamline it from a marketing perspective. To give you an example of this, we embarked on a process for our fuel business, where we invested new fuel tankers for our Mpumalanga business.

“It’s a concept that is commonly used in Germany and all across Europe. It is technology that delivers fuel at a much higher flow rate and at the same time does multiple discharge from multiple compartments, and it’s no longer a metered type of scenario. There’s a “dip-stick” in the trailer per compartment, which monitors every single litre that flows through the valves.
“With regards to pilferage, we now have an advantageous position that illuminates the risks from both a financial and safety perspective. Because of the higher flow rate, the vehicles’ standing time at the fuel forecourts are significantly shorter, so there’s improvement on the bottom line. Fuel currently represents anything from 35 to 40% of our total cost, so it is something that we keep a close eye on with about 100 or 120 million rand spent on fuel each year.”

Finally, as Cargo Carriers continues to grow their business into sub-Saharan Africa, Van Vuuren outlines some of the key challenges and opportunities for South African businesses.
“Obviously (from the recent Zambian acquisition), it has always been the strategy of the company that we are certainly not going to arrive in any one of these African countries, buy a property and say ‘We’ve arrived!’ That is most certainly not our strategy; our strategy is that of partnerships. Our strategy is to associate ourselves with people who understand the lay of the land, people who understand the legislation, people who understand the culture of that specific country, and people who are part of the communities in which they operate.

“From a South African perspective it’s the same story because we’ve got a bit of a lazy balance sheet. We have been embarking on a serious acquisition drive; we are looking at growing the business partnerships through encouraging people to join Cargo Carriers on this venture and trying to encourage existing clients to become part of our ‘family’.

Obviously expanding our existing customer base with organic growth is always part of our business plan,” concludes Van Vuuren.

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