M.Comm. / The concepts of logistics and supply chain management are relatively new in South Africa. The concept of logistics management was more commonly known in the 1960s and 1970s as physical distribution. In the late 1970s, the concept evolved to logistics management and in the late 1980s and early 1990s, it evolved into supply chain management. It was only after the end of apartheid in 1994 when South Africa was able to compete globally that there was great interest in supply chain management in South Africa. There is virtually no business or industry untouched by the business of logistics and supply chain management. Getting the right product to the right customer at the right time as efficiently and cost-effectively as possible is the main objective of logistics and supply chain management (Gordon, 2000a: 14). Logistics is “the process of strategically managing the acquisition, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channel in such a way that current and future profitability is maximised through the cost-effective fulfillment of orders” (Anon1. ,2002). The term supply chain is described by Lummus and Vokurka (1999) as “all of those activities associated with moving goods from raw materials stage through to the consumer. This includes procurement, production scheduling, order processing, inventory control, transportation, warehousing, and customer service. The information systems necessary to monitor all of these activities are also included. All these activities are then integrated and coordinated into a seamless process to involve all the partners in the supply chain”. With every step in the supply chain management process, there are costs involved and two of the major cost drivers in the supply chain according to Palmieri and Africk (1999) are inventory holding and transportation. Stout is of the opinion that this is more than a valid statement from a South African business perspective and emphasizes that unnecessary inventory costs money as does inventory that is distributed inefficiently (Gordon, 2000b: 21). Excessive inventory holding together with under-utilization of transport can lead to a major negative financial impact on total supply chain costs (Cooke, 2000: 12; Lambert, Stock & Ellram, 1998: 165; Hankanson, 1999). Therefore, the reciprocal relationship between inventory holding and transportation cost is very important. Christopher (1992: 25) also stipulates that the ultimate purpose of any supply chain is to satisfy customers. The importance of customer service in total supply chain functioning must therefore always be considered in a logistics supply chain system design. In South Africa, transport and inventory are two of the main cost drivers in the supply chain. Factors that make inventory and transport two of the main cost drivers in the supply chain are, among others: high fuel prices, high interest rates, poor road conditions, security concerns and the weak performance of the rand against major foreign currencies. It can therefore be said that inventory and transport are just as important in obtaining an optimized supply chain in South Africa as in the rest of the world. / Mr. P. Kilbourn Prof. J. Walters
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:12686 |
| Date | 17 October 2008 |
| Creators | Burger, Francois |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
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