Bearings supplier optimises supply-chain management over 42-branch network
30 March 2020 | Web Article Number: ME202018500
BEARINGS International (BI), part of the Hudaco Group, has embarked on a process to engage more with the group companies and unlock synergies when it comes to their client offering.
With a 42-branch network across South Africa, BI’s complex supply chain commences with product flows from its main suppliers to its central warehouse in Parkhaven, Johannesburg.
From here, the stock is picked-and-packed to go out to the various branches. These shipments are consolidated daily before being distributed. Branches also have the flexibility to pull stock from other branches.
Any stock discrepancies are managed by means of a complaint system in order to fix over, under, or incorrect supply of stock. Reverse logistics allows for all product that needs to be returned to undergo warranty inspection at Parkhaven, or to be returned to suppliers.
In May last year, BI centralised its national transport service provider as EPX, resulting in major savings due to economies of scale. A comprehensive collaborative sales forecasting process was also deployed mid-2019 to improve forward-looking demand.
Master data management has also been centralised at the Parkhaven head office to assist with a smoother-running Sage X3 ERP system. Stock control at all sites is maintained through continuous perpetual counts, with at least one annual stock take for the central warehouse, and at least two per branch site annually.
Supply-chain management gives BI a competitive advantage in that it allows for proactive stock planning, resulting in improved stock availability, improved sourcing of product from local and international suppliers for better margins, quick turnaround times for goods to be moved from the central warehouse to the dispersed branch network, consolidation of the volumes shipped from the central warehouse to the branches for transportation cost savings, and proactive expediting of stock-outs for improved customer service.
BI is also able to carry out overall data analysis on aspects such as forecast accuracies to highlight any issues for the sales and marketing teams to focus on. Supplier-performance management enables BI to hold its suppliers accountable for delays and shortages which, in turn, drives down lead times.
This reduces inventory holding, resulting in less working capital tied down in stock. Stock control across the entire branch network reduces the risk of pilferage, while overall performance management through KPIs assists the business in focusing on product availability and customer satisfaction.
The full supply chain for BI is currently managed by Laura van Rooyen, who was appointed Supply Chain Director in January last year. With over a decade’s experience in the supply chain environment, Van Rooyen said that she “loves the complexity and challenges of balancing supply and demand.”
“I have extensive experience and exposure in logistics management, procurement management, demand planning, supply planning, and now distribution planning and warehouse management. With a strong affinity for numbers and data, I find supply-chain analytics both exhilarating and fascinating. The continuous drive to improve efficiencies and productivity is very exhilarating, and keeps me motivated,” Van Rooyen said.
“Probably the biggest challenge is satisfying the ever-changing demand within our dispersed branch network. Many of our products have very long sales cycles. Furthermore, these products have to either fail or break down first before the customer buys stock again.” These are referred to as Maintenance, Repair, Operations (MRO) products.
Managing inventory levels, product mix, and excess stock management is critical. In this regard, BI uses Sage Inventory Advisor as an add-on tool to assist with its inventory parameters and management.
Inconsistent lead times, and very long lead times in excess of 240 days, from international suppliers also pose a huge challenge that is managed through supplier performance management. “This allows for a very stimulating supply planning perspective, as we are also critically responsible to provide the lowest landed cost of our products,” she said.
Apart from the central warehouse at Parkhaven, BI also has a bond store. This means that for some automotive products supplied exclusively to Toyota South Africa, for example, duties and VAT can be deferred until the stock is actually sold. This impacts positively on cash flow, as the goods are essentially stored tax-free. It also allows for government supervision and security for such products until they are sold.