Quarterly journal for business and industry in South Africa
AUG/SEPT/OCT 2020 • ISSUE 94
politics l of oil
Uncovering the path to oil price recovery
on the right track
Dr Phindile Masangane
CEO of Petroleum Agency South Africa
on top of the
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It has been estimated that the economy will take two to three years
to recover from Covid-19 and the subsequent economic collapse.
From now to there, the journey will indeed be business as unusual.
My pledge, as the new editor of Opportunity magazine, is to provide
cutting-edge content that guides our readers on how to rise above
the current business trajectory and to circumvent the consequences that
are now laid before them.
In this issue, Mike Townshend from Foord Asset Management writes,
in ‘The evolving politics of oil’ (page 8), that oil has caused wars,
assassinations, man-made disasters, coups and still affects every person
in the world today. On page 10, Rebecca Major from leading global law
firm, Herbert Smith Freehills, shares her insight on how to navigate
African oil and M&A deals in these volatile times. Both of these writers
will present more on these topics at Africa Oil Week.
The transport services sector has been severely affected by the
pandemic, but help is at hand. Digital transformation is set to disrupt
the sector – technology has transformed the railway industry globally
and implementing technological innovations could be a game-changer
for rail transport in South Africa. Read more on page 17.
Celebrating Women’s Month in August, Opportunity interviews the
newly appointed CEO of Petroleum Agency South Africa, Dr Phindile
Masangane (page 12), as well as founder and owner of Nemesis
Accounting, Shani Naidoo (page 14).
The South African Chamber of Commerce and Industry (SACCI) has
a pivotal role to play in guiding the business of its 22 000 members.
The Chamber believes that businesses should actively engage in the
strategic and recovery implementation processes towards inclusive
growth – read more in the CEO’s message on page 4.
Let’s work together in building a resilient, risk-savvy and formidable
Alexis Knipe, Editor
Editor: Alexis Knipe
Publishing director: Chris Whales
Managing director: Clive During
Online editor: Christoff Scholtz
Art director: Brent Meder
Designer: Simon Lewis
Production: Linda Tom
Administration & accounts:
Printing: FA Print
Global Africa Network Media (Pty) Ltd
Company Registration No:
Directors: Clive During, Chris Whales
Physical address: 28 Main Road,
Postal address: PO Box 292,
Tel: +27 21 657 6200
Fax: +27 21 674 6943
No portion of this book may be reproduced without written consent of
the copyright owner. The opinions expressed are not necessarily those of
Opportunity, nor the publisher, none of whom accept liability of any nature
arising out of, or in connection with, the contents of this book. The publishers
would like to express thanks to those who support this publication by their
submission of articles and with their advertising. All rights reserved.
2 | www.opportunityonline.co.za
ISSUE 94 | AUGUST–OCTOBER 2020
The impact of Covid-19 so far
NEWS & SNIPPETS
What has been and what’s to come
THE EVOLVING POLITICS OF OIL
Uncovering the uncertain path of oil price recovery
A PERFECT STORM
Negotiating African oil and M&A deals
EXPLORING SOUTH AFRICA’S MANY PROSPECTS
Interview with Dr Phindile Masangane, CEO of PASA
GAINING YOUR COMPETITIVE EDGE WITH NEMESIS
Interview with Nemesis Accounting founder, Shani Naidoo
TECHNOLOGY: TRANSFORMING RAILWAY TRANSPORT
The implementation of wheels on rails is changing
THE ROOT TO THE FUTURE OF AFRICAN MOBILITY
A profile on rail infrastructure provider, Mathupha Capital
TOGETHER WE CAN
Tshepo Kgare, ACEO of Railway Safety Regulator, shares insights on railway safety
ARE YOU MISSING OUT ON THE TRUE POTENTIAL OF AI?
Understanding the impact of Artificial Intelligence
A NEW ORDER OF MAGNITUDE
Covid-19 tests supply chain resilience
COVID-19 AND ITS IMPACT ON E-COMMERCE
The pandemic has pushed e-commerce and supply
chain issues to the top of the CEO agenda
The impact of
Covid-19 so far
Like wildfire, Covid-19 has rapidly mushroomed across the globe, leaving its crippling
imprint on every continent with noticeable trade disruptions and tensions, both locally
and internationally – and imposing significant cuts to the global supply chain.
Since South Africa announced its first case of
Covid-19 on 5 March 2020, the situation has
escalated to where we currently have the
highest recorded case incidences on the African
continent, with 225 989 confirmed cases on 8
July 2020, and 3 694 deaths, despite a total lockdown
which resulted in a devastating impact on every sector
of the economy.
Among the most affected sectors, the coronavirus
has impacted negatively on agriculture, mining,
manufacturing, retail, construction, transport services,
real estate and personal services such as the beauty
industry, causing many businesses (both small and
large) to close permanently and leaving many South
Africans without employment, with loss of income and
food insecurity concerns.
___ __ ___ __ _ _
Confidence Index (BCI)
reflected a marked
decline of 22.9 index
points between May
2019 and May 2020,
substantial effect the
lockdown is having on
real economic activity
___ __ ___ __ _ _
SACCI’s Business Confidence Index (BCI), which is
a composite index of economic and financial market
indicators (rated by business as critical indicators of
the business climate), reflected a marked decline of
22.9 index points between May 2019 and May 2020,
emphasising the substantial effect the lockdown is
having on real economic activity. Notable negative
annual impacts on the business climate were exerted
by the weaker rand, depressed new vehicle sales, lower
merchandise import and export volumes, and weaker
share prices on the JSE. Financial conditions were
somewhat easier mainly due to lower inflation and
monetary relief measures.
Though our government financial relief transfers
are helping to substantially support the total income of
households in the lower half of the income distribution,
their efforts are still far from eradicating the impact
of Covid-19 for both households and the business
sector. This narrows the options for all efforts by both
government and the private sector to be channelled
towards recovery strategies for the rapid economic
upliftment of the economy at large.
Though the economy is slowly reopening, and
precautionary measures continue to be implemented to
flatten the infection epidemic, the negative fear mindset
will continue to influence the perceptions around
growing the economy out of this slump. The medical
experts believe that South Africa is likely to see a peak
demand for hospital and intensive care unit (ICU) beds
between August and September. However, based on
current resource levels, projections indicate that the
number of available hospital and ICU beds will likely
be exhausted by the end of July 1 .
The coronavirus is affecting not only the health,
daily life and psychological wellbeing of the South
Since South Africa
announced its first
case of Covid-19
on 5 March 2020,
the situation has
escalated to where
we currently have
the highest recorded
case incidences on
the African continent,
with 225 989
on 8 July 2020, and
3 694 deaths, despite
a total lockdown
which resulted in a
on every sector
of the economy.
4 | www.opportunityonline.co.za
African population, but is also having a significant
impact on our businesses. In its efforts to cushion the
business community, SACCI continues to play a pivotal
role in advocating for the consideration of reasonable
accommodation for essential services and other key
sectors of the economy, especially for small and medium
businesses, and engages with the government in
strategic mitigation processes to ease lockdown for the
survival of businesses, from the onset of the lockdown.
___ ___ __ _ _
The coronavirus is
affecting not only
the health, daily life
wellbeing of the
is also having a
on our businesses
___ __ ___ __ _ _
Though working remotely,
SACCI continues to see an influx
of requests for intervention by
members for assistance in the
day-to-day management of their
business in these unprecedented
times. The South African Chamber
of Commerce and Industry has
reached out to its over 22 000
members with daily business
updates on coping, mitigation
reports, requests for comments
on policy and regulatory input
by members, as well as general
support for business survival and
return to work preparation and
compliance plans, and assistance
with access to financial relief
platforms for small businesses.
SACCI believes that businesses should more actively
engage in strategic and recovery implementation
processes which include contingency planning,
financial recovery strategies and legislative compliance
challenges, as well as communication, especially
with employees, to manage the psychological impact
of Covid-19 imposed changes and conduct scenario
analysis towards inclusive growth. This, we hope, will
pave the way towards the recovery of our economy.
Simulation Hub, Africa
of Cape Town; South
Centre of Excellence
Modelling and Analysis
(HE2RO), University of
of Public Health;
www.opportunityonline.co.za | 5
News & snippets
Industry insights from the past quarter
SA HOUSEHOLDS FACING HIGH FINANCIAL STRESS
A staggering yet understandable 58% of households across South Africa are facing overwhelming
financial stress as the Covid-19 crisis knocks savings and raises debt levels, according to the latest
Old Mutual Savings & Investment Monitor (OMSIM). Just over half of those surveyed are earning
less than they were at the end of February 2020, while 40% of those currently employed only have
enough funds to survive for one month or less should they lose their jobs. The levels of dependency
have also grown. In 2015 those with other adult dependents (excluding spouse/partner) was at
35%. This year it spiked at 52%. Lynette Nicholson, Head of Research and Insights at Old Mutual,
says: “A very alarming consequence of the financial pressures South African households are
experiencing is that just over 50% are currently dipping into their savings just to make ends meet,
37% have fallen behind on paying household bills and 23% have cashed in an investment policy.”
SME WARRIOR ENTREPRENEUR ACADEMY
Shani Naidoo, director of SME Warrior (Pty) Ltd, launches the
SME Warrior Entrepreneur Academy in September 2020, an
online learning and development platform for entrepreneurs
and business owners. The academy consists of three schools:
School of Legal, School of Business, Financial Literacy and
Entrepreneurship and the School of People Performance and
“Our educational indoctrination system is at the root cause of so
many business failures and the demise of entrepreneurship as we
know it. We are being taught using old methods in a new world,
expecting to succeed with high expectations. Learning material
designed for the agile and purposeful entrepreneur of the future,
SME Warrior will change lives and businesses alike forever,” says
Perfect, pure energy
“LPGas is an exceptional energy source, especially in areas
where there are electricity supply challenges. It’s a portable
energy solution which can alleviate energy poverty,” says LPGSA
Acting Managing Director Nirvan Brijlal. This clean-burning and
efficient fuel is primarily used for cooking, space and water
heating in South Africa and has over 1000 applications, but
importantly it also plays a role in helping to reduce indoor and
outdoor air pollution. “It is extremely important that you make
use of registered professionals to perform the installation and
maintenance of LPG appliances and cylinders,” adds Brijlal.
For more information on LPGas, visit www.lpgas.co.za
SA FACES A TWO-YEAR JOURNEY TO RECOVERY
Recovery from the coronavirus-induced economic and financial
meltdown could take some two years, according to Prescient
Investment Management’s research and baseline forecast. “The
world is grappling with the worst plunge in economic output in
living memory,” says Prescient Head of Asset Allocation, Bastian
Teichgreeber. “The coronavirus pandemic and the lockdowns to
contain it affect both supply and demand in the various sectors
of the economy in unusual and different ways.”
After making new all-time highs as late as mid-February 2020,
equity markets around the globe made headlines for the record
pace at which they fell shortly after as a result of the global
spread of the Covid-19 pandemic. The price declines have been
indiscriminate, with equities, listed property, bonds, credit,
preference shares, inflation-linked bonds (ILBs), income assets and
the rand selling off in lockstep. Correlations moved to highs
we have never seen before. During April and early May, however,
we saw a steep recovery, with markets posting record returns.
The question everyone is asking is: How long will it take to
return to the pre-corona GDP peak once the economy has hit
bottom? Our base case, says Teichgreeber, is a U-shaped recovery
in which losses incurred in the first two quarters of 2020 would be
recovered within two years. “This might sound pessimistic to some
and optimistic to others. The risks to our view are significant on
the up and the downside.”
6 | www.opportunityonline.co.za
R1-BILLION FOR TOWNSHIP AND RURAL ECONOMY
The Black Business Council (BBC) and Ubank Limited signed a historic partnership agreement in May
2020 to establish an R1-billion fund for township and rural economy revitalisation. The fund will be
made available to BBC members and other SMMEs to the value of R250-million per annum over the next
five years, targeted at supporting township and rural black business ventures, entrepreneurship and
start-up companies. The fund will focus mainly on the IT and digitalisation, manufacturing, agriculture
and agri-processing, retail, infrastructure and tourism sectors. www.blackbusinesscouncil.africa
DEMAND FOR HOME DELIVERY SET TO INCREASE
South African consumers are becoming more reliant on home
delivery services due to social distancing efforts. “Businesses will
have to gear up to provide home delivery, or beef up existing
fleets, as it is expected to play a crucial role in the coming months,”
says Derick de Vries, Head of Fleet Management at Standard Bank
“The new normal is digital, the events of the last month have
proved this. For businesses to remain viable going forward, they
will need an online extension of their business, where consumers
can view and purchase products, and a fleet of vehicles to carry
out deliveries. These systems, which some companies may already
have in place, should then be adapted for the current environment.
“The evolution of technology in the industry means that
fleet managers can access customised, in-depth information
on a regular, and in certain instances, real-time basis, via online
platforms,” explains De Vries. “These include daily, weekly and
monthly reports on fuel cost data, and the ability to use predictive
modelling for the outcome of variances to
their fleet and operational data.”
Standard Bank acquired a 40% stake in
Payment24 to support fleet owners with
digital technology solutions that work
to eliminate risk and inefficiencies. The
platform aims to eliminate the hassle of
monitoring and controlling fleet fuelling
transactions using real-time, cardless RFID,
mobile and cloud technologies.
Further to that, Standard Bank offers a
fleet management card, issued per vehicle
rather than driver, which offers convenience
in paying for, monitoring and controlling
vehicle running costs. This also helps
facilitate savings on diesel with several oil
company partnerships to choose from.
pull to come
info to come
pull to come
info to come
www.opportunityonline.co.za | 7
We built the modern economy on a global logistical supply
chain that could not function without oil and its downstream
derivatives. This dependence on oil has enabled the broader
oil industry to be remarkably profitable. It has been one of
the world’s more important industrial sectors for much of
the past 100 years, writes MIKE TOWNSHEND.
And because of the scale of the oil industry, it
has always been closely entwined with politics.
Since its genesis in the late nineteenth century,
the oil industry has drawn more controversy
than most others. Oil has caused wars,
assassinations, man-made disasters, coups and still
affects every person in the world today.
A BRIEF HISTORY
Iraq’s 1990 invasion of Kuwait after an oil production
dispute dragged the US back into Middle Eastern
conflict. US efforts to secure its oil supply, principally
from major producer Saudi Arabia, has embroiled it in
regional conflict ever since. Ensuring Saudi stability in
the strife-torn region has demanded costly US political
and defence support.
More recently, elevated oil prices made new US oil
fracking production profitable and the US has doubled
its oil production over the past decade. The US has once
again become the largest oil producer in the world,
surpassing Saudi Arabia and Russia. The US is no
longer reliant on imports and it is now re-evaluating
its expensive and divisive Middle Eastern involvement.
In the meantime, China’s economy burgeoned
and the oil-dry country is now the world’s largest oil
importer. Simultaneously, Putin’s Russia is smarting at
its post-communism loss of geopolitical influence. Putin
has been cosying up to Chinese President Xi, realising
Russia and China
could work together to
achieve greater global
THE CURRENT OIL IMBROGLIO
In late 2016, Russia and the
Organisation of the Petroleum
Exporting Countries (OPEC) worked together
to support oil prices from the relatively low levels
of mid-$40 per barrel. Prices recovered and a new,
extended OPEC oligopoly dubbed OPEC-Plus seemed to
have become entrenched.
When oil prices started falling from $65 at the
beginning of 2020, Putin conceived an opportunity to
decimate oil prices and thus strike at the booming US
shale oil industry while cementing Russia’s goodwill
with oil-importer, China. In early March, he chose not
to support the OPEC-Plus call for production cuts and
encouraged Russian oil companies to instead ramp up
production. The Saudis responded by increasing their
own production and the supply glut caused a further
weakening of prices.
The rapidly spreading Covid-19 pandemic was
concurrently decimating global oil demand. The
combination of slumping demand and rising supply saw
Brent crude prices collapse to $25 per barrel. Investors
should expect a six- to 18-month period, if not longer,
Oil demand is
with the global
economic cycle but
is now fraught with
up by an entirely
new set of factors.
8 | www.opportunityonline.co.za
where oil prices are volatile and likely to languish close
to $40 per barrel.
The shake-up of the oil sector will have a variety of
geopolitical ramifications. It is still too early to establish
how this will play out, but some macro consequences
are becoming clearer.
Firstly, OPEC’s influence should wane. As the energy
transition away from fossil fuels gains momentum and
the array of economically viable and less price-volatile
energy sources continues to emerge, oil’s dominant
position in the energy mix will decline. OPEC’s ability
to set prices and thus extract geopolitical bargaining
power will diminish. Conflict in the Middle Eastern
arena, however, could escalate. New power blocs
backed by Chinese or Russian interests will replace US
involvement and look to exploit Arab nations and assert
power in the region.
Secondly, Sino-Russian relations should deepen
on the back of this oil crisis. Their partnership is an
outcome of their shared dissatisfaction with the US –
both feel antipathy towards the US and its perceived
___ __ ___ __ _ _
Oil has caused wars,
coups and still affects
every person in
the world today
___ __ ___ __ _ _
meddling in their sovereignty and interests. Russia has
already become one of the biggest recipients of Chinese
investments under the Belt and Road initiative. The oil
war has complicated Russia’s prospects for economic
growth, but its alignment with China could deliver early
benefits as the latter’s economy recovers first from the
THE UNCERTAIN PATH TO OIL PRICE RECOVERY
The oil price is a factor of demand and supply. On the
supply side, there is now significant excess capacity in
oil and related-product inventories due to the Covid-19
pandemic. This excess must be absorbed before product
prices can recover. At prices below $45 per barrel, oil
supply is largely in the hands of the OPEC-Plus oligopoly.
At higher prices, higher-cost producers such as the US
onshore fracking industry can restart production.
Oil demand is normally correlated with the global
economic cycle but is now fraught with uncertainties
thrown up by an entirely new set of factors. These include
how quickly economies can rebound from lockdowns,
whether working from home becomes the new normal
and whether wary office workers avoid public transport
to favour self-driving. Bigger influences include the
timing and extent of the recovery in global travel and
tourism, the accelerating adoption of electric vehicles
and how the global logistics supply chain is affected
by de-globalisation, reshoring and the establishment of
new supply lines. Many of these decisions will be made
Uncertainty relating to supply and demand will,
therefore, result in a volatile period for oil prices and
oil-related investments. So, while an oil shock of this
nature offers investors rare buying opportunities, they
should proceed with caution.
Management is an
on the principles
www.opportunityonline.co.za | 9
Negotiating African oil and M&A deals in these times of low oil and gas prices, currency fluctuations,
Covid-19, increased nationalism and added focus on ESG, is no easy task. Here are some considerations
from REBECCA MAJOR that may be top of mind in the current circumstances.
Despite the current economic, political and sanitary
climate, we are seeing, and expect to continue
to see, mergers and acquisitions in Africa’s
oil and gas industry, including in particular:
• Deals already agreed before Covid-19/the
drop in oil and gas prices;
• Sellers looking to sell to raise money; and
• Buyers with cash/available credit lines looking to
Buyers and sellers have been checking the sale and
purchase agreements (SPAs) that they have already
signed and have been very carefully considering the
SPAs that they are about to sign.
SPAs often include provisions enabling one or other of
the parties to terminate the SPA between signing and
closing if certain circumstances arise. Generally, the
objective of the seller is to achieve as much certainty as
possible. Therefore, a seller will only accept very limited
rights for the buyer to terminate the SPA before closing.
On the other hand, the buyer will generally not want to
be bound into a deal that is not as good as was expected
when the SPA was signed.
MATERIAL ADVERSE CHANGE
This enables one or both of the parties to terminate the
SPA before closing if something significantly affects
the value of the target asset/company. Discussions
generally revolve around (i) what kind of event should
be covered: political crises in the country, significant
damage to the asset, significant fluctuations in oil and
gas prices; and (ii) whether there should be some kind
of materiality threshold: for example, a decrease of 10
to 25% in the value of the asset.
These kinds of provisions are generally fiercely
negotiated and may not be accepted at all. They relate
to the asset and not the financial position of the buyer
(or the seller) and will generally not relate to the state
of the oil and gas industry as a whole (for example a
decrease in oil and gas prices – although this may be a
point of negotiation).
investors may prefer
to support companies
than buy them out,
because it makes
legal or business
sense to do so.
10 | www.opportunityonline.co.za
MATERIAL BREACH OF REPRESENTATIONS AND WARRANTIES
Representation and warranties generally do not include
any kind of comfort concerning oil and gas prices,
availability of reserves, production levels or political
issues. However, current circumstances might give rise
to breaches such as:
• breach of a warranty to ensure that there is no
event of default under any of the existing financing
arrangements: low oil prices and/or a suspension of
production may trigger events of default relating to
• breach of material project contracts (for nonperformance,
• the target is unable to pay debts as they fall due.
For many deals, the price for the asset/company is fixed
on a past date (a locked box date or retroactive effective
date). In this case, there is a risk of value fluctuations
____ __ ___ __ _ _
As African countries are
more fragile, some
will become more
protectionist in terms
of foreign investments
___ __ ___ __ _ _ _
between that date and the date of the actual closing
of the deal. This can be significant where oil and gas
prices or production have significantly decreased since
that date. The parties may still have to close at the
original price in these circumstances.
If on the other hand the price is calculated based on
the value at the closing date, then the parties may be
better protected against any sudden increase or decrease
in oil and gas prices or production levels. Deferred price
mechanisms based on future performance might also
be helpful. Parties may become being more creative
with pricing mechanisms in future deals, with both
parties looking to mitigate their risks.
Some countries have found themselves
short of foreign currency, particularly those
countries that are dependent on exports of
goods (Ethiopia is an example) or oil and gas
revenues (such as Nigeria and Angola). This
means that African buyers have struggled
to be able to obtain the foreign currency
necessary to do deals. It has also meant that
foreign investors are concerned about their
investments becoming cash trapped in a
country. These issues have arisen on top
of the already existing issues around the
tightening of regulations in certain regions
(like the CEMAC region) concerning the
ability to maintain offshore bank accounts.
Many foreign investments in Africa are through
joint ventures with local partners and/or with other
international investors either for legal reasons or for
business reasons, or a combination of both. Many foreign
companies are also dependent on local contractors
Covid-19, combined with the oil and gas crisis, has not
only made target companies and projects more fragile
but has also made certain investors and contractors,
particularly smaller investors and contractors, more
fragile. In a company or project where the financial
stability of each of the stakeholders is important (for
example, an entity requiring shareholder funding
or dependent on shareholder services), this can be
a real issue. Foreign investors are therefore being
increasingly diligent both with new investments and
in relation to existing investments.
These circumstances may provide opportunities for
larger investors to acquire bigger stakes in companies
and projects. However, it may also require them to
acquire additional stakes to protect their investments
from the financial difficulties of their partners rather
than because they wanted a larger stake.
Where local partners or contractors have financial
difficulties, international investors may prefer to
support them financially rather than buy them out,
because it makes legal or business sense to do so.
Smith Freehills LLP
Freehills is one of the
world’s leading global
law firms, with
27 offices globally.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ISSUES
Before Covid-19 and the oil price collapse, ESG was the
key point in the minds of most oil and gas companies
and should not be forgotten. Sellers looking for a
clean exit, or buyers looking to avoid having to take
on past issues, should negotiate pre- and post-closing
indemnities carefully on this basis.
As African countries are feeling economically more
fragile, some will become more protectionist in terms
of foreign investments (increasing tax rates, etc).
However, this is not universally the case and many
countries have realised that they need the support of
others either regionally or internationally.
• To hear more from
M&A deals, attend
the Finance Forum
at AOW 2020.
www.opportunityonline.co.za | 11
Dr Phindile Masangane joins Petroleum Agency South Africa (PASA) as Chief Executive Officer at a time
when the country is developing a domestic gas market anchored on indigenous gas production. This is
something that she looks forward to and can draw on her experience to contribute towards achieving.
Please tell us about the history of Petroleum Agency SA.
Petroleum Agency SA (PASA) has its roots in the Petroleum Licensing
Unit of the then national oil company, Soekor (the predecessor of
PetroSA). In 1999, following the Norwegian model, it was decided that
regulation of the oil and gas upstream industry should be separated
from the national oil company, and the Agency was formed through a
The Agency has successfully attracted major explorers to South
Africa and facilitated the acquisition of many new large seismic surveys
and some exploratory drilling, through a period affected by legislative
issues and a major oil price crash. The company has grown from an
organisation of about 25 staff members to 85 today and is held in very
high regard by the local and international oil and gas industry that it
serves. Currently, the Agency is actively involved in shaping the new
stand-alone upstream legislation and in guiding government with its
decisions regarding the possible exploration for shale gas.
What is PASA’s core business function?
PASA has three main functions, as follows. The first is to attract
investment to South Africa’s oil and gas upstream industry, in other
words, investment into exploration and production of oil and gas in South
Africa. We have a team of geologists and geophysicists who interpret data
gathered through past exploration activity to determine prospectivity,
and use this to attract exploration companies to South Africa.
The second function of PASA is to regulate the upstream industry in terms
of the Mineral and Petroleum Resources Development Act, its regulations
and other applicable legislation. The Agency has staff responsible for
ensuring legal, technical and environmental compliance as organisations
enter into contracts with the state to explore for oil and gas.
The third function is to act as the national archive for all data and
information produced during oil and gas exploration and production
in South Africa and to curate and maintain this data for use and
Other functions include advising the government on any issues
pertaining to oil and gas as well as carrying out any special
projects, as directed by the government.
What is PASA’s purpose in South Africa’s energy sector?
From the above, it is clear that the Agency is the regulator
for South Africa’s oil and gas upstream industry. However,
the Agency by no means sees its role as only reactive. On the
contrary, it is one that is proactive and the Agency’s purpose
is to facilitate and regulate oil and gas exploration to achieve
production of indigenous oil and gas. This will ensure energy
security and bolster economic growth, and play a strong role in
addressing the eradication of poverty in South Africa.
South Africa has committed to reducing its carbon footprint
and natural gas can play a role in this. South Africa is currently
heavily dependent on coal as a primary energy source and the
substitution of natural gas for some percentage of electricity
generation, as envisaged in the National Development Plan, could
assist with South Africa reaching its goals in terms of carbon
emissions. The Agency’s main role in this is to attract and
facilitate the activities of explorers for indigenous gas.
You have recently taken over the position as CEO of PASA – and you are
the first formally appointed female CEO. Can you please share with us
some of your ideas in terms of plans and strategies for growing and
South Africa has a very good petroleum resource potential which
remains unexplored. Before 1994, we didn’t have international
oil companies in the country due to political sanctions. So all the
exploration activities for oil and gas in South Africa were undertaken
by the then state-owned company, Soekor (pre-cursor of PetroSA).
Oil and gas exploration is a highly capital intensive
and high-risk business that cannot be left to a national oil
12 | www.opportunityonline.co.za
company to do alone. In the democratic era, we
have attracted a number of international oil and gas
companies including the majors like Shell, Total and
ExxonMobil and have seen a number of our blocks
being licensed. Significant exploration activity in terms
of 2D and 3D seismic data collection has taken place
since then, mainly by international oil companies.
We are at the stage where we need to enter the next
phase in terms of exploration – that of significant
drilling activities. This is what we need: a move to
proving the resources we have. That would be the
game-changer for South Africa’s upstream oil and
gas industry. The recent discovery by Total and its JV
partners in Block 11B/12B (Brulpadda) is the first giant
step in that direction.
Offshore, there is currently ongoing exploration of
the prospects close to the Brulpadda discovery. Odfjell’s
Deepsea Stavanger oil rig is on its way to South Africa
from Norway, and should arrive around the 12th of
August. It will drill the Luiperd (more correctly the
Luiperdpadda) prospect which is the second of five
prospects in the group. There is an option to retain the
rig in South Africa for further drilling. The Brulpadda
well discovered light oil and gas condensate, but the
phase in the other prospects can only be determined
through drilling. Future development of the
discovery is highly dependent on the
success of this further drilling. Possible
development could see gas condensate
being piped to the PetroSA
facility in Mossel Bay, but these
decisions are ultimately up to the
operator, Total, and its partners.
My role is to work with industry
and the department to fast-track
these developments including
finalising the Upstream Resource
Development Bill. As we enter this
phase in our industrial development,
we want to ensure that it is an inclusive
and diversified industry in terms of race,
gender and participation of SMEs.
What would you consider to be PASA’s biggest
South Africa is playing catch-up
in terms of upstream oil and
gas development compared to
other countries in the region.
With the correct policies,
fiscus proposition and
domestic industry off-take
opportunities we can win.
PASA’s challenge is to ensure that both
international and local energy companies
see this value proposition with South Africa
and choose our country. In this low oil and
gas price environment, companies are
inclined to cut back on capital investments
and we need to partner with them to sustain
Upstream oil and gas industry is highly
capital intensive, high risk in the early
stages and requires highly specialised
skills. So local small and medium
companies tend to find it difficult to source
funding for participating in the industry.
Our challenge is that as a regulator acting
on behalf of the government and the people
of South Africa, we have to find solutions
to these challenges so that South African
companies can meaningfully participate in
this strategic industry.
What do you predict the company’s biggest
success will be in the future?
A vibrant upstream oil and gas industry
that contributes to the security of
energy supply of the country
and the economy having a
Dr Phindile Masangane,
CEO of PASA
DR PHINDILE C MASANGANE
PHD CHEMISTRY, MBA, BSC.
(MATHEMATICS & CHEMISTRY)
Dr Masangane was appointed as the
CEO of the South African upstream
oil and gas regulatory authority,
Petroleum Agency South Africa, in
Before then, Dr Masangane was
an executive at the South African
state-owned energy company, CEF
(SOC) Ltd, which is the holding
company of PASA. Dr Masangane
was responsible for clean, renewable
and alternative energy projects. In
partnership with private companies,
she led the development of energy
projects including the deal structuring,
project economic modelling and
financing on behalf of the CEF Group
Her responsibilities also include
supporting the national government
in developing energy policy and
regulations for diversifying the
country’s energy mix.
In 2019, Dr Masangane was Head
of Strategy for the CEF Group of
Companies where she led the
development of the Group’s longterm
strategic plan, Vision 2040+
as well as the Group’s gas strategy.
From 2010 to 2013, Dr Masangane
was a partner and director at KPMG,
responsible for the Energy Advisory
Division. In this capacity, she successfully
led the capital raising of
$2-billion for the Zimbabwe power
utility, ZESA/ZPC’s hydro and coal
power plants expansion programmes.
Gain your competitive
edge with Nemesis
Nemesis Accounting was born in 2005, with the objective to bring about an holistic approach to business
operations and business owner integration that ultimately flows into the sustainability of a business.
Opportunity magazine speaks to the owner of Nemesis Accounting, Shani Naidoo.
From 2010 onwards, Nemesis Accounting has grown steadily,
broadening its client base scope to international markets. Its
international clients included Ferrero Rocher, Hitachi Power
Europe (a Madupi Power Station project), Springer Germany
(publisher) and current KPMG international clients that operate
in South Africa. Nemesis continuously adapts to market requirements
so as to better service its clients.
Please elaborate on the services Nemesis Accounting provides.
Besides general accounting, tax and financial statement preparation,
we have a specialised service profile comprising of:
• Public officer services to international companies operating in SA
• Strategic Business Advisory Service
• Lean start-up business approach
• Financial literacy/management
• Financial statement reviews
• Business internal reviews and compliance
Shani, you are the founder of Nemesis Accounting. Please tell us about your
journey before you started the company.
After obtaining my CMA qualification, I started working in the
insurance and banking industry for the first four years of my journey.
In 1999, I had the opportunity to enter the accounting, compliance
and tax fields at an audit firm in Johannesburg. I was exposed to the
audit environment, tax compliance, SARS, and the execution of these
services. This was the beginning of a career that was to change so
much without me realising it at the time. After six years, I had to
resign for family reasons. It was towards the end of 2005 that I decided
to branch out and begin my career as a female entrepreneur.
Since 2005 to date, I have obtained a few more qualifications. Starting
with my CMA qualification, I moved on to acquire the following
additional qualifications: a registered FAP (financial accountant
in practice), CTP (certified tax practitioner), BRP (business rescue
practitioner), Internal Audit Certification, Master NLP Practitioner
(neuro linguistic programming) as well as a GCologist – GC Index
accredited facilitator and trainer (UK).
From 2005 to 2007, I served on the EXCO at Midrand Chamber of
Commerce as financial director/treasurer. I also hosted tax workshops
for small business through the Chamber.
In 2010, Nemesis Accounting was nominated as Small Business
Entrepreneur of the Year by the NSBC. I completed the internal
audit certificate programme at the University of Pretoria in 2014.
The following year marked a new venture as a director of Business
Acceleration Specialist (Pty) Ltd, teaching business sustainability
skills and development strategies for small business. I completed the
Advanced Business Rescue Practitioner qualification that was offered
by the Law Society and UNISA in 2018.
In August of 2018, Nemesis Accounting hosted its first Women’s Day
event at our offices in Kyalami, Business Woman of the Future. It was
a very transformational experience and well received. The next month
marked the birth of a new company, SME Warrior (Pty) Ltd. Geared
for entrepreneurs and business owners alike, this company’s focus
is training and development of SMEs using NLP and psycho-social
methodologies for the application and execution of the workshops and
training material. Start-ups hold a special place and we have special
course formulations tailored for them.
I qualified as an NLP practitioner in 2018 and in 2019, I completed
my Masters in Neuro Linguistic Programming. Being able to maximise
the potential of our brain functioning to be our absolute best in what
we do and how we live, is what brings the magic to the table in our
training and development.
In March 2019, together with Y-Connect, we presented the
interactive and activity-based Ignite Your Sales & What’s Your
Business Money Game workshop. A very new and different approach
to business and finance was showcased. NLP-based methodologies
were applied in the workshop.
Later that year, I embarked on studies with the GC Index in the UK
and qualified as a GCologist – facilitator and trainer. The GC Index is
a methodology and approach to maximising the highest-functioning
element in one’s composition as a person/worker/manager/CEO.
The profiling mechanism enables various levels of management to
transform their existing team and organisation dynamics to that of
game-changing executioner, ultimately improving the organisation’s
bottom line and the people involved too. This is an exceptional business
tool that I am using with my clients and will be using in SME Warrior
with the training and development workshops and programmes.
In January 2020, I was appointed as financial director at Safety
Boot Camp (Pty) Ltd – a company involved with evolved safety
training execution and implementation based on military and black
ops methodology. This type of safety training is not applied in South
African training situations. Safety Boot Camp focuses on mining,
engineering, coal and energy safety applications, which have a
14 | www.opportunityonline.co.za
of Legal, Business, Finance and Entrepreneurship and of People
Performance and Development.
Why should companies choose Nemesis Accounting?
We are geared for the South African SME. Having been through
the low end of starting a business to where we are now, puts us in
a synergistic position with South African businesses. Also, the fact
that we are using psycho-social methodologies in our problem-solving
applications with our clients has shown us that this is the way to go to
achieve impactful results. We serve an international client base and
have been since 2010. Our international clients are all referrals from
KPMG. We have intensive experience with the South African Reserve
Bank and international transacting. The nature of our game is problem
solving and advancement.
huge CSI impact in terms of social development and socio-economic
upliftment and sustainability. SME Warrior and Nemesis Accounting
are involved from a training and learning perspective for CSI and
socio-economic execution and development.
What has been the highlight of your career?
2010: Nomination for Small Business Entrepreneur of the Year
2018: Our first Women’s Day Event
2019: Qualifying as a GCologist – GC Index (UK) accredited facilitator
and trainer and Masters NLP practitioner
2020: The launch of SME Warrior Entreprenuer Academy. An online
platform of learning and development comprising of the Schools
What should we hope to see from Nemesis Accounting in the near future?
As we stand now, we are restructuring our service offerings to include
business advisory service as well. We have been working on this for
the last year and this will be one of our new features. We will be
offering this and additional customised offerings to small businesses.
What is your personal mission for Nemesis Accounting?
My purpose is to utilise all my qualifications and skills for the
benefit and upliftment of skills development and enhancement in a
forever-changing economy. The goal is to bring about life-changing
sustainability and transformation to businesses, business owners and
individuals in their personal capacities.
How has Covid-19 impacted your business?
At the onset of Covid-19, we already knew the biggest dip would be
the small business clients. Fortunately, due to our international client
base, this has cushioned the impact a bit. We are continuing and have
made slight changes to mitigate further effects.
THE COVID-19 NEW BUSINESS WOMAN OF THE FUTURE
SME Warrior will be hosting a virtual seminar looking at the
current/post Covid-19 pandemic business woman. The seminar
sets out to address the challenges that lie ahead for women in
business current and post-coronavirus pandemic. It will probe
what lies ahead for her, the new trajectory she will face, a new
way of thinking, new habits and the grounded intrinsic values
she will need.
Founder of SME Warrior and Director
at Nemesis Accounting, Shani Naidoo
feels that irrespective of the Covid-19
pandemic, the gains that have been
made so far in addressing inequalities
faced by women in business have
been quite reserved.
“Even before the coronavirus pandemic, women have always
been marginalized when it comes to the business world,” says
Naidoo. In 2017, Statistics South Africa found that despite
women making up just over half of the population, they remain
relatively unrepresented in positions of authority and power. The
same report by Stats SA found that out of the top 40 JSE-listed
companies, only one company had a female CEO.
Join us on 28 August 2020, as we talk about these inequalities
from the past, the challenges and who women will need
to become to surpass this now and continuing after the
Covid-19 pandemic. For any enquiries and to reserve your spot,
email email@example.com or firstname.lastname@example.org.
Follow our social media platforms: LinkedIn: SME Warrior Za
Facebook: SME Warrior
Awaken the Warrior Within
The geographical coordinates to the new container terminal on reclaimed land at the Port of Walvis Bay.
A port on the southwestern part of Africa equipped with infra and super infrastructure
that gives clients fast, efficient and safe passage of cargo into and out of Africa.
We are NAMPORT; Africa’s express hub to international markets.
Railway transportation has a long history. Although the basic concept of low-friction
wheels on rails remains the same, the implementation has undergone significant
changes, buoyed by multiple technological interventions.
Technological innovations are expanding the
capabilities of railway systems and helping
to achieve faster speeds, greater capacity and
better safety to compete with other forms of
transportation. Technology has transformed the
way the industry works globally, fuelled by railway
operators’ eagerness to reap benefits by making their
operations more efficient, safe and profitable.
Technology has the potential to impact five key dimensions
of rail transportation (see figure below right).
TRAIN OPERATIONS EFFECTIVENESS
The effectiveness of train operations is best measured
through asset reliability, utilisation, and employee productivity.
Technology can help improve asset reliability
through sensor-based condition monitoring and datadriven
predictive maintenance. Decision support systems
can play a strong role in enhancing asset utilisation and
Technology has the
power to improve
five dimensions of
Technology can make train operations safer by detecting
flaws in the tracks, remote monitoring the tracks,
digitising and automating maintenance, and improving
basic processes such as welding and grinding.
Improvements in signalling and telecommunication,
crash safety of rolling stock, and surveillance of human
operations can reduce errors and lessen the impact
Mechanised construction can enhance the speed for
infrastructure upgrades (track laying and electrification)
while improving cost-effectiveness.
www.opportunityonline.co.za | 17
PASSENGER EXPERIENCE IMPROVEMENT
The passenger experience is formed at each step of the journey –
from planning a trip and booking a ticket to travelling to the railway
station, arriving at the station, and travelling on the train. Technology
can affect each stage of the experience. Seamless availability of
information for planning, omnichannel ticket booking, smart railway
stations, value-added services such as Wi-Fi and infotainment, and
accurate train tracking based on GPS are just a few examples of ways
that technology can enhance the passenger experience.
b) For signalling-related interventions, invest in the European Train
Control System (ETCS) level 2 for high-density routes to increase
network capacity and maintain the required safety standards.
c) For rolling stock, fast-track the switch of passenger rolling stock
to Linke Hofmann Busch (LHB) coaches to minimise fatalities.
d) Increase view of personnel with interior and exterior locomotivemounted
video surveillance to improve monitoring.
2 | INFRASTRUCTURE UPGRADES
Three recommendations can lead to faster and more robust infrastructure
a) Invest in track-laying machines for mechanisation of construction.
b) Increase the rate of electrification through machines such as the
self-propelled overhead electrification laying train (SPOLT).
c) Proliferate use of prefabrication for construction elements.
3 | TRAIN OPERATIONS EFFECTIVENESS
Four recommendations are designed to increase asset availability
a) Invest in technologies such as complete train scanners
for improved diagnostics and maintenance.
b) Use operations optimisation tools for better management and
performance of trains, rakes, locomotives and crews.
c) Digitise processes to enhance work quality and lower costs,
thereby reducing reliance on labour-intensive processes.
d) Use distributed power to improve the efficiency of train operations
with coordinated acceleration and deceleration.
ORGANISATIONAL CAPABILITY ENHANCEMENT
Technology can have a powerful impact on an organisation’s capability
through effective training and assisting in decision-making. With the
introduction of virtual reality (VR) and gamification that can simulate
real-life scenarios, training has been revolutionised. IT dashboards
and management information systems have been used extensively
across industries to enable data-driven decision-making.
In a recent joint report by the Federation of Indian Chambers of
Commerce and Industry (FICCI) and American global consulting
firm, Kearney, they aimed to analyse the technology solutions
and best practices used by global rail systems to understand how
Indian Railways can improve the effectiveness of its operations.
These solutions and practices can also be used in a South African
context. The solutions are structured across the five dimensions
mentioned above. Following are some of the study’s key insights
and recommendations across these dimensions:
4 | PASSENGER EXPERIENCE IMPROVEMENT
To retain the passengers that the railway carries, enhancing the
passenger experience will be crucial:
a) Establish smart railway stations by implementing access control
at entry points, provide accurate real-time information, and put
interactive solutions in place.
b) Upgrade the ticketing experience with seamless integration
across platforms and open-loop smart cards.
c) Enhance the train experience with services such as infotainment
and app-based systems.
5 | ORGANISATIONAL CAPABILITY ENHANCEMENT
Two recommendations aim to enhance capability and improve
a) Use training simulators and virtual reality training systems
to improve personnel capabilities.
b) Enhance decision-making by improving information management
with management reporting dashboards.
1 | SAFETY ENHANCEMENT
Four recommendations focus on achieving zero fatalities:
a) For track-related interventions, introduce B-scan ultrasonic rail
flaw detection (both non-stop and stop-and-verify systems) and
track inspection with automated high-speed test trains.
Implementing these technology solutions will be essential for rail
transport in South Africa to get closer to the world-class standard for
train operations. However, selecting and implementing technology
as well as obtaining the optimum economic benefits will require
adopting innovative procurement models.
18 | www.opportunityonline.co.za
SeaRail is a logistics company that operates a 3.6-hectare Dry Port
facility in Walvis Bay, Namibia, located within the boundaries of
the Port of Walvis Bay (known as Namport).
ONE-STOP SHOP | SeaRail offers an integrated portfolio of services
that position it as a one-stop shop for various logistics needs.
The aim is to provide clients with total logistics solutions.
CONNECTIVITY | Corridors leading to and from the port are safe
and have well-maintained roads.
OUR VISION | To be the leading provider of transport and logistics
solutions for importers and exporters globally.
OUR MISSION | Providing efficient, safe and cost-effective port
and logistics services to our customers.
Project cargo handling & storage | Bonded facilities
Freight forwarding logistics | Customs brokerage
Container & breakbulk handling | Cartage & transportation
Ro-Ro vehicle handling
| Reefer plug-in points
General & specialised storage and warehousing
Value added services
• De-stuffing & stuffing containers
• On-site customs/vet inspections
ADDRESS Corner 5th Road & 5th Street,
Lagoon, Walvis Bay, Namibia
TELEPHONE +264 64 203434
• mechanised sleeper replacement,
• railway construction and rehabilitation, ballast
tamping, regulating and screening,
• overhead maintenance,
• rail profile rectification,
• rail flaw detection,
• drain cleaning,
The root • rail signaling
& OHTE, and
Your all-African solution to upgrading the rail network
• smart rail.
in Sub-Saharan Africa
Operating from Kimberley in the Northern Cape, Rail
2 Rail has been in the industry for close to a decade. Rail
Tel: +2711 898 6800; Mail: email@example.com
2 Rail manufacturers pre-stressed PY and P2 concrete
railway sleepers in compliance with SABS ISO 9001-
2000 standards. The sleepers are manufactured under
technical license from Rail One. Rail 2 Rail is one of the
biggest manufacturers of concrete sleepers in South
Africa. With the capacity to produce 400 000 sleepers
per annum, which are transported via a rail siding all
of African mobility
across South Africa, Rail 2 Rail, powered by Mathupha
Capital, is the only majority black owned supplier of
concrete sleepers in South Africa.
Tel: +2787 330 2221; Mail: firstname.lastname@example.org
Mathupha Capital is a 100% black-owned rail infrastructure solutions provider founded in Johannesburg,
South Africa. The name Mathupha Capital was derived from the need to stay relevant and represent the market
we compete in as an investment company, hence the modern take to the African name in the term “Capital”.
Mathupha represents our roots. This is our Chairman’s
family’s clan name and it speaks to our lineage. It
represents where we come from and who fuelled the drive
to create such a successful company. We believe that our
foundation and where we come from propels us to be the
best that we can be. Honouring our heritage daily clears the path for
us to reach even greater heights.
Mathupha Capital’s ultimate vision is to be the leading turnkey
rail solution provider on the African continent. This is no easy task
but we are confident in our ability to reach this ultimate goal. We are
the future of African mobility.
Mathupha Capital is the holding company and
100% owner of Rail 2 Rail and Lennings Rail.
We also believe in not only creating a future that
benefits us and the industry, but we also believe in
a future that benefits the country and continent at
large and its communities, hence the establishment
of the Mathupha Foundation.
Rail 2 Rail operates from Kimberley in the
Northern Cape and has been in the industry for
close to a decade.
Rail 2 Rail is the second largest manufacturer
of concrete sleepers in South Africa and is the
only majority black-owned supplier of concrete
sleepers in South Africa with a capacity to produce
over 400 000 sleepers per annum. Rail 2 Rail
manufacturers pre-stressed concrete PY and P2
railway sleepers in compliance with SABS ISO 9001-2000 standards.
These sleepers are manufactured under technical license from Rail
One, a leading supplier of innovative track systems for passenger,
freight, and heavy-haul transport based in Germany.
Lennings Rail operates from Boksburg in Gauteng and is the
oldest mechanised track construction and maintenance business
in Africa with roots dating back to 1931 and focuses on turnkey
mechanised railway development, construction, rehabilitation and
maintenance of track infrastructure work systems.
Lennings Rail is highly differentiated in this industry because
of its in-house engineering capabilities that can repair and build
machinery components on-site using mostly local
suppliers, thereby optimising downtime on occupations.
Our service offering under this subsidiary includes
mechanised sleeper replacement, railway construction
and rehabilitation, ballast tamping, regulating and
screening, OHTE maintenance, rail profile rectification
(grinding), rail flaw detection (rail breaks) and drain
Lennings Rail also has capabilities in rail signalling
and OHTE (incl. substations) as well as smart rail. Through
this subsidiary, we are passionate about migrating
into the digital environment by offering turnkey rail
infrastructure automation, rail signalling, metering and
monitoring, telecoms, theft and vandalism prevention,
automatic fare collection and maintenance.
Through Lennings Rail we have projects
spanning South Africa and other African countries
such as Mozambique and Namibia, amongst others.
The Mathupha Foundation is the corporate
social investment arm of the group and its
subsidiaries, and its primary goal is to build a truly
liberated and successful South Africa by providing
and supporting every member of the family to be
functional and independent. The foundation is
founded upon four key pillars; supporting the girl
child, boy child, entrepreneurs and also focusing
on rural development.
As an organisation, we believe that we have to
be the change we want to see in the world, be it
through our subsidiaries or the foundation.
20 | www.opportunityonline.co.za
Tshepo Kgare (Railway Safety Regulator: ACEO)
shares her first-hand insight into what the RSR
is doing to keep their teams, clients, suppliers
and the public safe and on track for a brighter
South African economic future, while making
significant strides into empowering women
and keeping them safe at work.
South Africa is at a crossroad and need the intervention
of industry roleplayers, including members of society.
Since the lockdown, the rate of theft and vandalism of
infrastructure has escalated exponentially. During the
same time, there has also been a rise in gender-based
violence where women cruelly lost their lives.
While we lament the death of women who are often killed by
people they know, we should be mindful that female workers,
particularly female train drivers, are often victims of crime
while executing their duties.
The general corporate response to affirmative action in the
railways has created a highly visible but often vulnerable
female workforce. However, if we are to attract more female
train drivers and bright young female engineers to the rail
sector, we will have to ensure that they are not deterred by the
prevailing external forces.
we protect our
South African women have become increasingly
prominent in sectors that were previously dominated
by men. However, the representation of female
engineers in the rail sector is still disproportionate.
“I am passionate about young women taking up
careers in science, technology, engineering and
maths (STEM) sectors,” says Tshepo Kgare, RSR
ACEO. The railways offer exciting career paths
such as railway inspectors, human factor specialists
and Overhead Track Equipment (OHTE) specialists
The Association of South African Women in
Science and Engineering, under the helm of the
University of Cape Town states that South Africa
has a critical shortage of trained technological
professionals to the degree that there was only 49
scientist and engineers involved in research 40
The RSR views the empowerment of women in
science and engineering as a business imperative
to build an inclusive community. The Regulator
follows equitable employment and skills development
practices, nevertheless have to acknowledge that the
sector is still miles from levelling the playing field.
____ __ ___ __ _ _
“I am passionate about
young women taking
up careers in science,
and maths (STEM)
sectors.” – Tshepo Kgare
_____ __ ___ __ _ _
According to the ACEO, Tshepo Kgare, we have to be
the change we want to see.
“We need to encourage girls to push the boundaries
and to reach fearlessly for what they want. Together we
can disrupt the collective barriers that impede women
from entering the rail sector,” said Kgare.
LET US CONTINUE TO PROTECT OUR RAIL ICONS
Covid-19 has proven to be a disruption not only to the
economy and health system, but to all facets of life. To
this effect, rail is no exception. The nationwide lockdown
resulted in most rail operators suspending their
operations, while those who remained to operate did so
under strict regulations and restrictions.
As the country moved to Alert Level 4 of the lockdown
in May, the Minister of Transport, Honourable
Fikile Mbalula issued directives to address, prevent and
combat the spread of Covid-19 in the rail operations.
As custodians of rail safety, the RSR played a central
role in ensuring that rail operators comprehend and
comply with the directives.
At the heart of the directives was an entreaty to operators
to demonstrate the health and safety measures
put in place to ensure that their operations are compliant
to the prescribed regulations. This encompassed,
inter alia, the protection of rail workers.
To accentuate on the clarion call to protect rail
workers, the RSR launched the Siyabavikela Campaign
at the beginning of June. The campaign which focusses
on protecting rail workers aims to heighten awareness
and reinforce the compliance that is required from
operators as far as social distancing and personal protective
equipment is concerned.
The campaign has been received very well by rail
operators who responded by sharing photos of rail
employees wearing masks, maintaining social distancing
and sanitizing their hands among other things.
These responses, coupled with the Covid-19 response
plans received from operators, as well as Covid-19
reports and updates, gives the Regulator comfort
that the industry is on the right track. In the words of
President Cyril Ramaphosa, “The task of dealing with
the coronavirus pandemic is like running a marathon
and not a sprint.”
The World Health Organisation has also cautioned
that the coronavirus pandemic will be with us for quite
some time. In light of this, the ball is in the court of
all rail stakeholders to ensure that we fight with the
pandemic and continue to protect our rail icons!
The RSR is a
established in terms
of the National
No 16 of 2002 (as
amended) to oversee
and enforce safety
compliance by all
in South Africa,
rail operations enter
Are you missing out
on the TRUE
Artificial Intelligence is top of mind, but is its impact understood?
Research suggests that the short-term impacts are vastly
overstated and the longer-term implications remain unexplored.
We see this same misapplied focus in enterprises where efforts either target
micro-sized use cases with disproportionate expectations of returns or
oversized, abstract dystopian concepts like replacing large chunks of
the workforce. The structural implications are often unexplored. For
example, with the adoption of smartphones and mobile broadband, the
effect on the quality of phone voice connections is insignificant compared with
the effect of Artificial Intelligence (AI) on industry value chains and the creation
of new ones like the sharing economy, with disruptors such as Uber and Airbnb.
A similar wave of structural change is likely with the widespread adoption of
AI – embedded AI. Embedded AI refers to the deep intertwining and widespread
adoption of AI in every step of the value chain (think Internet). Here’s what
organisations can expect from a world of embedded AI.
would be continually tested against claims, which
could reimagine the “actuarial” model upon which
DISRUPTING INDUSTRY VALUE CHAINS
the insurance industry is based. Insurance premiums
Embedding AI in the organisation has the potential to disrupt entire business measured in cents, anyone?
models, much the way Amazon is using digital technology to upend retail.
For example, consider the impact these changes could have on the insurance RECONFIGURING CURRENT OPERATIONS
industry. Dynamically mining consumer preference and behaviour data could The multitude of micro use cases of AI being considered
lead to faster, more accurate and personalised risk profiles. These profiles today is premised on wildly unrealistic expectations of
FACT 1: THE AI BOOM IS SUSTAINABLE AND SHOULD NOT BE IGNORED
For the first time, machine-learning algorithms are beating humans in tasks such as image
recognition and voice-to-text translation, and complex games such as Go. This AI boom is
fuelled by a convergence of three factors: a breakthrough in deep-learning algorithms, the
proliferation of big data (structured data) to train these algorithms and an exponential
speedup in processing power for machine-learning hardware, such as the graphics processing
unit (GPU) chipsets that cut down a machine’s training time from months to days and hours.
24 | www.opportunityonline.co.za
impact. The true value of embedding AI in current
operations is reconfiguration, not optimisation.
For example, leveraging chatbots for customer service
is a limited and narrow use case – still useful, but not
game-changing. Embedding a suite of AI capabilities
in the customer journey: behaviour analysis to predict
issues/calls, dynamically routing queries based on
customer context and mood, instantaneous solutions
and “rebates”, and, yes, traditional chatbots, can upend
customer service as we know it. Can you imagine a call
centre without any employees, a call routing
system without any prompts, or
perhaps proactive information sent
to the customer before they make
a call? When you think about it,
the answer is, of course, yes.
EVERYONE, EVERY TIME
AI has the potential to improve
the lives and efficiencies
of the workers in this new
organisational structure. It would
require companies to treat and
train AI as a fundamental aspect
of the business, available beyond
isolated pockets of expertise. When
companies enable every employee to
utilise a suite of AI tools, those employees will
be empowered to make the best possible decisions
with the latest information. Embedded AI systems
deliver data and information, freeing workers up to
look at the bigger picture. This enterprise AI suite
could transform knowledge workers’ jobs in the
same way that Microsoft Office transformed the
way we communicate.
LAYING THE GROUNDWORK
AI’s capabilities will surge in the future as we continue
to develop exponential technologies, including
augmented reality, virtual reality, nanotechnology and
digital biology. To reach this stage of innovation, we
must start with a solid foundation.
So go ahead and build your micro-solutions that improve operations and enhance
your operations now – they will provide good lessons, but perhaps not billions of
rands, in efficiency. But as you invest in near-term efficiencies, spare a thought
or two about the bigger picture: How do I embed AI in my business to deliver
Consider the following when deciding where to use AI for enterprise automation:
•One-time costs. Assess the initial capital outlay for a new AI solution, such
as developing an algorithm and acquiring training data. Open-source access to
algorithms and pay-as-you-go “AI as a service” platforms can lower the fixed-cost
hurdles, but access to training data can be either an expensive bottleneck or a
powerful source of differentiation.
• Switching costs. Evaluate the costs associated with displacing the existing
solution with an AI solution, including technical hurdles such as the ability to open
the AI algorithm’s black box to trace and explain decisions and human obstacles
such as political and cultural resistance to change.
• Ecosystem requirements. Determine if an integrated solution will require any
complementary technologies. For example, an AI solution that must be integrated
with innovative IoT sensors and emerging robotics technology will be more
complex to adopt.
• System externality hurdles. Consider the extent to which the AI solution
could negatively affect third parties that did not choose to use the new technology,
bearing in mind that the value of the solution will increase as more users adopt it.
AI automation is rapidly becoming a reality across organisations and value
chains. Now is the time for forward-thinking business leaders to adopt a
disciplined, portfolio-based approach to develop machine-learning capabilities,
data and partnerships to remain relevant.
FACT 4: ADOPTING AI IS ABOUT MORE THAN TECHNICAL FEASIBILITY
Some AI applications will be adopted faster than others, even though the technical
requirements are comparable. Broader solutions can ensure that a company’s portfolio
of AI initiatives can unlock value in the near term while also paving the
way for long-term aspirations.
FACT 3: AI IS READY FOR DEPLOYMENT ON SELECT ACTIVITIES
The Japanese insurer Fukoko plans to use AI to replace more than two dozen
human agents who process claims, and Goldman Sachs used machine learning
to transform its 600-person trader unit into a much leaner 200-person team
between 2000 and 2016. However, not all organisational activities are suitable
for AI automation under today’s narrow paradigm.
FACT 2: AI IS BEING USED ACROSS ORGANISATIONS BUT WITH A LIMITED SCOPE
So what will AI be able to do for enterprise automation in the next five to seven years? Most experts
say companies will adopt narrow AI, or supervised machine learning that is focused on one task. AI
algorithms will be able to use training data to learn how to automate a task, but once the task is
mastered, the solution will be narrow, and in most cases, the machine will not be able to generalise
that learning to perform other tasks. Widespread use of broad, human-like general intelligence, in
other words, unsupervised and context-aware, could be decades away.
The true value of
embedding AI in
www.opportunityonline.co.za | 25
Procurement is at the heart of Covid-19 crisis management and has taken an active
role in mitigating the immediate impact of the pandemic. Now, as companies brace
for the crisis’ long-term impact, a clear shift in mindset is needed.
Since the Covid-19 pandemic began battering
the world, procurement professionals of almost
every company have been rethinking their
supply risk management capabilities. Most are
grappling with little else today, as they try to
figure out how best to cope with the current and lasting
effects of the crisis.
How, and what, are they doing?
To find out, international management consultancy,
Kearney, recently conducted a global procurement
survey on the impact of the pandemic. In the survey,
Kearney asked procurement professionals how well
prepared they were for the pandemic at its onslaught,
procurement’s reactions to the immediate crisis, the role
procurement has played in bracing their companies for
the crisis’ longer-term impact, and how their mindset
about broader risk management strategies has changed.
Here’s what was learned:
___ __ ____ _ _
The pandemic crisis
has put a dramatic
emphasis on the
need for a balanced
scorecard approach to
measure the full impact
___ __ ___ _
PLAYING AN ACTIVE ROLE
Procurement is at the heart of most global companies’
crisis management efforts and plays an active role for
more than 70% of respondents. In these companies,
procurement is regarded as a peer with the other
organisational functions. It has a seat at the table and a
substantial voice in managing the Covid-19 crisis.
As the interface between the company and its
suppliers, procurement is in a unique position to
understand who the most vulnerable partners in
the supply chain are and take the right measures to
protect those most at risk. In about 30% of the companies
– especially those in smaller revenue brackets –
procurement has taken on a primary leadership role
and coordinates the cross-functional teams in day-today
crisis management and operations.
Some companies, though, are slower in getting their
herd over water than their competitors as the Covid-19
pandemic has exposed major weaknesses in their
supply chains – in particular around S&OP processes,
inventory control, and stock keeping unit (SKU)
complexity – which are compounding day-to-day crisis
Nevertheless, about 60% of companies have moved
beyond survival mode and started to look beyond the
crisis’ immediate impact.
They are operating in the current environment and
starting to plan and adapt for the post-recovery new
normal by assessing the impact of the crisis on their
broader risk management approach and adapting
category strategies based on scenario analysis for
the new normal. Procurement has a significant role to
Today, only 34% of
companies have a
linked to their
refreshed based on
(see figure, right).
26 | www.opportunityonline.co.za
BRACING FOR THE LONG TERM
A clear call to action is resounding throughout most
companies – a call urging procurement to do much
more to improve risk management strategies and
capabilities in the next 12 months. Almost 90% of survey
respondents believe the C-suite is fully expecting – and
is committed – to fundamental improvements in supply
risk management capabilities. They are convinced that
much needs to be done in the coming year – and that
they must start now.
DEVELOPING A BETTER SUPPLY RISK MANAGEMENT STRATEGY
Most companies today have a supply risk management
strategy. But for many, the strategy is basic at best and
far from robust, and the current crisis dramatically
surfaced many pain points. They recognise that the
strategy needs to become much more comprehensive,
explicit and dynamic.
It must, for example, be explicitly linked to what’s
happening externally in the market and internally
within the company, so it can be dynamically adjusted
to address these changes. It must be comprehensive in
measuring the impact on total value at risk, including
other value dimensions such as cash, growth, innovation
and enterprise agility. And it must be implemented and
dynamically refreshed – not just developed and then
disregarded. These are difficult tasks.
Today, only 34% of companies have a well-defined
supply risk management strategy explicitly linked
to their core procurement activities and dynamically
refreshed based on external situation and internal
demand changes (see figure below). With Covid-19
battering their operations, though, other companies
are looking closely at reworking their strategies. A
year from now, another 22% expect to have a robust
supply risk management strategy in place, giving more
than half of all companies a sound footing on which to
prepare for what’s ahead.
A company’s industry, of course, can affect which
supply risk management approaches it chooses to
use, which it uses on an ad hoc basis, and which
it uses systematically. All finance institutions in
the survey, as would be expected, apply financial
risk management. But today 57% of respondents
regardless of industry apply this approach to
managing their supply risk. More and more
companies now realise that to defend against a
catastrophe such as Covid-19, they must use the full
array of risk management approaches – and they
must apply these approaches systematically, not on
an as-needed basis.
CHANGING THE MINDSET TO SUCCEED
AFTER THE PANDEMIC
Many companies view cost reduction as the key
– and, often, the only – value delivered by the
procurement function. They operate with a strict
cost competitiveness mindset. The pandemic crisis
has put a dramatic emphasis on the need for a
balanced scorecard approach to measure the full
impact of procurement.
So, in addition to applying the full array of supply
risk management approaches available, companies
that see procurement’s potential benefits also
measure the impact of these approaches across
all the dimensions in value creation. This does
not mean that the pressure on competitive costs
is going away, and many organisations are taking
steps today to update their category management
strategies (for example, in commodities in light
of the recent oil price movements, or in indirects
where consolidation and demand management
opportunities exist in some areas). But as the survey
shows, a large percentage of companies today give
a high amount of consideration to each of the
following value-creation dimensions:
86% | CASH (working capital and terms
of payment )
86% | RELIABILITY (service levels, quality, etc)
79% | TOTAL COST
76% | GROWTH (speed to market, innovation)
72% | AGILITY (end-to-end cycle time and
reaction to emerging customer needs)
These companies know that to successfully
look beyond cost savings and to the
additional benefits procurement can
create, they cannot operate with the same
mindset focused on “cost competitiveness”
and are starting to shift their mindset to
“risk competitiveness”. In essence, they
are becoming risk savvy.
• What stage are you
(focus is on ensuring
(operating in the period
of high uncertainty)
(preparing for what
is coming next)
• What are the key
pandemic crisis has
exposed about your
• What specific actions
are you taking today
to take care of the
most vulnerable of
• How robust are your
supply risk management
• Is the mindset in your
on “cost competitiveness”
or “risk competitiveness”?
• What actions are
you taking today
to be prepared for
www.opportunityonline.co.za | 27
COVID-19 TEST OF SUPPLY CHAIN
2019 saw US companies actively adapting to what then felt like a major disruption – the US-China
trade war. Specifically, US companies sharply reduced imports of manufactured goods from China.
The shift was sizable, but there was still a sense that manufacturing imports might revert to old
patterns once the trade war ends. Then everything changed.
2020 dawned with the disruption of a new order
of magnitude: Covid-19. At time of writing, the
full extent of the societal and economic trauma
the coronavirus pandemic may cause is still
unknown. But it will be historic. In multiple
countries, social and economic activity is essentially
frozen. Governments as dissimilar as the US, Russia
and Italy are currently scrambling (and struggling) to
construct a coherent and effective response. The outlook
The lessons we must learn from Covid-19 are
as momentous as they are harsh. While the trade
war triggered some notable tinkering, the massive
operational disruption wrought by the coronavirus
pandemic will compel companies to fundamentally
rethink their sourcing strategies.
Might such a strategic redistribution spur a dynamic
resurgence of US domestic manufacturing? It seems
unlikely. The limitations that held US manufacturing
to flat growth in 2019, even as the trade war put Chinese
manufacturing at a decided disadvantage, will continue
to work against a US manufacturing revival. There is
still a pronounced shortage of skilled manufacturing
labour, and the long-promised productivity boom via
automation has yet to be realised. Yes, companies will
be more inclined to look at new sourcing options, but
they will still want to place most of their eggs in costcompetitive
The more likely outcome will be an accelerated
scattering. Companies that began distributing their
import supply risk in response to the stresses of the
trade war will double down on that strategy in response
to the much more severe disruptions caused by Covid-19.
In that sense, the trade war may have been a blessing
in disguise. Unanticipated shifts in US trade policy and
the resulting retaliatory exchange with China prompted
companies that had long relied on Chinese suppliers to
start rethinking old assumptions about where and how
More broadly, by confronting US companies with
costly disruptions that were largely beyond their
control, the trade war triggered at least a partial
awakening to the intrinsic vulnerabilities of modern
global supply chains.
Events in 2020 cast the trade war as a mere precursor
to the far greater economic and operational
disruptions being wrought by the coronavirus. What
we are experiencing now demands a more profound
reckoning. Covid-19 should cause companies to fundamentally
rethink the criteria they use to shape their
COST, RISK AND RESILIENCE
Three decades ago, many US producers began
manufacturing and sourcing in China for one
reason: cost. The US-China trade war brought a
second dimension more fully into the equation – risk
– as tariffs and the threat of disrupted China imports
prompted companies to weigh surety of supply more
fully alongside costs. Covid-19 brings the third
dimension more fully into the mix, and arguably to the
fore – resilience.
that events frequently
unfold in ways that
were impossible for
anyone to foresee,
28 | www.opportunityonline.co.za
The current crisis is exposing vulnerabilities that
cannot be addressed with short-term fixes and minor
tinkering. Many companies quickly ran out of any
inventory they were able to stockpile ahead of the
Covid-19 outbreak. Some with heavy dependence on
China found they had few alternatives that could help
see them through the drought.
We have subsequently learned that the disruption of
supply from core manufacturing regions of China was
just the beginning of the havoc to be wrought by the
coronavirus. Recent events illustrate, with distressing
clarity, that events frequently unfold in ways that
were impossible for anyone to foresee, shattering the
assumptions that shaped supply chain strategies.
The answer? Companies need to place more value on
resilience by building supply chains that can nimbly
sense and pivot in response to unexpected demands
and disruptions. This is the key to operating profitably
in the face of ongoing disruptions.
___ __ ___ __ _ _
The current crisis is
that cannot be
and minor tinkering
___ __ ___ __ _ _
Many supply chain leaders have transitioned from
the uncertainty by adopting new ways of working to
stabilise their business. Now it’s time to begin thinking
strategically about how to position operational networks
for life beyond the pandemic by designing a supply
chain that is both resilient and agile, can withstand
risks to both demand and supply, and can quickly
respond to shocks.
The first step is to conduct a rigorous review of the
impact Covid-19 is having on demand and the corresponding
performance of the supply chain. This will
require drilling down to the specifics of how the
pandemic has already affected demand and how
demand might change in the future.
To build a framework for a post-pandemic review,
considering these impacts of the coronavirus outbreak
is a good start:
• Demand has shifted
The demand for many products saw a rapid increase;
others saw a rapid decline. Some are no longer a
priority and may be gone for good.
• Customer behaviours have changed
Internet purchasing is skyrocketing in
some industries, and brick-and-mortar
retail may never be the same.
• There are new customers
People have reprioritised their wants
versus their needs, and it has affected
what they buy and who they buy it from.
• Portfolios are back to the drawing board
Certain stock keeping units (SKUs) are
no longer important, and in other cases,
product needs in a post-Covid world are
being rapidly redesigned.
Similarly, the impacts on supply will
also require a post-pandemic review:
• Supply chains were disrupted during the pandemic
The Covid-19 outbreak caused major shifts – from
transitioning supply planners so they can work from
home and finding alternative sources for suppliers
that are under lockdown to keeping employees safe
and manufacturing capacity available.
• Some supply areas performed well, others struggled
New best practices were learned and will be capitalised
on, and risky practices will be eliminated.
• Structural elements exacerbated supply issues
Global supply chains will be questioned as geographies
experienced the pandemic in phases and
suppliers, manufacturers and distributors were cut
off from one another.
• Technology is essential
Responding during a crisis requires real-time data
about where materials and products are as well as the
status, location and health of employees in plants and
warehouses. It also requires control towers that can
orchestrate operations from end to end.
Historically, operations strategy focused on balancing
cost reduction and investments to improve availability
performance and lead times. The business risk was
important, but it was typically addressed with relatively
simple approaches, such as maintaining safety stock at
distribution centres or establishing one-off secondary
supplier relationships. Responding to a global crisis was
rarely part of the picture.
As the world advances towards recovery, a supply
chain strategy will need to evolve to incorporate the
lessons learned during this pandemic. That means
moving away from a narrow focus on cost and
availability to a more comprehensive perspective that
incorporates risk and resilience factors. Supply chain
organisations that are designed to manage the right
risks in the right way will ultimately beat out the
competition when the next crisis inevitably strikes.
Now it’s time to begin
about how to position
for life beyond
the pandemic by
designing a supply
chain that is both
resilient and agile,
can withstand risks
to both demand
and supply, and can
www.opportunityonline.co.za | 29
nd its impact on
The pandemic has pushed e-commerce and supply chain issues to the top of the CEO agenda – opening
a window of opportunity for businesses to capitalise on the rapidly expanding online market.
Covid-19 has triggered exponential growth
in e-commerce and spurred many smaller
retailers to get in the game by establishing
their online offerings. If this shift becomes the
new normal, now is the time to rapidly define
omnichannel and supply chain strategies and ensure
the right structures are in place to support it.
As consumers become accustomed to the luxuries
of online shopping, this channel is likely to become
their preferred way of shopping once the pandemic is
over. To win in this new normal, retailers will need to
consider both the immediate and long-term implications
of consumers’ changing behaviours.
Establish a competitive e-commerce offering by
focusing on three areas:
Business planning and response
The Covid-19 outbreak has highlighted the importance
of being adaptable and responsive. During this
time, traditional demand triggers are not as relevant,
so new behaviour signals will need to be monitored by
tracking leading indicators. This will require a twofold
approach: qualitatively assessing government
and media messaging and quantitively tracking
customer data. Also, leading businesses have a welldocumented
response plan to triggers so they can act
quickly and decisively.
E-commerce channel strategy
Consumers of all ages have been forced to rapidly adapt
their purchasing behaviours. In the short term, focus
on establishing or streamlining your online offerings,
either through an existing website or a business-toconsumer
marketplace. To drive efficiency, limit the
initial offering to core products to maximise profits by
minimising the effort required to establish a product
range. Effectively managing inventories and narrowing
the window of time from purchase to shipping will also
keep customers happy.
Forward-thinking businesses understand the capacity
of their delivery partners and manage costs and
customer expectations accordingly. To improve delivery
speed and service quality, examine your delivery
service agreements and consider whether alternate
or additional delivery partners are needed. To create
window of time
from purchase to
shipping will keep
30 | www.opportunityonline.co.za
a customer-centric and economically sustainable
delivery service, consider two aspects: consumers’ price
sensitivity and delivery options such as same day, next
day, or a specific delivery window.
In the mid to long term, focus on two areas:
Refine the omnichannel strategy
The online competition will continue to grow as
consumers are now accustomed to buying online
and more businesses are embracing e-commerce. In
light of these shifts, consider the best way to manage
your omnichannel strategy. Most businesses either
sell their products solely on their websites or they
use a combination of brick-and-mortar marketplaces
and websites. The most effective approach is to adopt
a tailored product-range strategy, which can be
implemented in one of two ways:
•Offer a differentiated range of products
Because consumers typically buy different types
of products online than they do in stores, develop
an online offering that focuses on the products
that people tend to buy online. For example, online
shoppers often buy bulky items that they can easily
review online, such as kitchen aids and gaming
consoles, rather than items they want to hold before
they buy, such as a tennis racket.
• Sell different products on different sites
To ensure a clear distinction between product
quality and to maintain profit margins on premium
products, consider selling different product ranges
on different sites. For example, sell premium
products on your website, and sell standard products
on marketplaces such as Amazon.
Optimise last-mile delivery
Recent events have strained supply chains and revealed
that businesses with resilient and agile supply chains
are best suited to adapt to unpredictability. In light of
the events of the past 12 months and the acceleration
of e-commerce, consider the level of outsourcing
versus the strategic investment required to build lastmile
capabilities. Most companies rely on third-party
logistics providers. However, a self-managed supply
chain allows businesses to control services, quickly
switch or onboard suppliers, and increase security.
The grocery category is moving toward ultra-fast
delivery, defined as less than two hours from click to
delivery. Consumers continue to signal that they prefer
ultra-fast over in-store shopping or slower deliveries,
and the Covid-19 e-commerce surge presents shippers
and logistics providers with significant headwinds.
There’s a non-linear relationship between cost and
lead time for last-mile delivery. Lastmile
costs now play an elevated role in
ensuring future financial viability and
As a shipper or logistics provider, if
you want to play in the last-mile space,
you will need to tackle the complex
balance between needs and cost. The
good news is that your customers, your
products and your needs – not the
prescribed chase of the giants – are
what will truly determine how much
you should spend on your last mile.
The needs-based segmentation can appear overwhelming,
but it can be centred around some important
dimensions. Three such dimensions are consumer
centricity and sustainability; reliability and control; and
flexibility and resilience.
___ __ ___ __ _ _
During this time,
triggers are not as
relevant, so new
will need to be
monitored by tracking
___ __ ___ __ _ _
Consumer centricity and sustainability
As e-commerce accelerates and large players increase
their influence, you must start obsessing over how
you are going to provide consumers with unparalleled
service. Two areas are crucial:
• Seamless experience
New e-commerce consumers expect a seamless
experience across channels. You must design and
implement a continuous experience across all digital
(website, mobile application, alerts, etc) and physical
touchpoints throughout the customer journey.
• End-to-end visibility
It’s not merely about delivering at hyper-speed
and on time. Consumers today want end-to-end
visibility into the delivery process through nearreal-time
notifications and pictures upon delivery.
This visibility is essential to best-in-class customer
experience. You must develop the technological
capabilities to provide it.
As a shipper or
logistics provider, if
you want to play in
the last-mile space,
you will need to
tackle the complex
needs and cost.
but it can be
such dimensions are
control; and flexibility
www.opportunityonline.co.za | 31
Reliability and control
The Covid-19 pandemic emphasised the value of
meeting service-level key performance indicators
(KPIs) such as on-time deliveries and first-time
delivery success. Covid-19 represented a reliability
test for delivery networks: could their capacity and
cost structures withstand such peaks?
• On-time delivery
You can no longer talk vaguely about “shipping
in three to five business days”. As you design
your last-mile delivery strategy, you need to
align your network design with achievable
on-time delivery targets. That’s the only way
to consistently meet customer expectations.
• First-time delivery success
The faster you move into e-commerce, the
more important it is for you to minimise your
delivery quality defects – customer-reported
damages, missing packages, incorrect items, or
incorrect delivery locations. Such defects not only
disappoint customers but are also exceptionally
costly. They typically result in customer service
contacts, promotions, reverse logistics, or loss of
future business. To meet rising expectations and
minimise your cost-to-serve, you must succeed in
• Experimentation to flex
During the Covid-19 crisis, large players
experimented with ways to flex their capacity,
expanded their ability to deliver a wide variety
of products at hyper-speed, and learned how to
reprioritise deliveries. Most of their solutions used
crowdsourcing, some existing in-house and others
coming from third-party transportation providers.
• Diversification to reduce risk
However, when you depend solely on a crowdsourced
last-mile delivery solution, you increase operational
risk; you should also seek to diversify your volumes
across third-party transportation providers.
It all boils down to cost per package
Large players keep pursuing faster delivery options,
which makes it tempting to assume that all categories
and product segments must be delivered within two
days, or faster. But if you use this as a blanket strategy,
your costs will soar. Stop chasing this prescribed
strategy; instead, perform a needs-based segmentation
across your products (eg groceries, apparel, furniture)
and customers (eg metro/rural, subscriber).
During the Covid-19
crisis, large players
ways to flex their
their ability to deliver
a wide variety of
products at hyperspeed,
how to reprioritise
deliveries. Most of
their solutions used
and others coming
Flexibility and resilience
If you have to respond to an unpredicted large-scale
event by retroactively remodelling your last-mile
network, that’s costly. Instead, you can ask upfront
about how network flexibility and resilience could
control unexpected costs.
• Large and responsive supply base
The biggest benefit of crowdsourced delivery
solutions is that a large and responsive supply base
can flexibly respond to spikes in demand while
minimising costs during lulls.
Different segments of your product-customer
portfolio have different delivery needs (eg one-two
hours for urban groceries, same-day for urban apparel,
five days for rural furniture). Pay particular attention to
the segments requiring two-day, same-day or ultra-fast
delivery speeds, because the implications of increasing
your delivery footprint vary. A well-executed needsbased
segmentation can reduce last-mile costs by
20-30% while improving service where it counts by
10-20% and identifying the right carrier and technology
partners for execution.
32 | www.opportunityonline.co.za
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