Opportunity - Issue 94
Quarterly journal for business and industry in South Africa Business unusual 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 nation. Alexis Knipe, Editor
Quarterly journal for business and industry in South Africa
Business unusual
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 nation.
Alexis Knipe, Editor
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E-COMMERCE<br />
Reliability and control<br />
The Covid-19 pandemic emphasised the value of<br />
meeting service-level key performance indicators<br />
(KPIs) such as on-time deliveries and first-time<br />
delivery success. Covid-19 represented a reliability<br />
test for delivery networks: could their capacity and<br />
cost structures withstand such peaks?<br />
• On-time delivery<br />
You can no longer talk vaguely about “shipping<br />
in three to five business days”. As you design<br />
your last-mile delivery strategy, you need to<br />
align your network design with achievable<br />
on-time delivery targets. That’s the only way<br />
to consistently meet customer expectations.<br />
• First-time delivery success<br />
The faster you move into e-commerce, the<br />
more important it is for you to minimise your<br />
delivery quality defects – customer-reported<br />
damages, missing packages, incorrect items, or<br />
incorrect delivery locations. Such defects not only<br />
disappoint customers but are also exceptionally<br />
costly. They typically result in customer service<br />
contacts, promotions, reverse logistics, or loss of<br />
future business. To meet rising expectations and<br />
minimise your cost-to-serve, you must succeed in<br />
first-time delivery.<br />
• Experimentation to flex<br />
During the Covid-19 crisis, large players<br />
experimented with ways to flex their capacity,<br />
expanded their ability to deliver a wide variety<br />
of products at hyper-speed, and learned how to<br />
reprioritise deliveries. Most of their solutions used<br />
crowdsourcing, some existing in-house and others<br />
coming from third-party transportation providers.<br />
• Diversification to reduce risk<br />
However, when you depend solely on a crowdsourced<br />
last-mile delivery solution, you increase operational<br />
risk; you should also seek to diversify your volumes<br />
across third-party transportation providers.<br />
It all boils down to cost per package<br />
Large players keep pursuing faster delivery options,<br />
which makes it tempting to assume that all categories<br />
and product segments must be delivered within two<br />
days, or faster. But if you use this as a blanket strategy,<br />
your costs will soar. Stop chasing this prescribed<br />
strategy; instead, perform a needs-based segmentation<br />
across your products (eg groceries, apparel, furniture)<br />
and customers (eg metro/rural, subscriber).<br />
___ __<br />
During the Covid-19<br />
crisis, large players<br />
experimented with<br />
ways to flex their<br />
capacity, expanded<br />
their ability to deliver<br />
a wide variety of<br />
products at hyperspeed,<br />
and learned<br />
how to reprioritise<br />
deliveries. Most of<br />
their solutions used<br />
crowdsourcing, some<br />
existing in-house<br />
and others coming<br />
from third-party<br />
transportation<br />
providers.<br />
Flexibility and resilience<br />
If you have to respond to an unpredicted large-scale<br />
event by retroactively remodelling your last-mile<br />
network, that’s costly. Instead, you can ask upfront<br />
about how network flexibility and resilience could<br />
control unexpected costs.<br />
• Large and responsive supply base<br />
The biggest benefit of crowdsourced delivery<br />
solutions is that a large and responsive supply base<br />
can flexibly respond to spikes in demand while<br />
minimising costs during lulls.<br />
Different segments of your product-customer<br />
portfolio have different delivery needs (eg one-two<br />
hours for urban groceries, same-day for urban apparel,<br />
five days for rural furniture). Pay particular attention to<br />
the segments requiring two-day, same-day or ultra-fast<br />
delivery speeds, because the implications of increasing<br />
your delivery footprint vary. A well-executed needsbased<br />
segmentation can reduce last-mile costs by<br />
20-30% while improving service where it counts by<br />
10-20% and identifying the right carrier and technology<br />
partners for execution.<br />
32 | www.opportunityonline.co.za
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