South Africa needs to focus on improving the systemisation of logistics management or risk falling behind global trends and incurring inflated costs, says research logistics team Greiner, Mendi & Associates (GMA) MD Lars Greiner.

He notes that a deficit of skilled workers in the materials handling and logistics sector has resulted in the increased standardisation and systemisation of logistics management internationally. However, while this has proved to be a workable solution in highly developed countries, South Africa lags behind in the uptake of technology and is not yet systemised enough to move into a ‘people-free’ environment when managing the movement of cargo.

Greiner stresses that more extensive monitoring and management of cargo is, thus, required in South Africa than in more highly developed countries. “The biggest mistake that international companies make when it comes to managing logistics in developing countries like South Africa is to ‘fire and forget’ – simply send the cargo and assume it will arrive at its destination. Here, you have to track the cargo and keep in contact with all parties involved in its movement to ensure it arrives safely.”

Failure to do this can result in delays in the delivery of products to market, which can result in a significant loss of revenue, he points out.

“If we do not follow in the adoption of technology in all areas, including logistics, we will fall further . . . behind, which is likely to lead to inflated costs.”

He adds that increased systemisation in the logistics sector globally has resulted in decreased demand for subject matter experts and increased demand for programmers. “We need to cultivate these skills to ensure that we can accommodate international trends.”

Greiner stresses, however, that the tailoring of solutions for materials handling and logistics projects must not fall by the wayside with the uptake of technology. “GMA believes in bespoke solutions for all logistics projects. Each project has its own unique challenges and we aim to develop the best possible solution for the project, rather than trying to make the project fit existing solutions.”

As such, GMA’s solutions involve developing a preferred strategy and routings, at least two contingency plans, and a container and heavy-lift strategy based on a project’s location and the unique factors affecting cargo movement there.

Greiner points out that this approach is crucial when it comes to improving the efficiency of operations, ensuring schedules are kept and reducing costs. He notes that GMA’s advice is increasingly being sought on projects that were initially tendered to companies that employ standard-practice logistics solutions, as the mining industry seeks to increase efficiency and profits amid a challenging economic climate.

With mine productivity dropping to new lows in 2014 and commodities prices continuing to be depressed, project consultancy Africa Project Access MD Paul Runge says mines have been forced to evaluate the costly role of logistics in Africa.

For some, he notes, the decision to shutter operations has been far wiser than trying to find cost-effective logistical solutions to facilitate the movement of commodities off of the continent.

Greiner explains that mines on the continent are often in remote locations and infrastructure – road, rail and ports – is often lacking. However, with the extraction and transportation of minerals attracting high input and operational costs, and the very real possibility of low returns in the present economic environment, project consultancy Whitehouse & Associates partner Duncan Bonnett notes that companies are becoming increasingly less willing to invest in this infrastructure.

Runge lists Mozambique as an example of an African country where logistics has played a key role in the decision of many mining houses to sell almost all their interests in what were initially expected to be very lucrative coal mining projects.

“The transport system is very unreliable and the ports just don’t have the capacity to manage the export of coal. Another factor is the annual monsoon season, which requires that very good infrastructure be put in place to withstand the heavy rains. Taking into account the logistics infrastructure required and the cost of this in relation to the drop in the coal price, it becomes understandable why companies have decided to opt out,” he explains.

Improving logistics would be a game changer for the African mining industry, says Runge, who highlights that major oil and gas finds on the continent might trigger a willingness to invest in the necessary infrastructure to manage the logistics of these two commodities.

“It’s about whether investment in logistical infrastructure makes economic sense in the long run,” he concludes.