South Africa has a highly skilled, world-class electronics manufacturing industry and as a result of government policy as well as local capability, global electronic consumer brands are manufacturing their products in South Africa. This localisation results in employment creation as well as a series of activities such as logistics, supply chain and research and development of product design, industrialisation and processes.
Speaking at the 2017 Proudly South African Buy Local Summit in Johannesburg, Trade and Industry minister Dr Rob Davies highlighted that localisation is an important policy tool for industrial development in South Africa that will assist in growing the economy and the manufacturing sector, and he stipulated that it is government’s preference that state entities buy locally manufactured goods. “It is a widely deployed policy tool. If government decides to source products that are locally made, it will support the enterprises that are producing those products in our own economy, while creating and supporting jobs,” Davies said.
“Many projects are being implemented from a government level where they are looking for local IP creation and the conversion of that IP into finished products,” says Peter Griffiths, managing director of Arrow Altech Distribution (AAD).
This policy is resulting in numerous new startup businesses that have certain capacities – most likely in the IP creation or manufacturing and production space. The unforeseen impact of this localisation initiative is the need for creative supply chain and inventory management processes that align the time factor of project cash out- and in-flows. Projects require inventory, which raises three factors to consider: the order lead time, the time to bring the goods into the country, and the time to convert those goods from raw material to a finished good that is delivered and paid for by a customer.
“Arrow Altech is able to partner with companies, whether big or small, and plan their entire supply chain process,” says Griffiths. “These companies can then focus on their core competencies, be that product IP creation, product manufacturing or customer account service provision with AAD complementing this by adding supply chain.”
Localising revenue through value-driven business
Proudly South African CEO, Eustace Mashimbye, said at the recent Proudly South African Buy Local summit, held in March 2018, that exploration of local procurement policy is critical in addressing South Africa’s unemployment problem – reported at 26,7% in 2017.
An example of localisation procurement is the tender award to Tshwane East Manufacturing Centre (Temic), a Gauteng BEE Level 1 startup company, for the local manufacture and supply of 500 000 digital terrestrial TV antennas, called the DigiAnt, for the South African analog to digital conversion project.
Temic’s collaborative engagement with Poynting Antenna, AAD and Zealous Castings enabled it to successfully deliver this tender on time and in full compliance to governmental localisation requirements by complementing its core product manufacturing skill processes with the diverse capabilities and capacities of the entities above.
The driving force behind Temic’s localisation project delivery was driven by the workplace partnership of AAD’s Lucky Mkhize (manager: supply chain projects) and Temic’s Sydney Sihlali (production manager). Mkhize’s and Sihlali’s collective focus ensured that the diverse elements of physical product creation, namely material sourcing, workforce skill development, logistics and production management information system solutions were combined to ensure project delivery.
Key to success was the innovative, locally developed production management information system developed by Mkhize that captured real-time data of manufacturing processes at every stage. “By doing this, any problems on the production line that were slowing the process down could be identified and tweaked,” says Mkhize. “With this efficiency we have optimised the lines from producing 400 units per day to 3000 units per day.”
Mkhize and Sihlali collectively improved Temic workforce processes and skills across two shifts so that product quality and production output were maintained, resulting in the creation of over 100 jobs for the duration of the project. “A lot of workers had no workplace experience in this field, so we have done a lot of skills development through on-the-job training,” says Sihlali. “We have also monitored and implemented solutions on the line that allow for more efficient output.”
Another key aspect of the project was cash flow management that factored three time-based planning elements: the time to source raw material and components so they were available in production-ready kit lots, the time to process and convert kit lots to finished goods that were invoiced, and lastly the time to payment for the goods from the customer.
Eduard Walker, Temic’s CEO, unpacked their business partner’s contribution by explaining: “Temic was able to keep focus on our core skills, customer account management and manufacturing while AAD provided material procurement and logistics, Poynting provided IP creation in the form of antenna design and component casting tools while Zealous provided moulded aluminium antenna component parts.”
“Arrow Altech works at understanding our customer’s vision and then adapts its service delivery to enable the delivery of that vision,” says Peter Griffiths. “This allows our customers to focus on their core competency, whether it is IP creation or manufacturing and assembly. Whatever that focus is, AAD will complement it by adding optimised material and logistical supply chain.”
For more information contact Lucky Mkhize, Arrow Altech Distribution, +27 11 923 9600, [email protected], www.arrow.altech.co.za
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