Despite government's call to stimulate the local manufacturing industry, the number of manufacturers will continue to shrink because of what small manufacturers say is discrimination against them by distributors. The Internet may be their last resort in overcoming this discrimination.
This is according to outsourcing manufacturer Murton Electronics who says that many manufacturers have moved production overseas or outsourced to the Far East and Europe, specifically for this reason.
Smaller manufacturers complain that they are plagued by bad service from some suppliers which has over the years, dampened their ability to deliver on time and quote firm prices. Murton Electronics, which boasts clients such as Telkom and Spoornet, says that some South African distributors are not committed to smaller manufacturers.
"With the current attitude of the larger distributors, the local manufacturing industry is set to continue stumbling. The manufacturing expertise is here, but local distributors tend to put small manufacturers at a disadvantage," explains Murton Purchasing Manager, Ulrich Bëhr. "It doesn't matter how good the manufacturer, if the supplier cannot meet its commitments, the manufacturer cannot deliver," he explains.
"They call themselves stockists, but in fact never have stock. One saving factor is the Internet, which enables us to search for parts which stockists are not even prepared to order on our behalf," he notes.
Bëhr says distributors enforce minimum order quantities. "It is often the case that if we want 500 of a given item, we have to purchase 20 000 as the stockist will not hold stock. But the Internet is proving to be an invaluable tool in sourcing electronic components. Many of the components can be purchased over the web at a lower price and delivered on time," he says.
"It is our experience that only a few local distributors deliver on time. Seventy percent of orders placed on our distributors are late and they seldom are able to indicate the status of an order if it is late," he says.
"In terms of our ISO 9000 requirements, we are required to do a non-conformance report each time a delivery is incorrect. In ten years, we have never had a late or incorrect delivery from an overseas supplier. If we place orders on both US and local suppliers the same day, the local order generally arrives after the overseas order, even though the local product was in stock and the supplier a few kilometres away," says Bëhr.
"Pricing is also an issue. Most local stockists cannot guarantee prices. The price on order and price on delivery can vary by up to 50%, with a 'take it or leave it' attitude, making quoting and tendering extremely difficult," he adds.
"Local distributors need to give better service, otherwise small manufacturers will always remain small manufacturers. On the positive side the Internet will assist the local market and prompt suppliers to relook at their delivery mechanisms and improve the ordering efficiencies," concludes Bëhr.
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