The business of
logistics has to be as efficient as possible, but with too much cost-focus how
effective is it?
I had a thought today that made me feel we South Africans
have lost our way. And our Logistics Industry is helping to do it.
Where have all the fresh produce markets gone? Those colourful, scented, vibrant stalls strewn with vegetables, meats,
cheeses, fruits, fish…. You know, real stuff that looks like it came
from the ground or out the sea. Produce from a field just down the road still with
earth on it. Markets near major cities, not just rural centres with food tasting like the country-side not the
hypermarket...
Maybe it’s the Food Channel. Scenes of famous chef’s
creations interspersed with local euro-city market trips and remarks that best
taste needs the freshest ingredients. And they don’t mean a supermarket trip to
get plastic packed tomatoes and chicken with the longest use-by date.
We’ve lost the plot. Most of us live in cities, we either
use hawkers or want everything prepped and delivered, or easy to gather with a
shopping trolley. We rely on the logistics industry to cluster then hub-and-spoke
bulk produce to our local retailer. Europe lives in cities like Rome, Berlin,
Paris - all with 3 million people (the same as Johannesburg and Cape Town).
They have retail chains but also have thousands of fresh produce markets,
mid-city as well as informal rural.
In our Rainbow Nation bulging with unemployed but
rural-skilled people, keen or desperate to eke out a living, surely we can
foster micro businesses around food production. Instead we corporatize every
aspect of supply chains creating sky-high participation barriers to sustainable
micro enterprise - sized between hawking on a street corner and owning a shop.
Feeding the country via fresh produce markets - a growing
complementary channel to the mainstream - needs, specialization, basic skill, space
and funding. Use the 14-year-stalled farm workers land ownership plan (the
Labour Tenant Act) to provide the growing / selling space. Funds will be
required to transfer knowledge and coach small farms or cooperatives to work to
appropriate standards. This is going back to the roots of business, the place
to start in a country burdened with challenges of poor education, ineffective government
execution of grand plans and a surplus of Historically-Advantaged people
wanting to help.
The benefits are worthwhile but not always EVA-based
(Economic Value Added). Employment in a semi-informal food sector; introduction
of local foods; a breeding ground for single or small cooperative entrepreneurs;
reduced need for survival-crime, and even tourism value - a place to go for
interesting food. Current markets focus on African Art (mostly from outside
South Africa), and crafts which don’t attract food consumers.
And what about logistics? Local fresh produce has higher
input costs, and needs a small truck to get to market. But much of the food we
eat via the Big5 retailers absorbs at least 15% cost travelling thousands of kilometers
in a chilled super-link. Then a significant proportion is left to waste because
too much was moved in the first place.
Oh and what about the Big5 retailers’ shareholder
expectations. Returns based on EVA. To the layman this is the excess profit
after deducting all costs of running the business (not just operating but also
raising finance). Yes the local market supply chain is expensive - but is small
local any more expensive that the corporate retail market?
Perhaps we need to think Emotional Value Added. Small business brings opportunity, needs passion, delivers personal customer service and can build a nation - we need to consider the whole environment business exists in not just the money.
Contributed by: Doug
Hunter, Product Services Manager, Syspro Africa
