A study of Shoprites imported non-foods supply chain

Du Toit, Nina (2011-12)

The objectives of this paper is as follows: to model the current import supply chain; to assess the current import supply chain; to provide insight into the performance of the current supply chain; to provide an evidence-based viewpoint on the imports routing decision; and to develop suggestions for improvements of the supply chain.

Final year project (BEng)--Stellenbosch University, 2011.

Technical Report

ENGLISH ABSTRACT: The Shoprite retail group, based in South Africa, imports over 90% of their non-food goods. Two routes for transporting imports to Johannesburg were studied, specifically, (1) cross-docking the goods through distribution centres in Cape Town and, (2) direct shipments of entire containers via the port of Durban. A literature study comprised of research on supply chain management, logistics and the purchasing supply chain function was conducted. The literature study described various supply chain techniques, such as centralised distribution, and summarised ways of measuring and improving supply chains. An analysis based on the company’s strategies and financial and other data was used to determine the best route. The cross-docking route via Cape Town was chosen as it is aligned with the current company strategies and aids the visual management system used. There is no significant cost saving when using the Cape Town route, eliminating the choice to base the routing decision solely on financial implications. A detailed analysis of Shoprite’s process of importing revealed several problems. The high demurrage cost was studied further and it was shown that a lack of control of the timing of the release of goods from the supplier causes container storage costs to rise. The suggestion of implementing a freight forwarder to monitor the consolidation and timely shipment of goods was made. The promotion of communication between the buyers, suppliers, replenishers and distribution centre management was further identified as a major stumbling block for improved efficiency. If rectified, it would enable the supply chain to be flexible and allow management of the supply chain as a whole, instead of management of individual parts. An important classification was that of the distribution centres as the bottleneck in the supply chain. The supply chain can be improved by managing the flow of imported goods according to the capacity of the distribution centres. The project achieved its aims of identifying a route that should be used to import non-food goods from the East and of assessing the supply chain to provide improvement strategies.

AFRIKAANSE OPSOMMING: Die Shoprite kleinhandel-groep, wat in Suid-Afrika gebaseer is, voer meer as 90% van hulle nievoedsel- goedere in. Die twee roetes wat gebruik word om die goedere in Suid-Afrika na Johannesburg te versprei is bestudeer. Die roetes is, (1) die verwerking van die goedere deur die kruisdok prosedure via verspreidingsentrums in Kaapstad gevolg deur die vervoer van die goedere na Johannesburg toe, en (2) direkte vervoer van hele verskepings via die hawe in Durban. ‘n Literatuur studie oor voorsieningskettingbestuur, logistiek en die verkryging van goedere was onderneem. Die literatuurstudie beskryf verskillende voorsieningsketting tegnieke, soos gesentraliseerde verspreiding, maniere om voorsieningskettings te meet en hoe om dit te verbeter. 'n Analise wat gebaseer is op die maatskappy se strategieë, finansiële en ander inligting, is gebruik om die beste roete te bepaal. Die verwerking roete via Kaapstad is gekies omdat dit saamstem met die maatskappy se strategieë en die visuele bestuurstelsel wat gebruik word ondersteun. Daar is geen beduidende kostebesparing met die gebruik van die Kaapstad-roete nie en veroorsaak dat die keuse rondom die roete nie hoofsaaklik op finansiële implikasies gebaseer kan word nie. 'n Gedetailleerde ontleding van Shoprite se invoerproses is gedoen om enige probleme aan die lig te bring. Die hoë stoorkoste van onverwerkte goedere is verder bestudeer en dit het getoon dat 'n gebrek aan beheer van die vrylating van die goedere van die verskaffer veroorsaak dat stoorkoste styg. Die voorstel is gemaak om ‘n ekspediteur aan te stel wat die goedere kan konsolideer en tydige verskeping moet verseker. Die bevordering van kommunikasie tussen die kopers, verskaffers en verspreiding sentrum bestuur is as ‘n struikelblok teen die bevordering van bekwaamheid. As die probleem opgelos word sal dit die voorsieningsketting in staat stel om buigsaam te wees. Dit sou ook toelaat dat die bestuur van die voorsieningsketting dit as 'n geheel, in plaas van individuele dele, kan bestuur. Die verspreidingsentrums is as die bottelnek van die voorsieningsketting geklassifiseer. Die voorsieningsketting kan verbeter word deur om die vloei van ingevoerde goedere volgens die kapasiteit van die verspreiding sentrums te bestuur. Die doelwitte van die identifisering van 'n roete wat gebruik moet word om 'n nie-voedselgoedere in te voer uit die Ooste en die beoordeling van die voorsieningsketting om verbetering strategieë bekend te maak, is bereik.

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