shutterstock_154792133.jpg

What are the Benefits of Outsourcing Supply Chain Management?

Outsourcing SCM has several advantages that work towards maximizing profitability at the end of the day. However, these advantages can only be realized when you hire a reputable logistics provider.

Outsourced SCM will help you focus on your core competencies

Once you have outsourced supply and distribution to a third party, it becomes easier to spend more time on building the business and focusing on the future strategy. SCM can eat up precious time that would have been spent developing new ideas, marketing, and strengthening customer relationships: factors that are crucial for long-term success.

Outsourcing SCM gives competitive advantage (efficiency)

When you outsource, you get access to facilities, knowledge, and capabilities that were initially inaccessible or unaffordable. You then get the chance to leverage these resources to help you stay ahead of your competitors.

It reduces overall costs

When you hire a professional organization, they will use their knowledge and expertise to help you reduce your overall expenses. Usually, expenses associated with inventory, cold storage, sampling, overhead, and staffing can pile up and cause a financial strain.

However, when you work the right supply chain partner, these costs can be reduced significantly. The partner will streamline logistics and establish the most cost-effective plan that can reduce the costs associated with performing specific functions. Some of the new changes may include better inventory management and transport optimization. In the end, the business will have more cash for investments.

Ensure you meet customer demand

The outsourced SCM will take the responsibility of supplying the amount of products demanded by customers. They will be responsible for raw material planning to meet production schedules. When these responsibilities are offloaded, the business will spend more time on growth and building brand equity.

Increase flexibility and adaptability

Outsourcing allows a business to adapt quickly to the changes in demand. When you outsource, you can expand or downsize faster without having to worry about labour and labour laws. Increased flexibility is especially needed in today’s uncertain economies.

Reduce your overhead and risks

Outsourcing a company’s logistical needs reduces labour risks and the financial risk of an investment in equipment, property, and transportation in case the company downsizes.

Increase your capabilities and extend your resources

Your company may be limited in resources and tools. However, outsourcing partners can bring extra capabilities, solutions, and expertise beyond the scope of the business. Your organization will then get a chance to utilize these excellent tools to increase productivity and efficiency. Logistics or cargo companies normally have industry connections that you can leverage on to save on cost and to improve your capabilities.

What are the Risks of Outsourcing Supply Chain Management?

Although outsourcing SCM has a considerable number of benefits, there are just as many risks.

Quality may suffer

Your SCM partner should have extensive knowledge of your products or services. Otherwise, the quality of your offerings may diminish.

This risk is increased when the third-party company tries to cut corners or use cheaper materials. Such practices can be detrimental to your company and may significantly reduce sales, alongside your brand equity, so avoid using SCM partners who don’t prioritize quality.

You could face setbacks

Outsourcing SCM can become a complicated process that opens up more chances for setbacks. Watch out for unrealistic timelines that could cause revenue loss and more issues down the supply chain.

There may be integration challenges

Watch out for solutions that have a long onboarding process.

The business operations become smooth once a business is integrated with the SCM partner, but the transition process can be a nightmare. It requires both parties to invest a considerable amount of time, and it also requires good financial backing. If either party slacks, then it can cause delays and several mishaps. Several problems are likely to arise during the transition phase because this stage requires better communication besides time and money.

There could be unexpected costs

Occasionally, taxes, shipping costs, and other hidden fees may get out of control. Some 3PLs have multiple hidden costs, such as labelling, pick and pack, boxing, and more. To avoid this, work with providers that are transparent with their costs so you can protect your profit margins.


shutterstock_1356599871.jpg

Understanding what are the best products to export from South Africa in 2020.

 

The African continent’s southernmost country, the Republic of South Africa shipped US$90.2 billion worth of goods around the globe in 2019. That dollar amount reflects a 12.4% gain since 2015 but a -4.4% decline from 2018 to 2019.

Based on the average exchange rate for 2019, the South African rand depreciated by -13.2% against the US dollar since 2015 and declined by -9.2% from 2018 to 2019. South Africa’s weaker local currency makes its exports paid for in stronger US dollars relatively less expensive for international buyers.

The latest available country-specific data shows that 61.7% of products exported from South Africa were bought by importers in: China (10.7% of the global total), Germany (8.3%), United States (7%), United Kingdom (5.2%), Japan (4.8%), India (4.6%), Botswana (4.5%), Mozambique (4.1%), Namibia (4%), Netherlands (3.2%), Belgium (3%) and Zambia (2.3%).

From a continental perspective, 31.3% of South African exports by value were delivered to importers in Asia while 26.7% were sold to fellow African countries. South Africa shipped another 26.1% worth of its goods to Europe. Smaller percentages arrived in North America (7.5%), Oceania (1%) led by Australia, and Latin America (also 1%) excluding Mexico but including the Caribbean.

Given South Africa’s population of 55.4 million people, its total $94.4 billion in 2019 exports translates to roughly $1,500 for every resident in the relatively wealthy African nation.

South Africa’s Top 10 Exports

The following export product groups represent the highest dollar value in South African global shipments during 2019. Also shown is the percentage share each export category represents in terms of overall exports from South Africa.

  1. Gems, precious metals: US$15.3 billion (17% of total exports)
  2. Ores, slag, ash: $13.1 billion (14.5%)
  3. Vehicles: $11.4 billion (12.7%)
  4. Mineral fuels including oil: $9.1 billion (10.1%)
  5. Machinery including computers: $5.5 billion (6.1%)
  6. Iron, steel: $5.4 billion (6%)
  7. Fruits, nuts: $3.4 billion (3.8%)
  8. Aluminum: $1.8 billion (2%)
  9. Electrical machinery, equipment: $1.7 billion (1.9%)
  10. Plastics, plastic articles: $1.4 billion (1.6%)

South Africa’s top 10 exports accounted for about three-quarters (75.6%) of the overall value of its global shipments.

Ores, slag and ash was the fastest grower among the top 10 export categories, up by 11.1% since 2018. In second place for improving export sales was vehicles thanks to a 5.6% gain. South Africa’s shipments of plastics including articles made from plastic posted the third-fastest gain in value up by 0.01%.

The leading decliner among South Africa’s top 10 export categories was iron and steel which fell -14.8% year over year.

Note that the results listed above are at the categorized two-digit Harmonized Tariff System (HTS) code level. For a more granular view of exported goods at the four-digit HTS code level, see the section Searchable List of South Africa’s Most Valuable Export Products further down near the bottom of this article.

 

 

Searchable List of South Africa’s Most Valuable Export Products

The following searchable table displays 100 of the most in-demand goods shipped from South Africa during 2019. Shown beside each product label is its total export value then the percentage increase or decrease since 2018.


These 100 exported goods were worth a subtotal of US$72.6 billion or 80.5% by value for all products exported from South Africa during 2019.

In macroeconomic terms, South Africa’s total exported goods represent 11.2% of its overall Gross Domestic Product for 2019 ($809 billion valued in Purchasing Power Parity US dollars). That 11.2% for exports to overall GDP per PPP in 2019 compares to 12% one year earlier, seeming to indicate a slightly decreasing reliance on products sold on international markets for South Africa’s total economic performance.

Another key indicator of a country’s economic performance is its unemployment rate. South Africa’s average unemployment rate was 27.855% for 2019 compared to 27.125% in 2018, according to the International Monetary Fund.

See also South Africa’s Top 10 ImportsTop South African Trading Partners and Top African Export Countries

Research Sources:
Central Intelligence Agency, The World Factbook: Country Profiles. Accessed on February 5, 2020

Forbes Global 2000 rankings, The World’s Biggest Public Companies. Accessed on February 5, 2020

International Monetary Fund, Exchange Rates selected indicators (National Currency per U.S. dollar, period average). Accessed on February 5, 2020

International Monetary Fund, World Economic Outlook Database (GDP based on Purchasing Power Parity). Accessed on February 5, 2020

International Trade Centre, Trade Map. Accessed on February 5, 2020

Investopedia, Net Exports Definition. Accessed on February 5, 2020

Richest Country Reports, Key Statistics Powering Global Wealth. Accessed on February 5, 2020

Wikipedia, Gross domestic product. Accessed on February 5, 2020

Wikipedia, Purchasing power parity. Accessed on February 5, 2020

Wikipedia, South Africa. Accessed on February 5, 2020