JV project benefits emerging sugarcane growers

Engineering News - South Africa - Laura Tyrer - Friday 18 November 2005

The 2005 Logistics Achiever Platinum award was recently awarded to the successful empowerment company, Buhle Betfu, which is the inspiration of listed South African transport and logistics company, Cargo Carriers. The company initiated the joint-venture sugarcane transport scheme together with a small community of emerging growers in Mpumalanga in 2001.

With the assistance of Cargo Carriers, Buhle Betfu provides infrastructural and business management guidance to about 600 small sugarcane farmers.
Cargo Carriers strategic-marketing director Danie Roodt says the project involves coordinating the growers’ farming, harvesting and logistics efforts.
The farmers are advised on the appropriate time to burn and harvest the sugarcane.
The growers’ transportation and logistics efforts are also collectivised to lessen the time required to transport cane from the fields to the sugar mill.
Roodt says the time required to harvest the cane and transport it to the mill has been reduced from 90 hours to 48 hours, improving the value of the cane in the process.
Profits from the operation are being put into buying back shares in the joint-venture company and will increase the small growers’ current 36% ownership to a majority holding of 60% in the near future.

Cargo Carriers is in the process of training Buhle Betfu’s directors and is engaging in the skills transfer of staff.
Roodt says that precision farming and the supply of fertilisers and pesticides are initiatives that are being investigated and that will take Cargo Carriers into new fields away from its traditional transport activities and into value-added supply-chain activities.
The company is also moving away from an asset-based business approach to a more profitable intellectual approach in supply chain and logistics.
Roodt says the transformation process the company embarked on, five years ago, has been mimicked by the industry cycle.
This has led to a deeper focus on supply-chain and sophisticated logistics analyses, systems and processes.

While Cargo Carriers’ focus at present is the service of supply-chain management, the company’s transport and trucking side is still a strong component of the business.
Roodt says the company has been particularly successful with small and medium-sized projects that involve the establishment of a centralised lead-logistics control room that includes auditing, inventory management, fleet supply and management, routing, dynamic scheduling and execution, as well as electronic proof of delivery (POD).
He explains that a single company with a num-ber of associate companies would typically run different plants at different locations, while sharing a number of customers.

Cargo Carriers would implement a logistics function to control the process from the factory gate. In such an instance, the Cargo Carriers management system would take the orders, collect the products, warehouse them, collect and schedule the orders centrally so as to exploit synergies in the process.
Roodt says that fleet management has an important role to play in this process.
The virtual fleet is not dedicated to any particular company or geographic area. Orders are fed into a dynamic scheduling package that identifies sources and customers in a particular vicinity to facilitate the collection and delivery of goods.
"We are able to substantially reduce the fleet by managing the centralised control activities and bring visibility into the process through systems-driven and integrated methods," enthuses Roodt.
He adds that, since orders are run through a single system that incorporates electronic PODs, the cash-to-cash cycle is sped up.
Roodt says the company has been successful, thanks to the trust it builds in its relationships with customers.

"Visibility and integration with the customer are critical to avoid the client feeling that he or she is losing control," explains Roodt.
Additionally, the company is willing to work on a gain-share basis and Roodt says it is through this arrangement that trust and maturity are established.
Cargo Carriers has been successful with supply coordination in the steel and sugar industries, and hopes to duplicate this success in other industries the company deals with, such as the fuel, chemical and powder industries.
Roodt says that one of the challenges faced by thesupply-chain industry, is the establishment of in-house logistics divisions by some of the bigger companies.
These companies are more sensitised to the potential of supply-chain management. More sophisticated industries, the fuel industry in particular, tend to have strong in-house logistics departments, which Roodt advises should not be underestimated.
He explains that, while in-house logistics divisions make it more difficult to convince companies of the need for supply-chain and logistics management, CEOs understand the value of hiring external advice.
Roodt says the tendency to complicate matters through supply-chain and logistics management can intimidate uncomplicated industries.
Cargo Carriers tackles this by working with companies on a collaborative basis, which is less threatening, to bring about cost reductions.
It realised early on that asset possession is less important than running those assets effectively.