Activity-based management to improve public warehouse functioning in the logistics supply chain.

M.Comm.The South African economy is currently in a dynamic phase of change. In seeking a solution to rebuilding the economy and attaining a growth rate which is capable of creating jobs and sustaining economic development, it is widely recognized that a competitive platform needs to be created for a powerful expansion by the tradable goods sector. Many South African products cannot compete in international markets because of high unit costs and the consequential high prices offered to consumers. One of the primary reasons for product uncompetitiveness can be described as supply chain inefficiencies.q The supply chain is defined as the network of organisations that are involved in the various processes and activities that produce value in the form of products and services in the hands of the ultimate consumer. This study analyzes a single stand-alone component of the supply chain organisation, namely the public warehouse. The study recognizes that warehousing plays a vital role in enhancing end-user value by providing time and space utility and suggests that in order for the warehouse to fulfil a valueadding role, it must adjust its functioning to meet the supply chain's requirements. The study shows that conventional techniques are incorrectly focused and are thus inappropriate in an organisation aiming to achieve competitiveness and profitability, optimise the logistics trade-off between cost and quality and simultaneously supply the customer with a high level of service performance. The use of conventional costing and management techniques are shown to lead to the incorrect calculation and misallocation of costs which in turn result in inaccurate product (service) costing. This has made the public warehouse analyzed uncompetitive in the market and as a result unable to add any additional value to the customer. It is suggested that a completely new and differently focused system needs to be implemented if supply chain objectives are to be realised. It is suggested that activity-based management is capable of achieving supply chain goals. Activity-based management (ABM) is a system or discipline which focuses on the management of activities as the route to improving the value received by the customer and the profit achieved by providing this value. The study shows that ABM, as applied to the public warehouse, was able to achieve cost reductions, better and more effective management, enhanced strategic positioning, and, most importantly, competitiveness in the market place, a prerequisite for adding value to the supply chain. The study recognizes that supply chain management and activity-based management are relatively new fields of expertise, and that these are not yet recognized as a fully fledged profession in South Africa. Supply chain management needs to be established and promoted as a formal profession. Finally it is recognized that more research is necessary before ABM and supply chain management can become the standard in South African organisations. Information needs to be obtained regarding key South African performance indicators and information needs to be recognized as a strategic asset. Once this recognition is achieved strategic information plans can be designed and used to enhance the competitiveness of South African products