A high level of logistics integration : winning formular South African economic growth

M.B.A.The steel industry worldwide is undergoing rapid transformation and this presents an unprecedented opportunity for manufacturers of steel products in South Africa to take advantage of their improved global competitiveness, which has arisen principally as a result of the fall in the value of the South African currency. With global competition at its peek, steel manufacturers in South Africa find it important to reduce costs whilst improving their responsiveness to their clients, especially the foreign export markets. For steel manufacturers such as Iscor Steel, global competitiveness means sharpening the logistics of servicing these complex foreign markets with their intricate demands. This in turn puts pressure on transport suppliers such as Spoornet to provide speedy and efficient movement of cargo through the inland network down to the ports for exports to meet time demands. It is crucial that steel manufacturers, such as Iscor Steel work hand in glove in a collaborative manner with the rail operator Spoornet to achieve superior service delivery levels which consequently will reduce costs of providing such service due to maximum utilization of equipment and infrastructure. The reduction of costs in the provision of logistics services will result in a reduction of operating costs, which will have a positive effect on the operating profits of each steel manufacturer. Consequently the improvement in operating profits will result in improve shareholder value. The following areas of improvement have been identified and form part the recommendations, which will influence positive growth in shareholder value: Iscor Logistics should find ways to work on and improve relationships with Spoornet and other such service providers it makes use of; Iscor Logistics should implement the cost saving initiatives it has identified, such as adopting centralized distribution as in the case of Newcastle Steel as a matter of urgency — there is value in doing so; Iscor Logistics must start proving to its clients that it is adding meaningful value by showing value-add as this will differentiate them from the rest of similar service providers in the market. High level of logistics integration between stakeholders is critical to reduce cost of rendering logistics solutions. This will go a long way in improving shareholder value in organizations such as Iscor Steel