QUESTION 1 (50/100)

Case study

Please read the following case study and answer the questions that follow:

The Great Supply Chain Disruption continues in 2023. Unprecedented disruptions and volatility in recent years have stretched supply chains to breaking point. In 2023, we can expect the Great Supply Chain Disruption to continue to challenge industries around the world, according to SAPICS, The Professional Body for Supply Chain Management in Southern Africa. War, raw materials shortages, rising energy costs and extreme weather conditions are just some of the factors that will disrupt global supply chains in 2023, warns the non-profit organisation that is striving to elevate, educate and empower the community of supply chain professionals across Africa.

In South Africa, the electricity crisis will continue to challenge businesses across all sectors. The negative impact on energy-intensive and irrigation-dependent agricultural industries, in particular, will resonate through the entire supply chain from the farm to consumers, who will have to pay more and have fewer competitive options available on supermarket shelves, says SAPICS president MJ Schoemaker. This year, businesses must strive for optimised execution, risk reduction, and enhanced agility and responsiveness in their supply chains. It will also be critical to identify new ways to gain a real competitive advantage, she stresses.

Latest supply chain trends Digital supply chains were ranked second in ASCMs key trends in 2023. Leading organisations will be advanced in their adoption of digital supply chain capabilities. If not, they will be left behind by agile, more proficient competitors, cautions Schoemaker. She notes that supply chain risk and resilience will be prioritised by successful organisations in 2023. The diversification of suppliers, production capabilities and transportation processes will be some of their key strategies, according to ASCMs trends report, Forward-thinking organisations will also explore alternative materials and non-traditional partnerships, while many supply chains will become more compact and localised. Resilient supply chain design will also be critical to mitigating adverse events faster than the competition, providing excellent customer service, and generating value and market share.

Artificial intelligence In 2023, artificial intelligence and machine learning will have a much greater impact on supply chains because processing huge datasets in real time demands these capabilities. Using smart logistics solutions, based on the internet of things and next-generation robotics, will be a focal point of supply chain design. The ASCM report foresees more supply chain transformation via intelligent robotics in 2023. Labour shortages, supply disruptions and demand surges are compelling organisations to tap into robotics. Driven by rapid technological advancements and greater affordability, both mobile and stationary robots will assist workers with warehousing, transportation and last mile delivery tasks. Safer, more efficient warehouses, with fewer people in them, will drive down costs. Although the initial capital investment will be high, the cost savings are primed to be dramatic. According to Schoemaker, there is certainly a robotics trend in South Africa, but she says that load shedding may put a spanner in the works unless the businesses have their own energy source.

In South Africa, finding the balance between efficiency and employment is also difficult, she adds. Many companies are cross-skilling their staff to be more diverse and therefore are able to place them in other roles. Data security and cybersecurity are also hot topics that will impact supply chains this year. The more digital supply chains become, the more vulnerable their global networks are to cyberattacks. This interconnectedness means supply chain partners can inadvertently expose each other and their customers to privacy breaches, identity theft and worse, ASCMs report noted. More organisations will invest in redundancy, firewalls, advanced anti hacking technologies and employee training in 2023.

Sustainable supply chains Circular and sustainable supply chains will be on the agenda of all organisations aiming to future-proof their businesses. There is growing recognition that the traditional linear business model of take, make and waste must change. It has ecological as well as economic disadvantages, making raw material more expensive and increasing the likelihood of shortages and volatility, explains Schoemaker. Continuous logistics disruptions in 2023 will drive the need for constant master data maintenance, as well as refined logistics parameters and inventory levels. Logistics organisations must create the conditions necessary for a seamless interaction among multiple transportation networks and their digital replicas, ASCMs report recommended. It also found that many of them will be rethinking the physical connections among warehouses, highways, ports, waterways and air transportation.

Looking at the situation in South Africa, Schoemaker notes that transportation in the country is mainly road freight due to the deteriorating rail infrastructure. She says that issues at the ports - whether strikes or failing machinery are challenges for the trucking industry as well as for businesses. Alternative routes may become a necessity and improved security for the truck. Due to the fact that loadshedding is constantly being adapted to different levels, it is very difficult to plan when freight is needed, which will also impact cost as well as the efficiency of supply chains.

While supply chain challenges will continue in 2023, we can expect to reap the benefitsvof lessons learnt in recent years, Shoemaker contends. The pandemic and other disruptions highlighted the importance of supply chains for everyone. Supply chain management is better understood today. It is an increasingly attractive and sought after profession. There is more emphasis on supply chain qualifications and continuous skills development.

Source: SAPICS, The Professional Body for Supply Chain Management on January 25, 2023

According to the case study, unprecedented disruptions and volatility in recent years have stretched supply chains to breaking point. In 2023, we can expect the Great Supply Chain Disruption to continue to challenge industries around the world.

1.1. Describe how businesses can adapt their integrated supply chain strategies to accommodate the volatility, be more effective and stay competitive in a disruptive market. ` (5)

1.2. Explain the requirements that are needed to develop a market-driven supply chain for competitive advantage. (5)

1.3. Determine the areas that can be improved through diligent supplier relationship management. (8)

1.4. Discuss THREE risk approaches taken to control and prevent losses (6)

1.5. Describe the THREE elements on the master risk list in the analysis step of the risk management process (6)

1.6. Briefly describe any FOUR possible risks a business can face. (8)

1.7. Discuss the THREE supply chain layers within the supply chain scope (6)

1.8. Determine the FIVE components of supplier optimisation. (6)