The Biggest South African Mystery of all Time

Overview

Supply Chain and Logistics Managers are painfully aware of the constraints which skills shortages are placing on their ability to grow. At the same time we are sitting on a smoldering powder keg of unemployable youth.

The solution lies in our own hands, but why aren’t we seeing this?

South Africa: a rich legacy of mysteries

We boast the Flying Dutchmen, a Dutch trading vessel which sank just off the Cape in 1641.  It is said that whoever spots the phantom Flying Dutchman at sea will die a horrible death quite soon.

We have the tale of the vanishing hitchiker of Uniondale, said to be the ghost of a girl named Marie Charlotte Roux who was killed in a motor accident not far from Uniondale in 1968 and whose ghost still hitchhikes along the road but vanishes after being picked up. 

More recently Mbuyisa Makhubu, then 17, whose iconic picture is shown carrying the body of the dead Hector Pieterson, killed by police in Soweto on 16 June 1976, with sister Antoinette weeping uncontrollably at his side - he seems to have disappeared off the face of the planet.

The biggest mystery of all however is reluctance of the supply chain management and logistics companies to aggressively implement training strategies at this time.

Some facts:

• Between 1994 and 2014 the South African youth unemployment rate climbed from 39.4% to 53.0% whilst the rate of youth absorption into the economy declined from 20.1 % to 12.3%1

• A million jobs were lost in South Africa between Q1 2008 and Q1 20132

•  From 2006 to 2013 South Africa dropped from 35^th to 53^rd place in the Global Competitiveness Index rankings.³

The 2013 Global Competitiveness Report stated, “The quality of the educational system is very poor (146th), with low primary and tertiary enrolment rates. Raising educational standards and making the labour market more efficient will thus be critical” ³

The South African economy is evolving from a resource based economy needing relatively large amounts of unskilled labour into a service and manufacturing based economy needing relatively smaller numbers of skilled labour. However 59.4% of the unemployed have not completed secondary education.¹

Within the South African supply chain management environment the lack of skills is being felt acutely, “Respondents ranked the lack of relevant skills and talent as their number one strategic business constraint. This is a major shift from previous years. With the education system of South Africa under increasing scrutiny, there is a clear gap between relevant qualifications and skills that are marketable in the workplace.” ⁴

This is where the mystery really deepens: currently the university dropout rate between enrolment and first degree completion is 85%, whereas the successful completion rate for workbased training/ experiential learning programmes such as learnerships is 86%! In addition, 86% of those who successfully complete such programmes are able to find full time employment, meaning that employers see good economic returns from these graduates.

The message is clear: if you need skilled people in your organisation, then workbased training/ experiential learning programmes are the answer. Why aren’t we seeing this?    

In realising that South African society needs a skilled workforce in order to be transformed, Government has, through the newly introduced B-BBEE scorecard targets, placed heavy emphasis on Skills Development. At the same time this area is so incentivised through cash grants and tax incentives that fully utilising these incentives achieves the same after tax profit as acquiring an “A category” client. 

Why aren’t we seeing this?     

What training strategy does your company have in place?

What do you see as the factors inhibiting the enhancement of  workbased training/ experiential learning programmes in your organisation?

Could a better understanding of the incentives available for training lead to more comprehensive training in your organisation?

Are C level executives in your company equipped to implement training strategies which will enable the organisation to increase its global competitiveness?

References

1. Haldenwang, B 2014 20 years of democracy: Is life better or worse for the ‘average’ South African? Institute for Futures Research University of Stellenbosch

2.South Africa, SS 2013 Mid-year population estimates 2013. Pretoria: Statistics South Africa

3. World Economic Forum Global Competitiveness Report 2013-2014: 2013 World Economic Forum

4. Barloworld Logistics. (2014) 2014 supplychainforesight. The Rise and Fall of Customers and Companies

Open Letter to President Barak Obama- a Partnership for Africa to build Africa, for Africans

Dear Mr President,

The United States has and will be a major strategic partner of Africa for a long time.

In that context your recent visit is a good opportunity to analyse how the mutual interests of the USA and Africa can best be served.

You will have noticed that not everyone in Africa was happy to see you. In addition, certain factions operating on this continent represent a threat to your security interests. Those who are deprived (especially the young) see the United States as an oppressor whilst those who have, or are aspiring to, a better life find great inspiration in the American Way. 

Trade between USA and Africa is characterised by the export of commodities (mainly oil) from Africa to the USA and the import of manufactured goods and intellectual property in the opposite direction. This is not sustainable because it is heavily imbalanced, not in terms of value, but in terms of value added.

A striking feature of the post 2008 downturn is the path of the US recovery. Since 2009 the US has added 7 million jobs to the payroll, is now only 2 million jobs below the all-time 2008 peak, and is steadily raising employment levels monthly in excess of its labour force growth. The way in which this has happened represents a lesson for Africa in particular.

Despite an adverse investment climate, small to medium enterprises (SME’s) in post 2008 USA contribute just over 50% of your country’s GDP. Significantly, SMEs provide important opportunities for US citizens to develop entrepreneurial skills. In the USA the SME is a realisation of the American Dream for millions and SMEs are celebrated for their contribution to the development and growth of efficiency in the country, particularly where innovation, job generation, and international competitiveness are concerned.

Compare this to Africa where SMEs and the informal sector cannot participate in local, intra Africa, and international trade. On a continent where half or more of the population is under 25 years of age, in which Africa remains at 2.7 % of global trade whilst about 15% of the world's human population live here, this is a socio economic powder keg.

It is the extent to which the African economy is capacitated to celebrate, nurture and grow SMEs that will determine whether that powder keg can be defused.

And this, Mr President, is where you come in. The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of the African economy in a competitive and challenging environment is inarguable. Growth in African employment leads to increasing markets for your country’s products and decreasing threats to your security. Key to this growth is the type of “yes we can” entrepreneurship which the hallmark of American SME’s. The abundance of African natural resources indicates that entrepreneurial efforts on this continent should be focussed on beneficiation. 

Whilst the African Growth and Opportunity Act (AGOA) is significant, what it vividly reveals is the need for greater trade capacity assistance and the need to address "supply side" issues in Africa. The greatest potential to build local economic capacity which the US could make is in sharing technology through training to empower young entrepreneurs to convert our raw materials into products needed by American businesses to better serve their markets. This means that the AGOA ship needs to change course in the direction of business to business partnerships based on capacity building.

How about it, Mr President?

Aligning Capabilities to Strategy

Changes in international supply chain management and logistics as well as the South African education and training environment have shifted the ways in which we operate in these environments irreversibly and forever.

There are tremendous threats – the required competencies are costly, both in terms of money and expertise, but to carry on as before may see substantial loss of business.

As a measure of the efficiency with which our company is doing it might be instructive for us to look at some key ratios over a three year period:

• Business lost to business gained in Rand turnover terms;
• Amount of administrative penalties imposed to amounts disbursed on statutory imposts such as VAT,import duties and the like;
• Amount of storage, rent, overstays and/ or demurrage paid to the total freight bill;
• Amounts written off due to errors to total turnover.

An increase in any one of these of these is a critical indicator that something needs to be addressed in the way in which the skills needs in our company are being addressed, so read on.

• Experience with many companies shows that there are a number of ways of in which they try to make sure that they have people who are competent to carry out their respective functions:
• Poaching staff who appear to have the right experience and/ or training from competitors
• Existing job holder shows the “newbie” how things are done;
• Experienced staff hold training sessions as and when the need arises;
• Sending people on external courses as either they (or their supervisors) feel the need;
• Organising training for different sections of the organisation which is applicable to their particular function (payroll, marketing, Excel and so on).

I would like to suggest that whilst all of the above methods have their place, each one has some critical risks:

• How can we be sure that our opposition is not overjoyed at our taking a real dud off their hands (normally this only becomes apparent much too late)?
• Is the existing job holder going to be that willing to share their expertise, or will they be passing on their bad habits?
• Can the experienced staff member really train, or is s/he simply an experienced individual with little ability to transfer their knowledge and skills?
• How do we know that the courses on which we spend substantial amounts of money are really needed, or simply nice to haves?
• When we send people from our company on training, how can we be sure that each of them has gained maximum benefit from that training?

There is a better way which is a great deal more cost effective and which does not require any rocket science.

It starts off with the simple concept, “begin with the end in mind”.

Each of us has a vision of where we want our business to be.  

Once you are clear on your ultimate goal or destination, the next step is to determine what actions on the part of the team will be most effective in getting you there.

For companies involved in international supply chain and related logistics operations, a good way of looking at competitiveness is through a supply chain congruence model:

   

In terms of this model, the higher the congruence, or compatibility, amongst these elements, the greater the performance of the organisation.

So, for the people element, their development requires a structured approach and methodology focused on aligning their capabilities to your organisation’s supply chain strategy.

How we structure this approach is key and will be discussed in future posts.

In your experience, is there more of a need to train staff than was the case in the past? If so, why do you think this?

How about the quality of work being produced by today’s supply chain practitioners? 

Would you say that this is improving or do you think that it’s going backwards?