Finance News South Africa

SA businesses poorly equipped to adapt to market shifts

Barloworld Logistics' annual supplychainforesight report has revealed that most organisations are poorly equipped to anticipate major market shifts and adapt accordingly. This speaks to a lack of visionary leadership and the ability to manage change while leveraging key emerging opportunities.
SA businesses poorly equipped to adapt to market shifts
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"One of the most important findings was an impending shortage of leadership, visionary and change management skills within organisations," explains Kate Stubbs, executive of Marketing & Communications at Barloworld Logistics. "Whilst in all the previous supplychainforesight surveys the lack or shortage of skills has been viewed as a major business constraint, it is the first time that a lack of necessary leadership and visionary skills has been identified as a skills gap at managerial level."

Based on independent research conducted by Frost & Sullivan on behalf of Barloworld Logistics, the report garnered the views of over 370 professionals representing companies across South Africa - providing a statistically accurate representation of South Africa's business and industry leaders.

Managing change

The top ranking strategic business objective for this year is identifying and managing change, underscoring that change is indeed firmly on the boardroom agenda. Growth and expansion into new markets - ranked second - is a continuing theme from last year, as opportunities in Africa and abroad become potentially more lucrative and diversification becomes more of a priority.

The cost of doing business is the top ranked constraint by respondents. With most input costs increasing, high levels of uncertainty, competition from low cost producing nations and a relatively stagnant economy, companies are focusing on cost effectiveness to remain competitive.

With regards to supply chain objectives over the next five to ten years, the top three rankings in this section are consistent with last year's survey: improvement of service levels; to customers remains the foremost supply chain objective, while the integration of technology, improving the flow of business intelligence, lowering procurement costs, and reducing order lead times are also focus areas.

When questioned about supply chain challenges, respondents ranked the top supply chain challenge as the willingness to change/breaking old habits/relationships, which is undoubtedly a leadership, management or communication issue.

People related challenges

Stubbs says that it is important to note that seven out of the top ten ranked supply chain challenges relate to people. "These views support the fact that change is difficult - and the greatest obstacle is to change people," she explains. "Leaders are required to create the context and environment for change in order to effect change seamlessly and successfully."

When viewing change in the supply chain, 36% of respondents said there is a controlled and deliberate process to managing change in their supply chains, whilst the remaining 64% said their companies either react or change when required to respond to market needs) or see little or no development potential of their supply chains).

Only 42% of respondents said their organisations are constantly in touch with anticipated shifts in the market and predicting game changing trends. With regards to capabilities to implement change within organisations, 45% of respondents believe it is well executed but needs improvement, and only 7% responded that it is extensive and comprehensive. A high percentage (68%) of respondents believe that the health of their companies is at risk in the face of current and potential changes in global market structures and emerging technologies.

This year's survey also sought to understand respondents' views on the emerging megatrends, and their potential impact on supply chains, businesses and industries. The key observation is that all the megatrends are viewed as opportunities and less so as threats. The greatest perceived opportunity is from technology innovation, and the greatest threat is seen as the rise of Asian economies.

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