LABOUR: Disputes Pose Supply Chain Risk
Recent Western Cape Business News
In South Africa, protracted labour disputes feature as one of the major risks to supply chains, being 2.5 times higher than the world average. This is according to the recently completed Phase II of the MIT Center for Transportation and Logistics Global Risk Survey, a joint initiative in South Africa by SAPICS and IMPERIAL Logistics, in collaboration with MIT.
Comparatively, the local survey finds that extended loss of electricity is a risk that is 5 times higher than the world average. Employee theft/executive misdeeds come in 4 times higher and disease/infestation, 2.3 times higher.
Seven types of risk were identified by the survey, including ‘internal operations disruptions’, ‘people not available’ and ‘cannot ship or deliver products’, all of which have a bearing within labour disputes.
“We acknowledge that strike action is a fundamental right within the South African regulatory context. It is also important, however to consider the negative impact that protracted labour negotiations have on South Africa’s economic performance,” says Marius Swanepoel, IMPERIAL Logistics Chief Executive Officer.
For example, the lengthy industrial strike action immediately following the 2010 FIFA World Cup™ back tracked significantly positive perceptions relating to South Africa.
Within the supply chain context, last year’s Transnet-related strike action by the South African Transport and Allied Workers’ Union (SATAWU) and the United Transport and Allied Trade Union (UTATU) led to major companies being unable to supply customers. “Some shipping lines were required to divert vessels from Durban, which resulted in the delay of imports and exports and in some cases, cancelled orders,” he says.
From a positive perspective, the survey finds that in South Africa, civil unrest/terrorism, and product tampering and counterfeit products have less of an impact on the supply chain. It also benchmarks how the country fares against developed and developing countries. “It confirms that South Africa has similar supply chain risks to those of developed countries,” says Swanepoel.
The MIT Global Risk Survey, which explores supply chain risk attitudes and supply chain risk management practices has been completed in 70 countries. The survey enables greater understanding of the different contexts within which increasingly global supply chains operate.
“The motivation for the survey was to determine if regional or cultural differences existed and if so, what they might be. Most supply chains are very much international due to globalisation, involving trading partners from different regions, who speak different languages and have experienced different risks,” he explains.
Phase II enables the understanding of broad risk types. It has identified top supply chain risk factors, both internal and external disruptors and aims to further understanding of perceptions towards risk mitigation, as well as the types of risk management strategies that are currently in place within business.
“The survey validates the fact that protracted strike action is perceived to have serious implications for an economy, just as wage negotiations that run smoothly can have a positive impact for South Africa on all fronts, from individual remuneration to economic performance,” concludes Swanepoel.
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