Special feature: A break in the chain (Part Three)

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CFOs reveal how they are navigating the supply-chain disruptions brought on by crises.

When a factory is flooded, a warehouse looted, or a shipment pushed out, businesses and their CFOs need to act quickly. According to Tiger Brands CFO Deepa Sita, this also means looking at the big picture.

“As CFO, you need to have a good handle on market dynamics and the impact of your decisions on the business while balancing outputs,” says Deepa. “You can’t achieve this by just staying in your head office. You need to get out and network with customers and vendors to learn from them and see what other organisations are doing so that you remain relevant to your customers and consumers. This helps you source alternative solutions to challenges.”

Tiger Brands – South Africa’s largest food company – has felt the full impact of the global supply-chain squeeze and the knock-on inflationary pressures, including soaring energy, packaging, and commodity costs. All of this has been exacerbated by the Russia-Ukraine conflict. More recently, the company’s suppliers – still recovering from the July 2021 unrest – were hit by flooding in KwaZulu-Natal.

“As a company, we have intensified our efforts to reduce costs and drive efficiencies to minimise the need for selling price increases,” says Deepa. “But significant price increases across most of the portfolio are inevitable.”

For Deepa, fortifying and optimising supply chains is now crucial. Last year, Tiger Brands focused on stabilising supply-chain operational performance and put in place processes to boost productivity and efficiencies. The wheat price volatility due to the Ukraine crisis hasn’t helped matters, but the company is also taking steps to deliver organisational, process, and technology improvements.

“Events such as the civil unrest and the KwaZulu-Natal floods highlight the importance of CFOs needing to continuously look for opportunities to reduce costs, drive efficiencies, engage in strategic sourcing instead of reactive and, importantly, invest smartly in activities that will drive top-line growth.”

The lubricants industry has also seen a huge impact on its supply chains due to input costs of base oils, demand-driven pricing of containers and freight services, delays in shipping, and more. “The result has been erratic prices as various companies try to find ways to deal with the crisis,” explains Petrocam CFO Ridwan Gany (pictured).

Petrocam Lubricants has a tactical approach to dealing with the disruption. “In times where the supply chain is erratic and unpredictable, chasing margin on its own is a recipe for disaster. Instead, we’ve taken the strategic approach of zoning in and focusing on market segments that we think provide the best possibility for future market share growth,” Ridwan says.

He adds that, while these segments are not necessarily the most attractive in terms of margins at the moment, they do afford Petrocam the opportunity to provide the right product to the right people at the right time. “The logic is built on customer acquisition in an innovative, marketable and scalable manner, which we can leverage for growth when market conditions shift.”

Read part one and two again: 

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