INCORPORATING COLD CHAIN
Automation & technology accidental damage or some maintenance regime that was not perfectly followed , as to ensure Insurance pay-outs and protection of their reputations .
For instance , when a large fruit juice company in Ceres suffered such an incident several years ago , its international clients Tesco and Sainsbury sourced new suppliers in Brazil for their juices and have never resumed supplies from the local supplier . That loss , combined with having higher maintenance costs as a result of not doing an entire lifecycle cost analysis on the racking system , is typically many times higher than a 10 % saving on initial Capex . Sustainability often never enters the thought process .
We have an environmental report which is validated as to what we claim , to the extent of implementing something we call ‘ sustainable driving ’. EU regulations are in place for corporate ESG reporting and the impact it will have , and those regulations also have enormous applicability for South Africa where a local business is owned or partnered with a European operation .
South African companies can no longer afford to pay lip service to sustainability issues given their international networks . In future , EU companies ’ reporting will need to provide tangible evidence that their group companies such as in South Africa themselves have a coherent sustainability strategy which they are actively implementing . Such reporting requires that each year ’ s progress achieved is clearly demonstrated . The report encourages senior executives to emphasise the business case of ESG ( Environment , Social and Governance ) as an investment in their future , to help shift mindsets away from treating it as a grudge compliance burden . There are significant benefits to be reaped from compliance with ESG rules , especially greater operating efficiency and lower overheads in the long term .
In our experience , doing sustainability properly requires education , knowledge and a mindset shift : one that moves sustainability ( composed as it is of Environmental , Social and Governance issues ) from the periphery to the heart of a company . As the world changes , sustainability strategy will become business strategy – because it is ultimately customers who demand it .
This is happening globally , but in South Africa companies are not yet considering their end-user customers . Just as South African businesses will award a tender based on cheapest price , so too do South African shoppers opt for a product 5 % cheaper even though there are serious environmental or ethical issues at stake . It starts with government where ‘ cheapest cost ’ dictates which tender is accepted rather than ‘ value for money ’. It is only once you have sold to a customer based on full lifecycle cost do they develop this methodology as a habit or pattern of behaviour that they start to see the difference of having a sustainable partner behind a purchase decision .
Sustainability affects not only the ‘ buy cheap ’ culture , but a stock holding culture of keeping the minimum . Given global logistics problems , many companies are now correctly focusing on holding as much stock as they can , notwithstanding
the additional cost . These are tough times economically , but even tougher if you don ’ t have stock to deliver .
In a similar vein , we tendered for a distribution centre for South Africa ’ s largest e-Commerce company , which in the end opted to award the tender to a local company based on its promise it could locally manufacture the racking within four months , whereas we could only deliver imports in five months . More than a year later , I noted that local company only recently delivered . The loss to this e-Commerce company in lost revenue needs to be weighed against its policy ( or strategy ) of favouring local suppliers compared to using a company that has policies on ethics and sustainability . It is evident in their year-on-year results showing losses that is beyond comprehension .
Part of our sustainability is frequently looking at where we can improve and strengthen our business and investing accordingly . This should surely be everyone ’ s approach .
South African businesses to a large extent still subscribe to the culture of growing their business through ruthless management and short-term gains . In that scenario a company will do anything to clinch a deal . In truth , we had a similar culture until the formation of our relationship with Gonvarri five years ago . Now , after a 12-month training programme in Ethics and Sustainability , our growth is based on the sustainability of the systems we operate according to the business proposition rather than a cult of personality . But other companies are shocked when we tell them we do everything by the book . When they try argue ‘ But …’, we say ‘ No buts .’
The programme inculcates that ethics leads to profitability which in turn leads to sustainability . However , it doesn ’ t come about overnight . Customers sometimes do not understand that if one has a rigorous financial system that requires payment at the contractual milestones , then that is what we are going to require . It benefits nobody to let things slide even just a little .
Attaining sustainability means the management style has to change and strategically look at all the pressure points of the business – and investment in systems , infrastructure and training . The ethics and sustainability framework , such as codes of behaviour , have to be put in writing and adopted as inviolable policy , and distributed not just to staff but to business partners and customers . Those loyal customers will then buy from you again and again .
This is a way of doing business that people who buy and sell entirely on price may struggle to comprehend and indeed may consider it strange . Increasingly , international companies are adopting codes on ethics and sustainability and enforcing it through their own group structures , but also demanding it of their international networks before doing business with anyone . So too are international investors , before investing capital in any company , demanding reporting from such firms not just on their own compliance but their entire business network .
Soon , there will be no place to hide ! CLA
COLD LINK AFRICA • May 2023 www . coldlinkafrica . co . za 9