The Covid-19 pandemic has wreaked havoc on the global supply chain over the past two years. Global supply chains of original equipment manufacturers (OEMs) – from heavy equipment manufacturers to truck makers — are facing multiple challenges that are having adverse effects on all dimensions of their businesses.
While persistent shipping challenges, pandemic-related production interruptions and transportation delays continue to beleaguer manufacturers, fleet managers looking to upgrade or replace their mission-critical equipment have to deal with record long lead times.
Amid everchanging customer expectations, SANY Southern Africa has increased its inventory levels to help customers receive machines quickly to fulfil their equipment needs. Samuel Zhang, GM of SANY Southern Africa, tells Quarrying Africa that the company currently has at its Boksburg yard in South Africa, in excess of 100 mining-type excavators (36 t to 75 t), worth over R600-million in total.
“The international supply chain has been disrupted and long lead times have become the order of the day. With readily available stock in South Africa, SANY customers don’t have to stress about long lead times. Based on our understanding that putting machines to work immediately at full capacity is important for customers, we have beefed up our machine inventory significantly to ensure on-time deliveries,” explains Zhang.
Traditionally, this approach is regarded a bad business practice because it ties up a lot of capital into the inventory. However, Zhang says the new approach is part of SANY’s response to the current crisis, which calls for resilient and agile supply systems. The company, he says, spares no effort in building resilient business structures in order to continuously improve its service to customers.
The high inventory levels come on the back of recent investments in SANY’s South Africa’s operations to better support its dealers across the region. For example, the company commissioned a new 40 000 m² machine storage yard in Boksburg, South Africa, in 2020. This has been complemented by a huge stockholding of about R90-million’s worth of parts, which is set to be increased to R200-million in a year.
Zhang believes it is high time heavy equipment suppliers re-evaluate their disruption-mitigation strategies and be prepared to invest more in resilience. For SANY Southern Africa, having some excess inventory is paying dividends.
One of the main advantages of having high stock levels, he says, is that equipment suppliers can ensure that customer fulfilment times are always met within the timeframe that end users their machines. This is mostly beneficial for the contract mining fraternity, where customers often need their machines immediately to execute urgent contractual needs.
In addition to fast customer fulfilment, having excess inventory ensures that stock shortages are eradicated, especially at a time when the supply chain or overseas factories are affected. “If the factory experiences issues and cannot produce, there is a huge risk of having a shortage of machines, which in turn results in long lead times for customers. For example, our Shanghai factory has been closed for a month due to lockdown measures in China, but holding more inventory has allowed us to have a buffer to reduce the risk and to continue to supply machines within a normal timeframe to local customers, even though the production line is down,” concludes Zhang.