As South Africa battles the fallout of loadshedding, we watched the economy shrink by 1.4% in the fourth quarter of 2019, officially placing us in a technical recession. South Africa’s industrial decline and falling economic growth has been directly associated with decreasing electricity sustainability, as agriculture, construction, transport and communication, trade and manufacturing all declined in Q4 of 2019.
The recession was almost expected as the barometer for manufacturing confidence, the Absa PMI, showed a reduction in confidence during the first month of the year, falling to just 45.2 index points in January from 47.1 in December.
A number below 50 indicates that more manufacturers are pessimistic about the prospects for the next 12 months than those who are optimistic. The ongoing electricity supply constraints remain a downside risk and appear to be dampening sentiment in the sector, as the index measuring expected business conditions in six months’ time fell to a 15-month low.
It is not only manufacturing which is feeling the effects, as almost all sectors in the economy depend on electricity for their day-to-day running. The availability of electricity has a very significant role in both the production and consumption of goods and services as well as the country’s growth prospects. Industries such as mining and manufacturing require large amounts of electricity to operate heavy machinery around the clock and during loadshedding some producers grind to a halt. While those with furnaces and continuous processes simply cannot stop and must find or produce their own power.
While there are some solutions to mitigate the effects of loadshedding, such as investing in alternative sources of power through generators and renewable energy, many companies cannot afford large scale generators, or their operations are too large and would require too much power.
South African business owners need to safeguard their businesses financially by implementing comprehensive risk management procedures while loadshedding is in effect for the foreseeable future. Adopting the right software enables businesses to generate accurate schedules that consider constraints around people, machines, tooling, materials and flexible schedules to fit in with electricity supply .Rescheduling to run double shifts when the power is on to compensate for lost shifts when it’s cut. Hence ensuring best use of available capacity to deliver reliably to customers faster and in the most cost-effective way during the loadshedding.
Enterprise Resource Planning (ERP) software refers to the automation and integration of a company’s core business processes to help them focus on effectiveness and simplified success. Investing in an ERP system can help mitigate your organisation’s losses by planning and coordinating a number of processes, from procurement of raw materials to shifting production cycles, and distribution.
SYSPRO ERP systems are designed specifically to meet the needs of businesses and offer a variety of industry-specific features that can be used to minimize the effects of load shedding in your operations. ERP system help tighten your belt and maximize output from input. This means bedding down the planning stages in terms of inventory optimization and making sure that you are driving the necessary policies to support this.
Having the capability to create and execute an achievable schedule requires a comprehensive view of the current situation and available resources, as well as the tools to perform efficient re-scheduling if necessary.
Adopting more flexible manufacturing techniques and smart supply chains will enable manufacturers to provide products and services, reducing their time lost during loadshedding. It is not a fool-proof solution, as predictions must be based on Eskom’s published loadshedding schedule. However, it can alleviate much of the pressure that is currently on these industries.
While these are dark times for many industries, we must find a silver lining. When faced with adversities such as loadshedding, enterprises of all sizes must become more creative in running their operations. If we can learn and be agile to find a way to succeed, while working with loadshedding, imagine what organisations will be able to do when it is finally gone.