“unlocking potential through current programmes and future ... · “unlocking potential through...
TRANSCRIPT
“Unlocking potential through current programmes and future initiatives”
Presenter: Mmadiboka Chokoe, Executive Manager: Supplier Development, Transnet
10-11 September 2013
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TRANSNET
National Ports Authority
Freight Rail
Port Terminals
PipelinesEngineering
Product Manufacturing:� Manufacture� Assembly� Rebuilds� Refurbishments� Upgrades &
Conversions� Maintenance &
Service
SA National Maritime Authority:� Responsible for the
safe, efficient and effective management of South African ports
Port Terminals Operator:� Monitoring and
executing port terminal operations within South African ports
SA Rail Line and Freight Operator:� Rail operator
responsible for rail freight logistic solutions
� Serve the mining, manufacturing and industrial sectors
Oil and Gas Pipeline Operator:� Transportation of
petroleum and gas products via a pipeline network within South Africa
Owns and operates
21,000 km track,
including 1,500kmdedicated heavy haul
Africa’s rolling stock and maintenance
supplier of choice
Landlord to 8 commercial Ports around the South African coastline
16 cargo terminal operations across South African Ports
3 800 km of pipeline capacity
for petroleum and gas products
Transnet is a custodian of ports, rail and pipelines and has a number of operating divisions which have key focus areas
Source: TRE value analysis
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Setting the scene
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…One color one model and as few options as possible…
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Introduction
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• South Africa and Africa’s commercial and industrial giant, is now gearing up to take first steps into a new future, a future built on the foundation of a well-developed multimodal transport network and intra-regional trade.
• At the forefront of this initiative is Transnet. Transnet’s mandate is to lower the cost of doing business in South Africa, whilst promoting shared growth and transformation.
• Transnet recently embarked on its biggest project to date – the R600 billion Market Demand Strategy (MDS), which will significantly boost infrastructure development, job creation and investment in South Africa, and expose the country to a host of international trading possibilities.
PAGESource: Team Analysis
Corporate Strategy (MDS) drives various other strategies and frameworks inside Transnet to cascade and align with its objectives
Supply Chain Policy (SCP)
Corporate Strategy(MDS)
Document reference Key objectives (not exhaustive)
• Corporate Plan
• iSCM Strategy
• Increase volume and revenue growth• Create greater capacity• Increase operational efficiency• Maintain financial strength• Improve safety and health• Develop Suppliers: growth, transformation
• Optimise value from sourcing activities• Increase supply chain efficiency• Proactively manage compliance risk• Integrate SD strategy• Develop supplier base
• Enterprise and Supplier Development Strategy
• Support NGP/NDP objectives throughleading empowerment and transformation of the supplier base
• Leverage procurement to develop local suppliers to support localisation and industrialisation; creating jobs and reducing the unemployment rate
• Identify key areas to target for SD within the IC3 framework, together with their Strategies
• Provide implementation framework for SDP• Transnet SDP
Supplier Development Plan (SDP)
Enterprise and SD Strategy
Integrated Supply Chain Management
(iSCM) Strategy
• Supply Chain Policy
• Carry out procurement cost-effectively while meeting commercial, regulatory and socio-economic goals
• Ensure good governance via integrated Supply Chain Management
Key Transnet guidance framework’s / strategies / plans
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Focus area
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The majority of the MDS expenditure over the next 7 years will be in General Freight and Freight Rail requiring a responsive and competitive local supplier base
Commodity split (Rbn)
Divisional split (Rbn)
Major programmes
GFB rail capacity growth to meet market demand volumes from 79,7mt to 170,2mt
Completion of the New Multi-Product Pipeline (NMPP)
Increase export coal to 97,5mt – including Waterberg
Increase exportiron ore to 82,5mt
Increase exportmanganese to 16mt
Increase in fleet and improvementto the infrastructure
24
25
32
151
30
3
26
9
Containers (Ports)
Export Iron Ore
Export Coal
GFB
Bulk
Piped Products
Break Bulk
Other
4 11
33
47
4
201Other
TPL
TPT
TNPA
TRE
TFR
Other
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Key Facts
� By 2030 there should be approximately 60million people living in SA .
� Globally, 15 to 24 year-olds make up 40 percent of the total unemployed population.
� SA 60% of between 15 and 35 are unemployed.
� High levels of unemployment could lead to social
instability.
The need for Meaningful Transformation
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South Africa’s Inequality
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South Africa’s Inequality
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• MDS is an enabler for localisation, transformation and empowerment.
• The 300 billion in capital expenditure, and an additional R300 billion in operational expenditure invested over a seven-year period will open doors for extensive supplier development and enterprise development opportunities.
• Supplier Development opportunities present themselves along the entire Transnet value chain however what is key on Transnet’s transformation agenda is the development of competitive Black industries that can take advantage of the opportunities presented by MDS
• This requires the prioritising industry-specific skills transfer and skills related to manufacturing for our local Black SMMEs through:
i. on-the-job training and apprenticeships in international supply contracts for local suppliers, and
ii. providing financial and non-financial assistance to Black SMMEs (particularly in rural areas) to nurture innovation and create jobs. Skill vs Education
Underpinning the MDS is a commitment to ensure that Transnet creates lasting economic, social and environmentalvalue for South Africa
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Transnet’s SD approach is to leverage the MDS infrastructure programme to foster economic growthand promote transformation
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• Achieving SD objectives through leveraging high-value procurement by including: Industrialisation Localisation Promoting technology
transfer Job creation and
preservation Developing industry-
specific skills Enterprise
development Rural integration
• Ensuring transactions to bring HDI’s* into the economic mainstream through the advancement of HDI ownership
• Address economic disparities and entrenched social inequalities through the use of:
Generic B-BBEE scorecard• Ownership• Management Control• Employment equity• Preferential
procurement
• Enterprise development
• Socio economic development
• Skills development
SD objectives
Driv
e economic Transform
atio
n
(Empowerm
ent)
Facilitate economic Gro
wth
Transformation Growth
SD approach SD objectives
Enterprise
Development
Focused
Strategic
Programmatic
* HDI = Historically Disadvantaged Individuals as per the B-BBEE Act 2003** FRC = Further Recognition CriteriaSource: Team analysis
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Current supplier base has high maintenance and replacing capability but little IP to penetrate industries with high product complexity
*Desired supplier base capability
Current supplier base capability
A fundamental shift should take place to move our Black SMMEs from products/services with low complexity into Manufacturing, Design and Technology Development
• The current supplier base has high capability in products or services that have little or low complexity
• Black owned enterprises participate mainly in the technical support and maintenance industry
• Increasing capability should take place within industries with high complexity
• Government policies should support the BI initiative
A number of initiatives should be implemented to ensure the shift in current capability:
• Transfer of IP• Skills development and
training• Enterprise development• Incubation process where
established industries
Product complexity
Capability
TechnologyDevelopment
Design&Prototype
Manufacturing Technical support Maintenance and replacing
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Transnet has committed R200 million in the 2012/2013 FY to create an enabling environment for Black SMMEs/BI’s to participate meaningfully in the mainstream economy
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Description
Independent and Empowered Black Industrialists
Development Banks• DST• DTI
• Supplier Development Parks
• SOC collaboration --CSIR/AIDC/Mines/
• SABS/Anglo Zimele• FET colleges• Universities of Technology• Department of Science
and Technology• OEM’s Partnership
Skills Development
Incubation and Innovation
Financial Support
Independence
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Through the facilitation of a licencing partnership, Transnet developed Rail2Rail who’s capability and capacity have grown sustainably
14* Values are based on snapshot position at that time (i.e. not incremental)Source: TFR Report Oct 12
Historical ContextHistorical Context
As at October
2012*
As at October
2012*
AS at April 2009*
AS at April 2009*
SD initiatives
SD initiatives•2007-Sole supplier
•An award for 1 million concrete sleepers (over 5 years) was received from Transnet
•Successful application to participate in the Transnet CSDP through securing a licence agreement with Rail One GmbH of Germany
SD impact
Key lessonsKey lessons
Job creation
Investment in plant
Capacity
Transformation
Skills development
85 direct new jobs
R73m
350 000 pcs pa
51%
120 people
35 direct new jobs
R70m
156 000 pcs pa
51%
35 people
Job preservation 35 jobs0 jobs
• Facilitating joint-ventures between established OEM’s and local SMME’s accelerates the development of local suppliers
ED
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Case Study: CSDP - 50 Like New Locomotives
UTEX 16-645 Engine
Imported from US –Listed for localization in next order.
Modified Cooling, Engine and Inertial Air Hoods
All hoods and cab structures fabricated in Bloemfontein
Under frame
40 Supplied by EMD and 10 fabricated locally by DSC
New HVC, EM200 Control System and Rewire
Fabricated and equipped at TRE
UTEX AR10Main Alternator
Imported from US –Listed for localization in next order.
Fuel Tank
Fabricated by local suppliers including Kare
Of the 3000 Component parts listed, 2000 were sourced locally in South Africa.
That represents about 67% of the line items and over 40% of the product cost.
Plans have been presented to Transnet for additional units with increased local sourcing. New D43 Traction
motors supplied from EMD
Bogies (2 per unit) cast by SCAW
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TRANSNET will continue to aim for Sustainable Development and Transformation through fostering partnerships between government, private sector and industry
Transforming the Local Industries
• Structuring Meaningful BEE Deals
• Capital Investment
• Technology and IP Transfer
• Reducing the cost of steel
• Reviewing the current tariff methodology
• Setting targets for local content on specific components
• Improve SOC’s procurement and “transformation approval processes”
• Create significant opportunities' to channel the increased MDS spend to grow the local economy, and make a deliberate effort to support the meaningful participation of Black people,
Development of New Black Industrialists
• Creating strategic Relationships with the following Institutions :
� DST
� DTI
� CSIR
� Innovation Hubs
� OEMS
• Allow for transfer of key technology and skills from international organisations to build local capability which does not exist
• Enable downstream SD through unlocking opportunities
• Facilitate increase in transformation of the local supplier base through shifting spend
• Incentivise Black people for investment in plant and machinery to build industries