South African Supply Chain – a shift in the balance of power?

The Customs Modernisation Programme has engaged supply chain stakeholders for just on a year and 3 months now. What has been seen as an unprecedented approach to Customs/Stakeholder co-creation has no doubt also revealed some significant developments in the industry which prompt some observation and comment.

It is an understatement that the modernisation development impinges upon an individual or company’s ability to modernise on the one hand, while maintaining a constant focus and commitment to their day-to-day operational dealings with clients.

It serves well to take a step back a few years – not quite to the days of antiquity – but far enough back to when declarations were framed ‘manually’ by an entry clerk and assessed ‘manually’ by a customs officer. In both instances the clearing agent and Customs required a level of capability and skills in the specific areas of tariff and valuation. This did not stop at clearances but was a well established trait at most customs branch offices, and indeed clearance brokers, where skills in all specialised areas were generally in abundance. Companies in those days had the capacity to deal with just about any kind of customs and trade issue through their in-house knowledge base and proven track record.

In short, over the last 18 years or so, the ‘skills’ and knowledge base has gradually dwindled where in most cases only the larger companies have been able to maintain top-dollar skills on a fulltime basis. The introduction of systems has to large extent negated the need for knowledgeable (highly paid) entry clerks. A lot of these ‘skills’ landed up at one or other ‘audit firm’, and if collar-and-tie was not the desired work attire, they established their own specialised consultancies.

Automation and EDI have allowed a number of smaller players to enter the fray, but the once established methods of in-house training no longer exist. True, there are reputable learning institutions offering dedicated training, but it is widely acknowledged that mentorship within the organisation was always the best form of knowledge transfer. Some local and international organisations offer highly specialised technical e-learning offerings with ‘accredited’ diplomas or degrees. Yet, one has to question seriously how companies, and Customs for that matter, ensure a return on investment on the knowledge attained? Moreover, staff retention (attrition rather) questions the motive for training, i.e. are staff only interested in training for their personal development, or are companies not focussed enough to ensure staff is retained for a reasonable period to ensure sustainable benefit?

This brings me to the point of this post. The modernisation programme will undoubtedly offer significant benefits to trade. The first release allowed ALL traders and service providers to progress at a common pace with implementation occurring only once all were fully tested and ready. This, itself, extended to joint training programmes between SARS and the trade. The forthcoming release will however reveal the competitive edge for traders whose service providers have their act together versus those who are not quite there. Is this the desired state envisaged by SARS? No. However, equal opportunity is afforded to all involved. True, a large company can dedicate more time and resource to such developments. This is a painful trade-off for some. The reality is therefore brutally clear – to stay with the game, companies must take some pain. It is quite apparent that the pace at which change is occurring is unexpected by some members of the supply chain.

A trend amongst certain service providers has been to recruit so-called customs experts. This is both a strategic and competitive move in that service providers, today more than ever before, require a more intimate understanding of customs procedure. However, while this evolution is silently occurring it needs be mentioned that there exists a fine line in terms of the manner by which these ‘experts’ operate. Bureaus need to be cognisant of this point and their real role in the industry. If such ‘expertise’ goes beyond systems development it may require them having to license with SARS to ensure parity in the industry. These developments are not going unnoticed.

The Customs Modernisation Programme has provided an environment for radical re-structuring where the ‘fit’ will survive and thrive. Unfortunately, nostalgia and novelty are no longer a criteria.

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