11 Nov 2019
In the World Economic Forum (WEF) rankings for relationships between employee and employer South Africa ranks 137th out of 137 countries, at the bottom, this in 2018. No doubt this arises from adversarial attitudes. So, do we have adversarial relationships both between the users and suppliers and between employees and employers?
I recently met with some Swiss industrialists at a social function in Europe. South Africa is of concern to Switzerland and Germany. South Africa is popular with German speaking countries. The WEF is a Swiss based international forum.
Maybe as a gesture to help, they told me, in Switzerland many industries had reached an agreement with the Unions not to strike. I have since researched this, using Google, and it is true. The number of strikes in Switzerland is one of the lowest in the world.
Achieving industrial peace in Switzerland has been a contributory factor to the country having one of the strongest economies in the world. What about South Africa modelling its industrial relationships on Switzerland? Africa has an ancient humanitarian philosophy called Ubuntu. it means humanness, captured by the slogan “Umuntu Ngumuntu Ngabantu” meaning, “I am a person through other human beings,” closely related to “I am because you are.” Business has developed a management philosophy around Ubuntu, UMP (Ubuntu Management Philosophy). The Ubuntu philosophy urgently needs to assist developing industrial peace in South Africa.
Switzerland politically is divided into a number of cantons; it is a Federal system of government with a high degree of devolution of power to the Canton states. Switzerland is famous for holding referendums, there could be two or three a year on subjects affecting the well-being of their society. Two examples recently, were, a vote for the ending of radio and TV licenses. This was defeated 28.4%:71.6%. The other, new financial regulations for 2021, the regulations were approved by 84.1%:15.9%. These results show responsible concern, this is what happens when you seek people to be included.
Returning to the CEO who wanted to step up adversarial relationships, he said. “If users were not tougher on suppliers, their higher charges, would have to be passed on to their customers”. In the highly competitive retail trade, he was determined to keep prices down. Cosy relations with suppliers were not good for keeping prices down….and so his call for a more adversarial relationship.
The retailer had outsourced his transport, I was one of the pioneers in taking over the transport of other companies. The CEO had a point. He was fighting for his customers, keeping prices low.
“We need not be in conflict.” My answer, we needed first to monitor the add-on cost of transport on a regular basis, weekly for all the stores. The retailer used a standard size tray for deliveries. This standard size tray was also used by all food suppliers. Products packed in cartons would have a tray equivalent, based on the size or weight of the carton.
On a weekly basis we could monitor the cost per tray to do all the deliveries. A simple calculation, the total weekly charge divided by the total number of trays; this gives a cost per tray. A reduction in the cost per tray, meant lowering the cost of transport for the client. Working together, scheduling the vehicles effectively and ensuring full loads, benefitted the client. The working together is called becoming an alliance partner.
Full utilisation of the fleet was another factor in lowering the unit cost. We used the fleet for collection from food suppliers and passed on 90% of the operating income to reduce the tray rate. The programme was basically collecting from suppliers during the day and delivering at night.
There is more detail to this, every industry is different, every non-core activity that is outsourced must have a monitoring system in place, assuring effectiveness and efficiencies are achieved, the root to productivity. Outsourcing must be about a better way; it must enhance the competitiveness of the user.
Minimising the cost of transport without compromising on service or compromising our ability, the Carriers’ to reinvest in up to date equipment and systems, is an imperative
In my first book “Carrier Value.” I wrote about outsourcing, this included, “the Value Chain theory”, developed by Michael Porter. This framework can be used for to develop a successful outsourced service.
On improved relationships with staff, the value chain plays its part. The principle of staff contributing and having their contribution valued is part of the philosophy of the “Value Chain”. Trust and respect are needed, including being up front with staff on costs and the understanding of the workings of the Value Chain.
One final remark my Swiss friends made. The remark was made by the wife of the Swiss national, she was born in Germany. Her comment, the Swiss somehow, can appreciate the other persons point of view. They were not fixed on being one dimensional, rather seeking the right solution without the need for an adversarial relationship. It may be part of the Swiss culture, friendly and productive relationships.
Her remarks brought back to me our need to dust off the cobwebs from our ancient African Philosophy of Ubuntu. We must pick ourselves off the bottom of WEF rankings. Then on outsourcing, it is a two-way relationship, if focused on contributing true value for the user, you have an alliance partner and not an adversarial sparring partner.
By Neil Wright of Wright Publishing