Importers' Connect

In importing, timing matters, delays matter, currency moves matter. This is Importers' Connect, your weekly briefing on the logistics, freight and forex trends shaping South African trade. From port congestion and customs updates to shipping costs and market movements, we bring you the insight behind the headlines so your business can plan with greater certainty.

Vernon: Good day, welcome to another episode of Importers' Connect. I'm Vernon Sinden.

Francois: And I'm Francois Herman.

Francois: So Vernon, in our last conversation, you briefly mentioned the importance of technology and digitalisation in supply chains. I thought it would be useful to explore that in more detail today. Why, according to you, has this become such an important topic for importers specifically?

Vernon: It's important for us to unpack it today because we've mentioned predictability a few times on the podcast. What does that mean for your business? We've spoken about port congestion, bad weather at origin and delays at origin.

We've also spoken about customs. There are a lot of factors that can influence your supply chain and logistics. Visibility and predictability are becoming integral parts of any supply chain. Most clients would have a database of the volumes they're importing, but it's also important to look at what's happening in the market and in supply chains.

You're looking at schedule reliability and similar factors. Technology helps businesses get information earlier and connects different parties in the supply chain. Clients can then make better decisions and avoid delays. There's also a cost implication.

Francois: Let us start with the two we touched on last week: EDI integration and API integration.

These terms are mentioned regularly in the news and in the media, but what do they actually mean?

Vernon: Let's start with EDI, which stands for electronic data interchange. In simple terms, it allows one company's system to send structured business information directly to another company's systems.

For example, as an importer, if you have a purchase order, it can be sent electronically to your supplier. The supplier can then send back the order confirmation, shipping information and an invoice. You receive that information earlier, without manual intervention such as emails.

It improves speed and reduces the risk of errors. You also mentioned API, which stands for application programming interface. It's another way for systems to communicate with one another.

APIs often provide real-time information to trigger an action between systems. For example, a business that connects its order management system to a freight forwarder's platform can receive live updates on shipments, estimated arrival times and customs statuses.

That's valuable for any business.

Francois: Tell me, Vernon, is it an either-or choice? Are they alternatives to each other?

Vernon: If you're talking about alternatives, there are so many systems in the market at the moment. You would want to partner with a freight forwarder that invests in systems, whether they develop their own or buy them off the shelf.

Clients need to look at how advanced their partners are, what systems they have and how those systems can integrate with their own to provide that visibility.

Francois: Looking specifically at the retail sector, purchase order management is a big part of the market and hugely important for retail clients.

Why is purchase order management so important?

Vernon: For retail clients, you've hit the nail on the head. A purchase order is the starting point of the supply chain. It contains supplier details, product information, quantities, prices, delivery dates and all your shipping requirements.

We're hearing a lot from our clients in the retail space who are specifically asking for purchase order management and that kind of integration.

If the information is inaccurate, the problem can continue all the way through the supply chain.

A good digital purchase order process or system allows a business to see the order that was placed, whether the supplier has accepted it, whether production has started, how far along it is, when shipping is booked and whether the cargo has departed.

It gives you full visibility from beginning to end and avoids the manual Excel spreadsheets that we see a lot of. That's the traditional way of managing freight forwarding or purchase orders.

There's a lot of room for error, a dependence on key people and a lot of manpower involved.

Francois: There's also a cost-saving element to it. Where do those savings actually come from?

Vernon: There are several areas where you can save money. Firstly, there's less administrative work. As I mentioned before, from a staffing perspective, you don't need to capture the same information repeatedly across different systems or send emails back and forth.

Secondly, productivity improves, and there are fewer errors. The wrong quantity, an incorrect product code or missing documentation can result in delays and extra costs. Thirdly, businesses can reduce storage, demurrage and detention costs. We've mentioned those a few times on the podcast and how they can influence your business and the total landed cost.

There are also savings on urgent transport and unnecessary air freight. If you get the ocean shipment wrong and order incorrect quantities, you still need to make sure you have the right stock on the shelves. You may then need to bring in the balance by air freight just in time. The biggest benefit is that the company can identify problems earlier.

If a supplier advises that production will be late, the importer can take time to consider alternatives instead of reacting at the last minute, as we often see.

Francois: It's very much focused on visibility. Let us talk about predictability. How does technology help a business manage lead times more effectively?

Vernon: The first step is to stop looking at lead time as a single number. An international shipment has many stages: supplier preparation, production, cargo readiness, clearances, booking, port handling, ocean transit, discharge, customs clearance and delivery on the final transport leg. We've mentioned port handling productivity a few times here.

That's just to mention a few. Technology allows a business to monitor each stage and compare planned and actual dates and times, giving it more predictability. Over time, that creates a much more accurate view of performance.

The importer can see which suppliers regularly ship late because of production, which routes are unreliable based on sailing schedules, how long customs clearances normally take and where delays occur.

Francois: It gives the business a more realistic idea of what to expect and where to spend its money.

Vernon: For sure. It helps the business move from estimated dates to more evidence-based planning and greater predictability. It provides early warnings. If one milestone is already late, the system can flag it to help you avoid missing your delivery date.

That gives the business the opportunity to contact the supplier or freight forwarder, mitigate the risk, adjust stock planning, change the transport mode or, most importantly, inform clients in advance that there are going to be delays.

Francois: Moving on to something that's been a buzzword over the last few years: artificial intelligence.

Where does AI fit into all of this?

Vernon: That is definitely a buzzword, and we're getting a lot of questions about it from our clients. There's a lot of investment from clients, freight forwarders and partners in AI for predictability, as we just mentioned. AI becomes valuable when there's enough reliable data available, so you need to build up that data.

It can analyse historical orders, supplier performance, shipment movements, port delays and delivery records. From that information, it can identify patterns and help mitigate risk earlier.

For example, if a supplier is late with production and the vessel is already delayed, an AI-supported system can help assess the likely impact on inventory and customer orders. It can also help businesses compare different options.

That's where predictive planning comes into play, and it can make a real difference for a business. But AI is not a replacement for the white-glove experience. If the data is poor, the result is poor too.

That's why we need to give it time to build up data. Businesses still need to look at their processes, maintain accurate master data and involve people who understand the data and the operation.

Francois: It's not a one-size-fits-all silver bullet that means you're going to be sorted just because you have AI. We're talking a lot today about integration between partners in the value chain and supply chain. Why is it so important to connect with your suppliers, freight forwarders, transporters and other partners in your supply chain?

Vernon: Integration is important because each partner contributes information to the same process. It's about processes and mitigating risk. The supplier can confirm production, and the freight forwarder can provide booking and sailing updates earlier. The shipping line can provide vessel milestones.

On customs, a customs broker can update the clearances and related processes. On the final leg, a transporter can confirm the collection and delivery dates. This reduces the number of emails and phone calls, and gives everybody a clearer, more realistic view of what is happening.

It also helps prevent different parties from working with different versions of information. Information can get lost in translation if it's not provided correctly.

Francois: What are the risks of everything becoming so connected, with different businesses feeding into each other?

What are the risks that we need to look out for?

Vernon: If you look at cybersecurity, we've seen cyberattacks on shipping lines and websites before. We need to consider the risks and how we can mitigate them. The more systems and companies are connected, the more important it becomes to control who has access to those systems.

Businesses could begin with a purchase order management system, visibility or document control. They should define what success looks like, such as fewer manual entries, fewer errors, faster confirmations and lower demurrage costs, as we mentioned before.

The technology must also be easy for employees, clients and partners to use. If the system is too complicated, people will continue using informal Excel spreadsheets, as we've seen before. It can be overwhelming for somebody to use a new system they don't understand.

Francois: In closing, Vern, if you had to give importers one key message about digitalisation, what would that message be?

Vernon: Technology should be used to create better visibility and enable earlier decision-making. The objective is not simply to have another software system. It's to make supply chains more predictable, more responsive and more cost-effective.

Businesses should focus on connecting their purchase orders, suppliers, logistics providers, documentation and shipment milestones for visibility. Once the information is connected and reliable, businesses can begin to use analytics and AI to predict problems, manage lead times and improve overall customer service.

Companies that invest in good data and strong integration will be much better positioned to manage disruptions and control costs in future, given what we're seeing in the market at the moment.

Francois: That's a very useful perspective. Technology is no longer just an IT issue. It's becoming a central part of every supply chain and supply chain strategy.

Vernon: For sure. Thanks, Francois, and thanks to everybody for listening to another episode of Importers Connect. Until next time, trade confidently.

Disclaimer: The views and opinions expressed in this podcast are for informational purposes only, and should not be considered financial, investment or other professional advice, guidance, or recommendations. Investec Business and Commercial Banking is a division of Investec Bank Limited, an authorised financial services provider.

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