Integrated Annual Report 2021
Integrated Annual Report 2021

Delivering a best-in-class Supply Chain network

Our mission

Enable a reliable and agile end-to-end omnichannel Supply Chain that is a competitive advantage for Massmart and delivers the customer promise at the lowest cost to the value chain.

Our goals are to:

  • Drive the best cost-effective availability
  • Reduce operating costs
  • Optimise our working capital
  • Increase Supply Chain centralisation
  • Run a completely funded network
  • Transform our Supply Chain to support our omnichannel strategy

 

Our strengths

340,000m2 distribution capacity

A substantial footprint in South Africa with over 340,000m2 of distribution capacity in 13 nodes.

3 state-of-the-art omni DCs

Consolidating our network to cater for our customers’ needs by building three state-of-the-art fully omni DCs.

Servicing leading banners

Servicing a combination of leading banners in both the Retail and Wholesale space from the same nodes.

Walmart-backed technology

By leveraging our Demand Forecasting engine, based on Machine Learning algorithms from Walmart, we will significantly improve how we interpret demand and execute our ordering and fulfilment.

Overcoming challenges during the year

Global supply chain challenges and the Covid-19 pandemic
During 2021, the world saw significant impacts to supply chains across industries from the pandemic as well as container shortages and rate increases. Through the work and focus of our Massmart International Commerce Team, we were able to limit shipment delays at the port of origin such that only 17% of our indent volume was affected. We also managed to maintain fixed ocean rates during 2021, thus avoiding significant landed costs. Despite shipping delays, Supply Chain was able to source all indent articles on-time for our peak trading season and achieved record in-stock numbers for products imported directly by the Company. We were however, negatively affected by delayed stock deliveries in the electronics and appliance categories.

Impact of the civil unrest
The civil unrest that took place in South Africa in July 2021 resulted in significant damage to our two DCs in KZN: Cato Ridge and Riverhorse. To address the impact of this damage we responded swiftly by re-opening our operations in Surprise Road (a facility we had vacated in May 2021 as part of our Network consolidation programme) in just three weeks in August of 2021; and we brought forward the opening of two of our three new DCs in both Gauteng and KZN by an average of five months from their original opening date.

Read more detail on our year of unique challenges

 

Leveraging Walmart expertise

Our ability to leverage Walmart’s Supply Chain expertise has allowed us to focus on improvements in our upstream processes for flowing products. We also established new ways of working, a best-in-class Walmart International market structure and achieved over 230bps of improved product availability to support sales. Global partners of Walmart’s network assisted us with our Vendor Fill Rates and on-time in-full performance, which was a key focus area of ours during 2021.

Supporting our omnichannel growth strategy

The progress we made with our transition to a digitally enabled, cross functional end-to-end omni Network during the year under review included developing the functionality to expand customer pickup areas in two of our three DCs and transitioning our network into a full omni Network with our first Fulfilment Centre expected to go live in Gauteng in the second half of 2022.

The progress we have made with our journey thus far will allow us to extend our online offering, expand our footprint into all our Regional DCs and commence the repurposing of our LIDs into full omni nodes capable of serving all banners and all customers directly.

Portfolio optimisation

Part of our optimisation project is to consolidate our DCs to provide more efficient cost-effective services to our customers. Since we began this journey we have seen a significant reduction in rental expenses and an overall decrease in total square meters operated following the shutdown of the following DCs:

  • Airport DC serving both Makro and Game
  • Cambridge Denver DC
  • Cambridge and Builders Surprise Road DCs (had to be re-opened to accommodate for the losses in KZN).

The future of Massmart’s Supply Chain

Leveraging Walmart’s SMART Forecasting tools (with Machine Learning capabilities) should allow us to better serve demand (both online and offline) by having the right product, at the right time, in the right place. SMART allows for more than 500bps of increased forecasting accuracy, which drives product availability up, and also allows for the reduction of safety stocks.

The information used by SMART is derived from a set of data feeds which includes historical sales, on-shelf availability, product seasonality, local festivities, pricing, weather events, sporting events and other data sources we think might be relevant to demand calculations.

 

Read more detail on our strategy