Economic volatility and changing market demands require not only an effective long-term capital investment strategy, but a flexible approach to business based on an accurate understanding of the environment.
This is the view of Mike Hellyar, Managing Director of Air Products South Africa, who was speaking at the gala dinner which Air Products South Africa sponsored at the third African industrial gas conference hosted by Gasworld, held at the Indaba Hotel from the 20th to 22nd May 2013.
The conference, entitled ‘Future Investment and the Supply Chain’, brought together stakeholders in the industrial gas industry from around the world to discuss, among others, issues pertaining to market trends, investments and supply chain dynamics.
“The shifting financial sands of our global economy have in recent times amply demonstrated just how unpredictable markets can be. Consequently, many companies have been forced to fine-tune or adjust their once cast-in-stone strategies,” Hellyar said.
“Organisations have been forced to sit up and realise that, unless they keep their fingers firmly on the pulse of the environment in which they operate, and become finely attuned to market changes, their businesses will slowly erode and become less sustainable in the long term.”
For Air Products, a critical part of ensuring its long-term sustainability has involved a shift in focus from production to security of supply, in line with the company’s customer-centric approach to its business and resulting from the driving force of economic change.
A supply chain company
“Producing gas has always been our primary function, but a variety of market demands and drivers have forced us to focus on optimising the way we supply and service the end market. We therefore no longer see ourselves as a gas company.”
“We are a supply chain company. As such, we have built a solid industry reputation for security of supply and operational excellence in the provision of quality gas products while adhering to the strictest standards of safety,” Hellyar commented.
Long-term investment choices
Air Products South Africa, which manufactures, supplies and distributes a diverse portfolio of atmospheric gases, specialty gases, performance materials, equipment and services to the Southern African region, sees long-term investments as the key to creating supply chain capacity and ensuring the future sustainability of the industry.
“The key to good operational strategy and long-term success is about identifying and managing not only risk, but also opportunity. This includes making the right long-term investment choices for one’s business.”
“Long-term investments build supply chain capacity, while attracting other business opportunities and development in the process,” Hellyar noted.
Citing Air Products’ recently announced investment in the first Air Separation Unit (ASU) of its kind in the Coega Industrial Development Zone (IDZ), he added that, together with several other key investments, this will form a national footprint of sound gas-producing infrastructure across South Africa.
Innovation + communication = a great supply chain
In recognising the complexities of the supply chain, which are often underestimated, he advises that enough emphasis should be placed on the role which people play, and critically, the role of communication.
“For a great supply chain which really works, one needs broad-thinking people, who think flexibly and efficiently, always keeping in mind the overall interests of the company,” Hellyar remarked.
“It is also important to encourage a knowledge-sharing organisational culture, which is critical when keeping in mind the overall company strategy.”
“We believe that, in order to maintain a leading position in the gas industry, an effective supply chain based on open channels of communication, is non-negotiable. This is crucial in the process of monitoring market demand and maintaining close relationships with our valued customer,” he continued.
People – the most important investment
However, an industry is only as good as its people, he noted. “The individual emphasis which we may place on security of supply, safety, quality, innovation or continuous improvement, will have no lasting benefit if we do not focus on the single most important element we all have in common: our people.”
He maintained that the success of the gas industry in South Africa has largely been built on the contribution of generations of committed individuals who were dedicated to promoting and safeguarding the future of the industry.
Gas in one’s blood
“The industrial gas industry is in one’s blood”, he said, referring to two ex-Air Products South Africa directors, now retired, who attended the conference - Mike Gaade and Albert Spencer. “Both men are respected as industry veterans, and they contributed substantially - not only to the success of Air Products South Africa, but to that of the industry as a whole.”
The importance of the quality and calibre of a company’s people cannot be over-estimated, in Hellyar’s view, in particular those individuals who display a wide knowledge of the industry, and who are flexible and creative in their thinking when it comes to pin-pointing the most innovative solutions to industry challenges.
Rising costs mean the supply chain must ‘rise to the occasion’
“Economic unpredictability is not the only challenge facing this industry. It is no secret that rising operational costs - in particular those associated with electricity and transport - are exerting pressure on the gas industry and forcing companies to rethink their supply chain strategies.”
“The supply chain should be seen as a network of various entities which interact, rather than a linear ‘chain’. As a network, this body needs to be flexible enough to respond creatively to the environment, which includes changes in power and fuel costs.”
Hellyar mentioned a number of ways in which these challenges may be met, including analysing and improving a customer’s on-site inventory storage and cost management, which can equate to increased reliability and security of supply.
The success of one is the success of many
“The old adage ‘your success helps many, your failure helps no-one’ holds very true for the industrial gas industry. This applies throughout the supply chain, and to the other stakeholders involved. From the creation of jobs for our employees to worthy projects for our corporate social investment beneficiaries, the individual success of each and every one of us has a positive, ripple effect.”
“May the future therefore allow each and every one of us to attain sustainable success: in our own right as individual businesses; and as members of the greater industrial gas industry in Southern and pan-Africa,” Hellyar concluded.