Johannesburg, 23 Jul 2018
In an interview on EE Publishers in April 2016 about the role the local electronics manufacturing industry can play in South Africa's industrial development, Hans van de Groenendaal, features editor of EngineerIT, wrote: "The electronics manufacturing industry can play a bigger role in South Africa's industrial development and grow the country's exports, thereby creating more real jobs."
In 2017, Euromonitor International reported that "despite challenges, consumer electronics continued to record positive growth in 2017, with an array of categories registering double-digit retail growth volume".
But, margins are still under pressure in this burgeoning industry.
According to Craig Johnston of Bluekey Seidor, the leading SAP Business One partner in Africa: "The electronics industry is an extremely commoditised market that is characterised by cost pressures and low margins. Companies are heavily regulated and have to adhere to strict safety measures and production guidelines when producing electronic components. It is a highly competitive industry, with new innovative manufacturers that constantly enter the electrical realm."
For SMEs within the electronic components industry, being able to make informed decisions around procurement is essential, with one industry insider noting that you can't manage what you can't measure. Onerous stock control processes can actually cost you money.
"Carrying excess stock for extended periods of time can be a significant financial burden for manufacturers and distributors of electronics," says Johnston. "For a company that manufactures PC boards, for example, the challenge lies in the fact that a single PC board can consist of hundreds of small components. This can be a nightmare to manage if done manually."
An integrated system streamlines inventory management and optimises purchasing to ensure project budgets and manufacturing time-frames can be met. Knowing the lead times of your suppliers for ordering parts and having real-time information about stock levels means management is able to make informed decisions around procurement. For example, with the correct information, managers would be able to make more profitable decisions to capitalise on discounts and could place bulk orders at a reduced price to match demand. This level of supply chain visibility and real-time insight may have a positive effect on profit margins.
According to the DTI (2014), the electrotechnical sector accounts for 12.5% of South Africa's gross domestic product (GDP). The country's consumer electronics spending is expected to grow at a compounded annual average growth rate of 7.3% to reach USD10.6 billiion by 2018, from USD6.4 billion in 2010.
"This means that the electronics industry has enormous potential in South Africa," says Johnston. "Small and medium manufacturers in the local electronics industry need to switch to the right business management systems to ensure their businesses stay current."
Share