Abstract
M.Comm.
The methodology of supply chain optimisation is a fairly new concept in the field of logistics management and is also referred to as value chain optimisation. This short dissertation explores and describes the effects of a national improvement in supply chain processes on the sales and profitability of RS Components SA. The study contains discussions from various theoretical disciplines and includes topics such as customer service, customer satisfaction, customer loyalty, logistics management and supply chain methodology. The link between the performance of the logistics processes and perceived customer service levels is also discussed in detail. Finally the study will show how improved logistical performance can lead to improved levels of customer satisfaction, which in turn leads to customer loyalty and increased profitability. In order to improve the organisation's national supply chain, RS Components SA decided to open a new Trade Counter in the Cape Town sales region. Before the opening of this Trade Counter however, improvements were made to the national logistical network to ensure seamless integration of the new sales branch as a fully operational warehouse. Various financial indicators were measured for the year after the opening of the new Trade Counter in Cape Town, in order to compare such figures to the year prior to the opening of said Trade Counter. The primary results were as follows: Sales for the Cape Town sales region have increased by a greater margin than originally budgeted for. The sales growth target was exceeded by 30.21%. The number of invoices generated for the year after the opening of the Trade Counter in Cape Town has increased steadily while the average invoice value has shown no mentionable growth. This indicates that the Trade Counter in Cape Town has spurned a greater percentage of repeat purchases and that sales have not merely increased due to bigger sales orders. Growth in the number of individual purchasing customers for the Cape Town region also reached a staggering growth of 71.71% compared to the growth target of 45%. Substantial growth was also achieved throughout the year for the number of Trade Counter visits to the Cape Town Trade Counter. Whilst staggering growth rates were achieved in all of the above-mentioned categories, overhead expenses came in lower than was originally budgeted for the Cape Town sales region. A saving of 3.65% was achieved against a sales growth of 75.21%. In conclusion, this study indicated an increase in sales and profitability in the Cape Town sales region. Based on the success achieved through supply chain optimisation, both in terms of increased revenue as well as perceived levels of customer satisfaction, a recommendation is made for further expansion of the supply chain network of RS Components SA through the opening of a new Trade Counter in Durban.