Case Study Of Tongaat Hulett Sugar Company
Executive summary
At the request of Tongaat Hulett Sugar SA an investigation was launched into the current stockholding model used at their South African operational centres. A model of de-centralised stockholding has been used for the last decade due to constraints on the accessability to some of the more rural locations.
The question was raised whether it was time to look at a more centralised stockholding model and whether the stockholding can be utilised in a more efficient manner, reducing the inventory monetary value, raising availability and the use of spares to bring down overall levels as well as identifying redundant stock due to accessibility from off the shelf.
A thorough stakeholder analysis was conducted as the starting point …show more content…
The company has three business units, being Tongaat Hulett Sugar (THS), including the animal feeds business, Voermol Feeds, Tongaat Hulett Starch and Tongaat Hulett Developments. The Huletts sugar brand is one of the top food brands in the country and recipient of many awards.
TH balances the operational requirement for sugarcane supplies to its cane processing operations with other priority uses of agricultural land and its transition to higher value uses at the appropriate times. The current focus prioritises the business leveraging its asset base in six Southern African Development Community (SADC) countries in which it operates, being South Africa, Botswana, Mozambique, Namibia, Swaziland and Zimbabwe. (Tongaat Hulett, 2015)
THS continues to focus its energies on cane growing, sugar milling and refining at its operations throughout the Southern African region. It has four mills in South Africa, two mills in Mozambique, two in Zimbabwe and extensive cane operations in each of these countries as well as Swaziland. In addition to its raw sugar capability Tongaat Hulett Sugar South Africa (THSSA) has a central refinery in South Africa with an annual refining capacity of some 600 000 tons. (Tongaat Hulett, …show more content…
Each centre carries inventory in the following categories:
• Strategic spares (centre specific)
• General stock items
• Plant spares common to one or more centre
• Consumables
• Fuels, oils and lubricants
The questions remains whether this stockholding can be utilised in a more efficient manner, reducing the inventory monetary value, raising availability and the use of spares to bring down overall levels as well as identifying redundant stock due to accessibility from off the shelf. (Van den Berg, 2015)
1.2 Business need
The financial impact of maintenance, repairs and operational (MRO) spares can have a severe impact on a company the size of TH. During the 2013/14 financial year the TH group spend R1 030 billion on MRO spares, 15% of this, R159 million, was spend by THS. (SAP Implementation,
At the request of Tongaat Hulett Sugar SA an investigation was launched into the current stockholding model used at their South African operational centres. A model of de-centralised stockholding has been used for the last decade due to constraints on the accessability to some of the more rural locations.
The question was raised whether it was time to look at a more centralised stockholding model and whether the stockholding can be utilised in a more efficient manner, reducing the inventory monetary value, raising availability and the use of spares to bring down overall levels as well as identifying redundant stock due to accessibility from off the shelf.
A thorough stakeholder analysis was conducted as the starting point …show more content…
The company has three business units, being Tongaat Hulett Sugar (THS), including the animal feeds business, Voermol Feeds, Tongaat Hulett Starch and Tongaat Hulett Developments. The Huletts sugar brand is one of the top food brands in the country and recipient of many awards.
TH balances the operational requirement for sugarcane supplies to its cane processing operations with other priority uses of agricultural land and its transition to higher value uses at the appropriate times. The current focus prioritises the business leveraging its asset base in six Southern African Development Community (SADC) countries in which it operates, being South Africa, Botswana, Mozambique, Namibia, Swaziland and Zimbabwe. (Tongaat Hulett, 2015)
THS continues to focus its energies on cane growing, sugar milling and refining at its operations throughout the Southern African region. It has four mills in South Africa, two mills in Mozambique, two in Zimbabwe and extensive cane operations in each of these countries as well as Swaziland. In addition to its raw sugar capability Tongaat Hulett Sugar South Africa (THSSA) has a central refinery in South Africa with an annual refining capacity of some 600 000 tons. (Tongaat Hulett, …show more content…
Each centre carries inventory in the following categories:
• Strategic spares (centre specific)
• General stock items
• Plant spares common to one or more centre
• Consumables
• Fuels, oils and lubricants
The questions remains whether this stockholding can be utilised in a more efficient manner, reducing the inventory monetary value, raising availability and the use of spares to bring down overall levels as well as identifying redundant stock due to accessibility from off the shelf. (Van den Berg, 2015)
1.2 Business need
The financial impact of maintenance, repairs and operational (MRO) spares can have a severe impact on a company the size of TH. During the 2013/14 financial year the TH group spend R1 030 billion on MRO spares, 15% of this, R159 million, was spend by THS. (SAP Implementation,