The Considerations of Developing and Implementing An It System To Track and Trace Explosives in The South African Market

CIE42 Proceedings, 16-18 July 2012, Cape Town, South Africa © 2012 CIE & SAIIE
THE CONSIDERATIONS OF DEVELOPING AND IMPLEMENTING AN IT SYSTEM TO TRACK AND

TRACE EXPLOSIVES IN THE SOUTH AFRICAN MARKET
R. Holm1* and K. von Leipzig2
1
Department of Industrial Engineering
University of Stellenbosch, South Africa
16392868@sun.ac.za
2
Department of Industrial Engineering
University of Stellenbosch, South Africa
kvl@sun.ac.za
ABSTRACT
The mining industry accounts for roughly one-third of the market capitalisation of the
Johannesburg Stock Exchange, is a magnet for foreign investment, and employment represents a
significant percentage of the country’s total economically active population. Currently South
African mines have a renewed focus on safety and security. Section 54 of the Mine Health and
Safety Act has no doubt saved many lives, but still closures under this section, 6% of which can
be attributed to explosives control, are costing the industry up to R4.6 billion per annum.
This article investigates the manner in which the South African explosives industry is actively
changing the way explosives are controlled and explosive accessories are managed. The industry
is under extreme pressure to gain control over their final products due to on-going theft and loss
throughout the supply chain. A project was identified to track and trace explosives and explosive
accessories through the supply chain which in turn could highlight risk areas. The increased
visibility obtained from implementing a system and automating transactions is the key to the
success in identifying these risk areas and enabling authorities to focus their investigations and
establish proper control procedures.
*
Corresponding Author
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1 INTRODUCTION
The South African explosives industry is under pressure to gain control over their products due to
ongoing loss and even theft of explosives and explosive accessories, including detonators,
detonating cord and other initiation systems. The industry is busy changing the way they manage
explosives, and is also investigating how the use of technology can improve the flow of
information, increase visibility along the supply chain, and ultimate lead to better control.
The mining industry is of prime economic and social importance to South Africa. It plays a major
role in the South African economy, acts as a magnet for foreign investment, and is an important
employer particularly when one considers that each miner supports an average of seven to ten
family members. Currently the South African mines face major challenges with a renewed focus
on safety and security. They are primarily governed by the Department of Minerals and Energy
(DMR) which works under the governing principles set out in the Mining Health and Safety Act
(MHS) adopted in 1996. This act was brought into action as the South African mines were seen as
very unsafe and needed to be forced to bring safe practises into place. This department has
appointed inspectors with the power to close a mine should suspected unsafe practises be
noticed.
UASA (United Association of South Africa) has emphasised several times in the recent past that
although Section 54 of the Mine Health and Safety Act has no doubt saved many lives, the fact
that often all the activities at mines are halted while an incident only affects one specific plant
or a workplace, is costing the industry up to R4.6 billion per annum. (UASA, 2011) Currently the
mining industry loses a significant portion of their revenue due to section 54 closures, and 6% of
these closures can be attributed to explosives control. (Department of Mineral Resources, 2011)
Figure 1 below graphically depicts the various causes of mine closures.
Figure 1: Mine Closure Causes

Taking the above data into consideration the cost for the mining industry of not having proper
explosives control is around R280 million per annum. This is not only significant in terms of costs
but the risk in terms of theft of explosives, which can then be used for criminal activities, has
made the problem wider than the mining industry and the safety of the public has come into
question.
The Department of Labour (DOL) in South Africa has a branch actively looking at explosives
manufacturing sites, and has on numerous occasions indicated that the suppliers need to help
stop the theft of explosives and explosive accessories. The other regulating body for explosives
is the Chief Inspector of Explosives (CIE) who is appointed by the South African Police Service
(SAPS) to govern all movement and control of explosives before it reaches the
mines. They have also put significant pressure on the industry to adopt new ways of handling and
controlling explosives.
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Given the above, mining houses thus have a forced focus on improving their systems in terms of
safety and security. There is a dire need to obtain control over the handling of explosives and
explosive accessories, and the mining industry has turned to its suppliers for an answer on how to
address and hopefully solve the issues of control and tracking of explosives. This need is not only
required internally, as for instance automated teller machine (ATM) bombings are also on the
increase and the SAPS have made this a top priority to solve. Even though the criminal element can
never be addressed fully, by knowing where certain hot spots are the SAPS can focus their efforts.
This then poses the following question:
What is a good way to implement a solution for the South African Explosives industry to track
and trace explosives and explosive accessories?
By analysing the requirements from the Department of Minerals and Energy, Chief Inspector of
Explosives, and industry forums like NIXT (National Institute for Explosive Technology) it becomes
clear that the industry is looking for ways to change the manner in which it handles and manages
explosives and explosive accessories due to the current problems experienced.
The industry has also shown interest in using standards published in other countries. The Federation
of European Explosives Manufacturers (FEEM) has published guidelines for the identification and
traceability of explosives. The FEEM recommends that as a first prerequisite, an Application
Identifier (AI), e.g. a bar code, be printed on every single cartridge, detonator, detonating-cord and
other accessories.
A need for collaboration is also expressed and hence a second prerequisite is the creation of a
platform for shared information. In particular, there has to be clear visibility of downstream flow;
data on real movements needs to be captured as far down the chain as possible and shared with
upstream suppliers and authorities. There needs to be willingness amongst the stake holders to put
aside any previous mistrust and instead create an environment in which information can freely flow
in all directions in the chain. (Christopher, 2000)
2 SYSTEM DEVELOPMENT CONSIDERATIONS
2.1 Regulations Pertaining To Explosives Storage And Transport
Movement of dangerous goods is often very difficult because of the restrictive policies and
regulations that govern the movement of these types of products. Particularly in the case of
movement of dangerous goods across the world, there is no universal standard, and different
countries impose additional requirements over and above the regulatory requirements, or impose
more restrictive requirements. This places barriers against the movement of dangerous goods and
ads on to the cost and complexity for operators, shippers and others in the supply chain. (Brennan,
2010) As an example, all explosives in South Africa are governed principally by the Explosives Act (15
of 2003 as amended) and The Explosives Act 1956 as amended. Military explosives are additionally
governed by the Defence Act and National Conventional Arms Control Act. As soon as explosives have
to be transported, a number of other Acts come into play, such as the Railway Safety Regulator Act
, Occupational Health and Safety Act, Road Traffic regulations, Harbour regulations, and the
Merchant Shipping Act to name only a few.
All aspects regarding the security of these products remain a principal concern and are therefore
monitored very closely at all stages of the movement. As the CIE does not have the manpower to
do excessive inspections they rely on the suppliers to self regulate and adhere to all rules and
regulations with the understanding that if something goes wrong they will be held accountable.
This is based on a strong trust relationship and potentially might be abused by the
215-3
manufacturers. It can also be noted that it is a major risk to lose products or not know where
they are in the supply chain. The penalties for companies in this regard have significant
consequences.
The introduction of technologies like Bar Coding and Radio Frequency Identification (RFID) has
proven that it reduces the chances of theft, reduces staffing needs and allows better control.
(Delaney, 2004) There are other explosives tracking systems that are operational (Darnbrough,
2008) in other countries, but the concepts stay the same - the key is how the information is
used. Using tags, and with tracking technology having made huge strides in recent years, mining
companies can keep their eye firmly locked on the prize, tracking the progress of explosives
from ordering through delivery and onto final detonation. By using tracking technology, mining
companies can provide safe storage, security, tracking and regularity compliance in the use of
explosives.
Tracking systems can provide the magazine keeper with new resources to perform key tasks
better and achieve higher work efficiency while meeting all present and hopefully future
regulations. For the first time, both stock management and risk reporting can be generated in
both paper-based and electronic formats. “Paper-based systems provide a lack of traceability
once the explosives leaves the box, restricting personnel from fully understanding what is being
loaded into each blast hole,” Cash said. (IPICO Inc., 2006) “Real-time globally visible explosives
security is one of the best defences against terrorists who misuse explosives to manufacture
bombs”, said Bob Morhard, Managing Partner, ExploTrack, LLC.
2.2 Industry Dynamics
Although all the indication is given that suppliers and manufacturers of explosives will be
responsible for finding a solution, it also has to make business sense. Simply improving control by
means of physical checks and additional people will only add to the cost of a supply chain – on
its own this does not add value.
In order to develop a system, the specific interactions between one of the suppliers and
distributors of explosive accessories in South Africa have been analysed, and a system designed
for their particular needs. The design, however, is generic and handles all the basic needs that
an explosives company would need to control the stock throughout the supply chain. The
resulting formalised collaboration has had a major impact on the way they do business and this
meant that the supplier truly has “cradle to grave” control of products sent out. Once the
project was completed it could be seen that by having more real time data and by automating
transactions certain benefits were gained internally. These benefits could be quantified and
measured in terms of the benefits versus the cost of implementation.
Although this company was the first and currently the only explosives company in South Africa to
successfully implement a solution of this nature, on its own it does not necessarily give it a
significant strategic advantage. However, such a system will in all probability become a
qualifying requirement, i.e. in future one would not be allowed to enter the market without
one.
2.3 Inefficiencies In Current Control
The current state of the South African logistics systems is not as efficient as one might think,
with the industry incurring billions in unnecessary costs due to inefficiencies. This has two
implications:
Companies with considerable opportunities in cost and inventory reduction and customer
service improvements are prime acquisition targets for overseas multinational retailers or
equity players who add value and sell them on.
First movers who manage to address the supply chain challenge will have great
opportunity to reduce costs and improve service, and consequently gain market share and
margin ahead of the competition.
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In order to reform the SA explosives industry and avoid falling even further behind in the global
environment, a large and holistic supply chain effort is required, consisting of an integrated and
collaborative approach. Attempts to fix problems such as shrinkage, security, demand
forecasting, lead times and other silo-based problems in isolation will yield suboptimal value.
The most basic definition of visibility in the supply chain is the traceability of products in transit
from the manufacturer to the final destination. These could be parts or components used to
make a final product or the final product itself. In a broader sense, visibility is the increase of
available data that can be analysed to make recommendations and determine strategies to
improve and strengthen a supply chain. There are certainly different levels of visibility, but as
risks in the supply chain continue to exist and customer demand continues to be less
understanding of disruptions, more companies are recognizing the importance of creating and
managing a visible supply chain. (KLCI Research Group, 2002)
Share
Analyse
Integrate
Capture
Real-‐
Time
Data
Figure 2: Steps in Utilizing Information
Significant cost savings and improved efficiencies are achieved through effective supply chain
optimisation. This is supported by the implementation and use of appropriate technology. An
example of this is through track-and-trace technology whereby real-time information determines
whether distribution points have the right inventory and right inventory levels. (Dutton, 2009)
Real-time information creates visibility, and details of individual lanes, routes and facilities
become apparent. The success of supply chain collaboration is built on information. All parties
need to have visibility and sufficient information to make the best decisions. (Barloworld, 2006)
As can be seen in Figure 3, South African logistics companies spend a lot more on administration
than most other countries. One major reason for this is the fact that many SA companies rely on
manual data entry, and that the way ERP systems were implemented in South Africa is lacking on
capturing and automated updating of data in ERP systems – this definitely was the case with the
company under consideration.
215-5
Figure 3: Logistics Cost Components as a Percentage of Total Logistics Costs for Selected
Countries (Rantasila, 2010) (CSCMP, 2009) (ILOS, 2010) (Business Wire Media, 2010)
Efficient supply chain control is dependent on access to real-time information that is critical for
controlling the flow of products, services and information between suppliers and customers.
Recent developments in technology and standards have enabled more efficient solutions for data
capturing, storing and sharing in a supply chain setting. In traditional supply chain inventory
management, orders are the only information that firms exchange, but information technology
now allows firms to share demand and inventory data quickly and inexpensively. (Ghomi & Azad,
2009) Such a system and the requirements for visibility in a supply chain are illustrated in Figure
4.
215-6
Transport &
• Tags/Labels are matched
Storage • Delivery Note scanned to Delivery
to specific batch make sure correct
products • Magazine Clerk receives product loaded • Customer Confirms
• Scanned as complete out product • Bill of lading confirmed correct products
of building • Verifica�on that all that received
was made is received
Produc�on Loading
Verifica�on that scanned

item is correct
Catogorise
accordingly
Enable
transac�ons
Produc�on
Warehousing
Loading
Invoicing
Backflush Verify that no Verifica�on that Invoicing or Plant

produc�on product is lost customer order is to plant tranfer
Verify actual count between matched to done
with scanned qty produc�on and product loaded Move individual
storage Track every box to boxes to that
Track all labels not
used Ac�vate boxes as a specific customer customer
ready for sale Enable system to
Reconcilia�on to invoice
manual count and
SAP
SAP
Figure 4: Bringing It All Together
By using technology as an enabler to business processes and focussing on the correct systems a
solution can be designed to encompass and control most risks relating to control and information
of explosives.
215-7
3 A WAY TO IMPLEMENT A SOLUTION FOR THE SOUTH AFRICAN EXPLOSIVES INDUSTRY TO

TRACK AND TRACE EXPLOSIVES
Transporting explosives is an administrative intensive task in general. In the case, the cost of
administration in the logistics and manufacturing side was roughly 1% of the revenue generated
for the two companies. The risk however of not doing the administration correctly was a total
shut down of operations. The need therefore to get a system working correctly and as soon as
possible was of key importance to the business.
There are real benefits in information sharing and having it real time. Integrating and
coordinating supply chain operations is widely considered a prerequisite for achieving high
efficiency and competitiveness. Focusing on the performance and competitive situation for the
entire supply chain rather than a single company is a trend in several industries. The supply
chain perspective implies an increased need for orchestrating a broad set of activities, resources
and companies, often with decentralised geographical structure and high complexity (Busi &
Dreyer, 2004) (Chopra & Meindl, 2007) (Jonsson & Mattsson, 2003) (Rudberg & Olhager, 2002)
For an explosives tracking application to be effective, it needs to be accurate, safe and secure,
as well as cost effective while providing clear chain-of-custody and authentication in extremely
fast-paced, dynamic environments, with large volumes of explosives moving throughout the
global supply chain. The system should also provide real-time explosives security and inventory
control by monitoring and tracking explosives and detonators from production through logistics,
storage and use throughout the South African explosives supply chain.
The scope of this change was to improve the integrity of the data and information in the supply
chain with the means of an ERP system that receives its inputs from automated data inputs. This
would help significantly with traceability of outbound products through the supply chain. The
system was developed as a solution to integrate and automate transactions between the
companies. The key focus was to trace individual boxes and all their movements, track
individual product movements, do the financial transactions on the ERP system and create a
platform to share this information across the supply chain. Figure 5 is a visual interpretation of
this with the most important issues that were addressed.
•  Keep Tracebility to see

where box is or was
delivered
•  Keep Batch Informa�on for
Reverse Logis�cs
Trace
Individual
Boxes
•  Web Based Pla�orm
•  Log in with Unique ID
•  Access to Relevant
Informa�on
Track
Product
Movements
•  Capture real �me
movements
•  Do ERP transac�ons
•  Queue Worklfow Share Informa�on
Movements with Authori�es and
Customers
Figure 5: The Key Drivers Of The System
215-8
As can be seen in the high level process overview in Figure 6, all movement points are captured
by scanning every box. The data is uploaded to a central server and processed in the workflows.
It is imperative to keep a database of transactions as the current ERP system does not have this
capability. The transactions are queued to the ERP system and completed when the ERP system
is available.
Process Overview
Configuration & Production Dailly

Planning Production
Sales Storage
131 & 261 Movemen
311 Movement
Distribution 313 315

Customers Movement Movement
Quality Manager
Onsite
Returns
Magazine 1 Magazine 2
Offsite Storage
Figure 6: Flow Of Materials And Transactions Automated

The system can be seen as a traceability layer on top of the current ERP system with
asynchronous connectivity keeping the ERP system as real time as possible in terms of all the
financial transactions. This enables the two companies to have a virtual look at all stock
currently in the system and not rely on the paper system that was used previously. It also
enables sharing of information on a standard platform, making planning more efficient and
effective.
Knowing where your products went also enables the companies to effectively recall boxes with
quality defects. It also answers the questions asked by the CIE when boxes are found in non
permit holders hands – where did the box come from? Every box that is manufactured has a
unique label that can be interrogated in the system in terms of where it is and how it got there.
By including the date stamp and batch number it makes it easy to interrogate the system for the
specific box’s movements. The production personnel, magazine clerks and freight controllers are
also issued with a username and password to make sure accountability of transactions are kept,
and this forces ownership of transactions to the correct level of employees i.e. the people
actually moving the product and not an administrator sitting in an office. The move away from
manual entries decreases the risk of making mistakes.
The reporting on the website is easy to access and reports on batches, individual boxes or people
can be drawn to interrogate where the stock is and who moved it. As can be seen in the example
in Figure 7, the user who is logged in can interrogate all the boxes in a batch with their current
215-9
status as well as the supporting documentation for the movements. The user details of the
person that handled the boxes are also captured.
Figure 7: Tracking Of Individual Boxes To Customer
Integrating the manufacturing, storage and deliveries real-time onto one system means that
control over the entire supply chain is gained. The current system is estimated to have 98 %
accuracy on all products delivered. This is a very significant change from the paper system
where virtually no box traceability existed. In all the product recalls that were issued in the last
two years of the project running there was only one instance where all boxes could not be
accounted for. Previously this entailed phoning every customer who receives similar products
and asking them to go through their magazine to look for the batch in question. Certainly this
leaves an impression of not knowing what is going on in the operations?
The benefits and value of a standardised industry platform and a standard communication
process included:
Improved operational efficiency and simplified processes, reducing paper dependency
and duplication;
Standardisation for both data and format, improving processing time;
Efficient use of resources, thus increasing productivity;
Improved communication between trading partners;
Electronic updates tracking and maintaining a record of processes, with secure business-
to-business communication;
Risks could easily be identified and addressed;
Economies of scale by two companies using same infrastructure platform;
One system vs. several integration points meant one port of call for information;
Reduced investment requirements for hardware, software and expertise (making
effective use of the internet for low-tech user access) at all points, which are all
centrally managed; and
Decreased wrong deliveries.
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Figure 8 is a graphical depiction of the three biggest contributors to success on this solution.
Visible
Box Real �me Shared Supply
Traceability Transac�ons Pla�orm
Chain
Figure 8: The Solution Components
The system meets all the potential legislation requirements and also made it easier for the
business to track and trace their products through the outbound supply chain. The information
that is now available provides the regulating bodies with the potential risk areas in South Africa
and they can focus their efforts in these areas rather than spreading resources thin to try and
find the source of loss or theft. The system has great potential to solve the security concerns,
but it also now places the responsibility on the mining houses to make sure they have proper
security systems in place.
Other intangible benefits include reduction in lost sales due to increased visibility into existing
inventory (knowing what’s in your backroom so you can eliminate out-of-stocks), improved
customer service due to timely delivery of orders, and more confidence in managing the supply
chain due to accurate, real-time knowledge of location of products moving in the supply chain.
Apart from tracking of explosives the solution implemented also showed some real monetary
benefits. The difficulty is to separate benefits of focussed leadership in this area from real
benefits gained from the system.
The following data was retrieved from the ERP system to see how many of the transactions were
automated. The number of transactions done by normal administrators and the system are
tracked separately. This is broken down into three types of movements: Backflushing, Stock
Movements, and Sales. A clear trend can be seen in the reduction in manual administrative
functions. This time “saved” resulted in two administrative personnel members being completely
freed up as resources and moved to a different department.
215-11
Automated vs Manual Transac�ons

60000
Phase 1 Phase 2
50000
40000
30000
20000
10000
0
Jul-‐09
Aug-‐09
Apr-‐10
Jul-‐10
Aug-‐10
Oct-‐09
Mar-‐10
May-‐10
Dec-‐09
Oct-‐10
Sep-‐09
Jun-‐10
Nov-‐09
Feb-‐10
Sep-‐10
Nov-‐10
Dec-‐10
Jan-‐10
Transac�ons done Manual Total Transac�ons Automated Total
Figure 9: Decrease in Cost of Admin

The customer experience can also be measured by tracking the Full Order on Time (FOOT) and
looking at trends on customer complaints. This should indicate whether your customer is
satisfied with the system that is used to support movement of products to the mines. Customer
complaints decreased significantly with scanner checking every box for accuracy.
4 CONCLUSION
Technology enhancements on an Information System like bar coding or RFID help streamline
systems and contribute to having accurate and real time data. Ultimately to get control over the
supply chain real-time, accurate and accessible information is needed. Once control is achieved,
the information needs to be shared and this adds value to the whole supply chain.
In an attempt to thus answer the question asked originally, namely “What is a good way to
implement a solution for the South African Explosives industry to track and trace explosives
and explosive accessories?” was to create a technology enabler on the ERP system to capture
individual box movements throughout the supply chain and share this information with
regulatory authorities as well as customers. This then highlights where most theft or losses occur
and the focus can be moved to those areas.
The future of the industry is yet to be determined but the recommendation is to establish a
group of technical experts through an institution such as the SABS to establish a standard for the
industry. With this in mind, a steering committee consisting of suppliers of all tiers of South
African industry should be set up to aid the CIE and DMR in determining which direction to
follow. The steering committee should meet on a quarterly basis to give feedback on progress
made in the programme, and to acquire input for future endeavours.
Significant gains were made in the supply chain from this project and the following were
measured:
Customer complaints related to loading errors were down by 76%;
FOOT increased by 1.8%;
Administration costs went down by approximately R50 000 per month;
Real time visibility decreased the effect of the bullwhip effect, and working capital
requirements decreased;
Control over discrepancies has increased and are noted by a decrease in necessary
adjustments.
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It is important to note that these were not the initial reasons behind the project but spin-off
benefits from enabling the processes by means of technology.
This study is important and worthwhile because it outlines the fact that technology does not
always solve the problems, but when used as an enabler on top of proper business processes they
become invaluable to the business. The results as described in this paper are evidence of that.
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The Considerations of Developing and Implementing An It System To Track and Trace Explosives in The South African Market

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The Considerations of Developing and Implementing An It System To Track and Trace Explosives in The South African Market

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CIE42 Proceedings, 16-18 July 2012, Cape Town, South Africa © 2012 CIE & SAIIE