Some years ago, I attended a supply chain conference in South Africa addressed by an impressive list of speakers from South Africa, Europe and the US. One of the sessions focused on supply chain trends, presented by a well-known supply chain thought-leader from the US.
Directly after the conference, I flew to South Sudan on business. The trip to the capital Juba was a good reminder of the gulf between supply chain issues in developed and emerging markets. South Sudan is an extreme example as the world’s newest nation – but sub-Saharan Africa is still in the very early stages of supply chain development.
In the developed world, key trends revolve around big data, demand planning, collaborative relationships, process integration, and nearshoring (transferring business to nearby countries). While demand planning, process integration and collaborative relationships are very relevant to African supply chains, the development stages differ substantially.
Big data refers to analysing large amounts of information. For example, in developed economies such as the US, improved demand planning is increasingly driven through big data and new approaches to better forecasting demand. For deliveries, Big data can enable companies to determine the best times of shipments, with the aid of traffic and truck GPS data. Data will help them to make better decisions, reduce cost, and make customers happier in the process.
However, African supply chains are far from drowning in data. Many organisations across the continent are still in the early stages of determining customer demand and implementing relevant Enterprise Resource Planning (ERP) software. I often encounter companies in which the focus is more on automating back-office functions (think 1990s ERP in the US) than on managing relationships with customers and suppliers.
African businesses are also increasingly evaluating mid-tech solutions and identifying the appropriate technology (such as mobile phone communication) for their operations. Manual labour remains relatively cheap, and for many organisations manual processes can save money and high tech automated solutions, less of a priority.
When assessing warehousing and transportation challenges, the key issues are often more basic. Some examples include finding or constructing a suitable warehouse space; investing in material handling (e.g. forklifts) and purchasing the right storage equipment. Companies are increasingly outsourcing distribution and warehousing to a small but growing network of third-party logistics companies. These organisations want to improve transportation management through improved fleet maintenance, tracking, and network design.
Just like their developed market counterparts, African companies are striving for increased visibility, but often, their goals remain more focused on the internal organisation rather than suppliers and customers.
Companies are driven to reduce inventory and cost through better information. However, this information is a mix of electronic and paper-based systems. In supply chains in African businesses, the challenge is not big data, but simply data. And you don’t have to travel to Juba to experience that.
First published in How we Made it in Africa