Finding a professional warehouse operator can be a daunting experience. Many warehouses for rent are poorly designed, with poor yard management, ventilation and equipment. Often key components such as the receiving, staging and dispatching areas are overlooked or are provided with inadequate space. Many 3PLs also lack the required capability development and incentive schemes to motivate their workforce. For management, it is better to manage expectations and closely work with local operators. Local operators allow organisations to tap into a lower cost structure and can also provide greater flexibility. Organisations sometimes need to play an active part in capability development and setting incentives and rewarding partners. However, there is an increase in the number of professional 3PLs operating in the African continent. A number of South African and European operators are setting up shop or making strategic acquisitions in the continent.

Prior to purchasing a large fleet, management need to understand how markets operate and whether it makes sense to operate a fleet or to outsource, rent or lease. There are many large established multinationals in Africa that outsource their transport requirements, often to small independent transporters that cover smaller towns and regions. Road conditions will also affect transport costs. Transport costs escalate the rougher the road, as transporters need to factor in truck maintenance. For smaller organisations there are real opportunities in collaborating with companies to consolidate shipments. I often run into companies that effectively tap into the African bus system to courier goods around the country, often with great success and at much lower cost.

When operating a fleet, it is important to assess the make of vehicles that have readily available spare parts and maintenance in the country. An organisation in South Sudan discovered that their particular make of vehicles could not be serviced in the country. The vehicles had to be driven back to Kenya for service as there were no spare parts available in the country. In extreme cases such as South Sudan, finding qualified technicians can also be a major obstacle.

Skills and technology

For many organisations, creating visibility in their African supply chains can be a major challenge. Integrating ERP (Enterprise Resource Planning) and other tech systems provide challenges. Increasing visibility can take time and might include a combination of technology and manual processes. Manual labour remains relatively cheap, and for many organisations manual processes can save money. In many operations hardcopy paper flow will remain and will likely coexist with information technology systems. African businesses are also increasingly evaluating mid-tech solutions and identifying the appropriate technology (such as mobile phones) for their operations. For many organisations, mobile sales automisation and m-banking provide real opportunities.

African supply chains provide a number of challenges for organisations and integrating supply chains will take time. Often organisations need to play an active role in capability development, as supply chain skills are often in short supply. Organisations need to rethink technology solutions, as sometimes old school approaches and a local mindset can reduce the complexity and increase profitability in the early development stages. Organisations should take time to understand individual markets and stay clear from the oversimplification or generalisation so readily on offer.

Tielman Nieuwoudt is principal of The Supply Chain Lab based in Johannesburg, South Africa. The Supply Chain Lab is a group of supply chain improvement specialists with a focus on factory to village supply chain solutions in emerging markets.