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. During my visit to the capital Juba, I was once again reminded of the gulf between supply chain issues in developed and emerging markets. While South Sudan, as the world’s newest nation, is an extreme, most of sub-Saharan Africa (excluding South 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 forecast demand. Big data could be employed to better manage delivery, such as analysing traffic and truck GPS signals to determine the exact time of delivery, and therefore make better decisions. 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 and business units 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.
A number of African businesses are also increasingly evaluating mid-tech solutions and identifying the appropriate technology (such as mobile phone communication) for their operations. In addition, manual labour remains relatively cheap, and for many organisations manual processes can save money.
When assessing warehousing and transportation challenges, the key issues are often more basic. Some examples include finding or constructing suitable warehouse space; investing in material handling (e.g. forklifts) and storage equipment like racks; outsourcing distribution and warehousing to a small but growing network of third party logistics companies; improving transportation management through palletisation and improved fleet maintenance and tracking; and improving network design, often through manual surveys and mapping.
Just like their developed market counterparts, African companies are striving for increased visibility, but often their goals remain 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 all the way to Juba to experience that.
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.