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The case for supply chain visibility in Africa

July 15, 2016 by  
Filed under Africa, Featured Articles, Technology

Selecting a pizza delivery company in our house is a straight forward business. There is only one criteria; the delivery needs to be made with a red motorbike (my 3 and a ½ year old son is the key decision maker).  How the pizza tastes is a distant second consideration. Waiting for the pizza can be agonising. Has the motorbike already left and what time can we expect it? And while my son is unfamiliar with real time driver tracking, messaging, alerting and ETA (Estimated Time of Delivery), an Uber-like technology is essentially what he wants.

In emerging market countries like South Africa, supply chain sophistication (or the lack there of) has many degrees. Organisations can deal with real time data companies to complete blacks holes (think South Africa Post Office). In 2015, a CIPS survey noted that 65% of South African companies lacked supply chain visibility. Visibility can be defined as the process where companies and customers know exactly at which point in the supply chain the product or raw material is. However, the real percentage is likely much higher.

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In the consumer packaged goods (CPG) industry, Africa’s fragmented retail market and reliance on distributors and wholesalers provide challenges. Collaboration and shared metrics with distribution partners are often still in the early stages of development. Technology infrastructure is sometimes limited, and often paper coexists with technology. In East Africa, I recently came across organisations where hard copy flow is still the main source of information, as ERP (Enterprise Resource Planning) implementation “didn’t work so well.”

Limited warehouse and transportation management systems often leave organisations in the dark. As one CPG supply chain director in Ethiopia put it to me, “for all we know, the transporters could be driving our stock to Somali.” In the same operation, salesmen also have to call the warehouse every morning to determine the SKU (stock Keeping Unit) availability, even with an ERP system in place. The warehouse and sales department run on different IT systems that “don’t like to talk to one another.” Salesmen improvise, and currently use instant messaging (security risk) to receive regular stock updates from the warehouse.

In healthcare logistics (particularly the public sector), with limited analytics and reliable data, inventory has traditionally been pushed down the supply chain. In the public sector, overworked and a sometimes poorly trained workforce struggle with recording out of stocks and determining demand, especially taking into consideration seasonality (e.g. malaria during the rainy season) and outbreaks (e.g. Ebola). Public health professionals often confront shared resources (e.g. different programmes and donors share the same delivery trucks) and have limited technology infrastructure. Understanding inventory flow and where bottlenecks are in the system can be problematic.

Increased visibility

However, technology is slowly changing all of that. Simple scanning technology and mobile inventory apps (applications) can increase visibility in the supply chain. Cloud based software can be a cost effective solution, irrespective of the size of the organisation. In some organisations, procurement is playing a leading role in integrating processes and systems, including shared metrics with suppliers to increase visibility in the supply chain.

In CPG organisations, where in the past it was often too expensive to issue the sales force with PDA’s (Personal Digital Assistances) and internet connectivity in the traditional trade (e.g. small groceries such as spaza shops or dukas), a growing number of companies are using smart phones for sales automation. Smartphones supported with apps, can enable companies with real time visibility, including tracking salesmen’s movements with GPS technology. Smartphone cameras can capture sales execution standards and even determine visible share of inventory.  This can create visibility at even the smallest outlet.

Cloud based technology can help companies to optimise transport costs and consolidate transport providers. Mobile apps supported with cost effective barcoding have the potential to reduce out of stock situations in the warehouse and at distribution level.

In the cold chain industry, sensors can also detect if doors have been left opened or seals broken. Current colour coded temperature strips can be an indication of a break in the cold chain, but does not provide the required visibility at central level.

While courier companies’ scan, track (you have to go online and enter the tracking code) and trace technology have matured, a number of logistics start-ups in Africa are also looking to disrupt the traditional players and create increased visibility with a focus on mobile apps.

In South Africa WumDrop has evolved from a diaper subscription service to Uber-like delivery service. Kenya’s Sendy and Ethiopia’s Besew are all looking to breathe life into the traditional courier market.  Many more are joining. In South Africa over the past few months, Sendr, Fastvan and Rush have added their names to the list.

Challenges

African organisations are generating an increased volume of data. As one operator put it to me,”5 years ago we didn’t dream of big data, but just accurate data.” However, with increased data availability, big data provides opportunities for companies to better respond to supply chain volatility and other supply chain risks.

However, with the amount of data available, organisations need to recruit analysts that are able to filter, analyse and present information in such a way that it makes sense to the management team. Most companies’ IT infrastructure is also unable to analyse the volume of data. Finding cost effective tools and analysts (or companies) will present an increased challenge for African organisations.

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