Africa is full of contradictions: Zimbabwe is often listed as South Africa’s Achilles heel in terms of business confidence – yet despite the socio-economic woes of Zimbabwe, Beitbridge remains Africa’s busiest border post when measured by cargo volume. Add to that, two of the world’s fastest growing economies are South Africa’s neighbours: according to the IMF Angola was the world’s fastest growing economy last year, and Mozambique was the fastest growing non-oil producing country. Six of the world’s 10 fastest growing economies are in sub-Saharan Africa.
While cargo volumes are declining the world over, Africa’s supply chains are in danger of being overwhelmed. While Africans may still be uncomplaining about empty shelves, CEO of Barloworld Logistics, Steve Ford, says this will not be tolerated much longer as consumerism takes root.
“Last year’s tsunami in Japan made organisations recognise the sensitivity and level of risk exposure supply chains have when reliant on a small number of vendors, especially those located in volatile environments. Organisations have been attempting to avert risk by bringing new suppliers on board, but relationships and business trust are not developed overnight,” says Ford.
He quotes the BCI Supply Chain Resilience report from last year (559 respondents from 62 countries) which found that at least 85% had experienced at least one disruptive incident in 2011, and only 8% reported all of their key suppliers had business continuity programmes in place.
“In an industry with fast inventory turns such as retail, companies without risk plans can be faced with empty shelves from harsh weather conditions, strikes and increasingly – currency volatility.
“How do manufacturers and suppliers address what must seem like a situation increasingly beyond their control in the quest for cost-effective forecasting of demand and optimisation of inventory across these extended networks? Even with the sophisticated planning tools available today, the best supply chain plans often yield less than 50% accuracy. While advances in planning brought the industry some remarkable promises it also proved how difficult it was to predict the future by simply relying on historical data.
“Optimising inventory planning now requires an unprecedented degree of flexibility, while retaining the visibility provided by maturing software solutions. Business intelligence solutions need to provide the ability to have a seamless view of what is happening across the entire supply chain network – a centralised system of command and control. Although technology is evolving to make a single view of the supply chain possible, the challenge of disparate parts and silo’ed systems remains,” adds Ford.
In almost all areas of technology, Africa is being leapfrogged into the modern world. For instance, the continent used to be seen as a dumping ground for old trucks – as it still is for aircraft – but for reasons of reliability the later-model trucks are now being employed, because it is not possible to support aged models in Africa.
The same is happening with Supply Chain Management (SCM). Notwithstanding creaking infrastructure and interminable delays through bureaucracy, the continent is seeing the deployment of the latest technology, thereby achieving a holistic approach to cost management and the freeing up of value.
“SCM deals not only with physical process flows, but also encompasses information flow and cash flows. The purpose and intent of SCM has evolved into the enabling of a company’s business strategy. It can create a competitive advantage by driving overall volume and revenue growth, increasing profits and by improving customer service levels and responsiveness. This is a very different role to the one played traditionally by the various logistics functions in a supply chain. These are focused on reducing costs while maintaining or improving service levels in individual functions, such as transportation, where reductions in spot rates for transportation contracts are generally the accepted way to compete for business,” explains Ford.
“In revenue terms, an immediate impact can be seen on sales, through the increase in service levels, reduction of out of stocks and the creation of more loyal customers. Operating costs, similarly, reduce through the reduction of the cost of holding inventory, and the reduction of write offs due to obsolete stock. Operational cost savings are also realised in direct distribution costs as these are optimised, as well as the minimising of production downtime,” adds Ford.
Contributed by Barloworld Logistics
