Although African supply chains are doing way beyond their peers across the globe, especially considering what they have to work with, there are still common mistakes they get mixed up with.
And sometimes, these mistakes can be harmful to their supply chain. There is no mistaking it, African supply chains are largely responsible for the economic awakening on the continent.
But they face unique challenges compared to the rest of the world. This unique challenge has given birth to the need for unique strategies. However, they are also the birthing place for these mistakes.*
In this article, we will explore three of these mistakes.
1. Considering Only Local Sourcing
Many supply chains across Africa do not do business with other organizations outside of their home country. Whether with a neighbouring country or one further away, Europe, China, or America.
Although this can be commendable at first glance, these supply chains are missing out on opportunities that global sourcing avails them. These opportunities include: access to specialized expertise, cost reduction, better raw materials, and improved competition.
Many of these supply chains have the misconception that local sourcing equates to cheaper raw materials, but that is not always the case.
Local sourcing is a good strategy, especially when building supply chain resilience. However, when it is the sole source of raw materials and services for the supply chain, it leads to costly mistakes and can limit the operations of supply chains.
2. SKU Proliferation
The infrastructure needed for demand forecasting in many African supply chains can be quite expensive for these supply chains. Many do not have the basics for demand planning, resulting in SKU proliferation, even though the strategy is not bad.
SKU proliferation is simply the addition of more products to the inventory of any supply chain.
Supply chains typically use this to reach different levels of customers in the market. For example, a phone typically has small, medium, and large variations. This is to help customers with varying preferences find something for them.
However, there is a caveat. For SKU proliferation to work well, a good demand forecasting system must be on the ground. Otherwise, it will lead to a lot of deadstock. This is where African supply chains are making mistakes.
They jump to SKU proliferation because they do not have the demand forecasting infrastructure, but they need it before SKU proliferation can benefit any of them.
3. Hands Off Vendor Management
Many supply chains favour the hands-off approach in their vendor management process. They do the due diligence when onboarding these suppliers. But there is no follow-up for months or sometimes years into how the suppliers interact with their supply chains.
As you can imagine, this often leads to disruptions because the suppliers keep getting away with more and more until it becomes too much for the supply chain to handle.
Suppliers and businesses tend to explore what they can get away with because they want to spend less or cut corners. When African supply chains employ the hands-off approach, it encourages these suppliers to take advantage of the system.
African supply chains can avoid these by periodically auditing the suppliers and monitoring their interaction with the supply chain operation. Hands-off vendor management can be dangerous to any supply chain’s survival.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
