Optimizing African Supply Chains For Future Dominance

African supply chains have access to a population of 1.4 billion people, or, you could say, the second-largest continent and market.

With numbers like these, it is little wonder that brands are increasingly trying to have a taste of the African market. A significant portion of this desire is contingent on the ability of supply chains across the continent. However, despite its customer-centric population, poor supply chain operations still abound, making it challenging for manufacturers to get optimal value from the market.

Beyond the challenge of poor supply chain operations, poor economic policies have plagued the continent.

That is why the market has constantly fallen short of expectations despite its size and other advantages. The pandemic dealt another blow to the economy affecting cross-border sales and logistics, inevitably leading to soaring prices of consumer goods. In a bid to get it all together, governments and businesses have forgotten that it is a robust supply chain is necessary for any striving economy.

That is why, in this article, we review five ways African supply chains can be optimized to enhance trade and investments.

Five Areas of Note in Optimizing African Supply Chains

Optimizing African supply chains will have to involve the government and businesses.

One party will struggle to pull it off. It is like two sides of a coin. Here are the key areas both will have to focus on:

1. Infrastructure

A supply chain is heavily reliant on a country’s infrastructure.

Generally, Africa has a very poor infrastructural rating, with just over eight countries scoring above 50% on the Africa Infrastructure Development Index. Transportation infrastructure and electricity are two critical infrastructures necessary for the optimization supply chain.

Transportation is vital because it facilitates the delivery of products to consumers.

There are generally four primary modes of transportation: road, rail, water, and air. Poor transportation infrastructure generally leads to long lead times and disappoints in the delivery of goods. Take, for example, the Apapa port in Lagos. The seaport is among the most significant seaports in Africa, but getting goods out of there can take between 3 to 5 weeks, a logistics nightmare for importers.

Delays like that cannot be encouraging for manufacturers expecting raw materials to produce goods primarily because it also increases low downtimes for African supply chains.

Then there is the issue of electricity. Did you know that over 600 million people on the continent lack access to electricity? Seeking alternative sources of energy is also very expensive. For instance, diesel (gas) is essential for running generators to power high-capacity machines. The high cost of oil inevitably impacts operations, leading to increased downtimes.

Optimizing these infrastructures can and would significantly improve the efficiency of African supply chains.

Recently China’s road and belt initiative has seen much improvement in infrastructural development on the continent. However, there is still much to do to improve infrastructure.

2. Sustainability Policies in African Supply Chains

Sustainability is all the rage around the world and with good reason.

Major corporations are adopting sustainable development standards for their supply chain practices. The same can be beneficial for African sourcing strategies. But what does that mean for African supply chains? As significant brands and businesses look to the African market, they look for businesses that closely align with their core values. Sustainable supply chain practices are one of those core values. However, wide spread implementation of sustainability begins with the government, and like infrastructures.

3. Technology Integration into African Supply Chains

Technology works in every aspect of the supply chain process.

However, in Africa, much of its value is underappreciated. Today, technology greatly improves the efficiency of every arm of the supply chain, including cost-cutting, lead times, and overall efficiency.

Some key areas where technology can be beneficial to African supply chains include:

Sourcing and Vendor Management

Technology streamlines vendors and grades their performance using certain matrices embedded in their chosen software. Examples of software for sourcing and vendor management are Keelvar and SAP.

Transparency and Visibility across Logistics Operations

GPS trackers in the vehicle or truck help logistics managers better plan their product delivery because they can correctly estimate where their vehicles or trucks are.

Supply Chain Planning

Blockchain technology helps distribution and logistics managers effectively plan their distribution routes, ensuring none of their retail stores run out of inventory.

Demand Forecasting

Data analysis software systems like PDA (Personal data assistance) help supply chain managers forecast demands and market trends effectively.

Automation

Robotics has achieved legendary success in automating distribution and fulfilment centres, cutting lead times by as much as 80%.

Despite the benefits of technology in the supply chain process and management, Africans have sadly had disappointing enthusiasm for it.

Supply chains tend to shy away from them, effectively stagnating their supply chain. As the continent seeks to rebound to its economic glory, it will undoubtedly come roaring out the gate, encouraging competition. Investing in adequate and necessary technology would give businesses and their supply chains an edge.

People Management: Train staff and Create a Better Working Culture

Despite its huge young population, Africa’s labour force is hugely informal, causing a shortage in supply chain expertise in the continent.

The good news is that businesses can overcome this by investing in staff training. While some businesses are understandably hesitant to invest in training, to decline from training staff would only serve their supply chain negatively. Like in any economy (informal or formal), labour is necessary for the supply chain to function. However, skilled labour can effectively upscale business processes.

Work culture is another way to get the best out of staff. When staff are happy to work at a firm, they tend to be more motivated.

Complaints and issues like tribalism, sexism, harassment, and other forms of discrimination should not be tolerated in any African supply chain.

Model after Successful Supply Chain Strategies

Sadly, an infinite number of supply chain strategies have succeeded or failed.

As African supply chains bid to strengthen their performance over the coming years, studying and implementing successful strategies would benefit supply chain management.

Conclusion

African supply chains show great promise and potential, but achieving them will require collaboration between the Government and private sectors.

How would the years following the pandemic turn out? Do we learn from our mistakes? Do we innovate?

How we answer these questions will significantly determine the subsequent decades of the African economy and its supply chain.