Global supply chains are quickly becoming the norm in Africa. As more supply chains grow and expand, they continue to seek ways to globalize their operations.
However, managing a global supply chain can be way more complicated when compared to a local supply chain. There are too many factors to consider, especially in a more nuanced environment like ours.
In this article, we look at strategies African supply chains can adopt when taking their operations global. We will also look at some challenges that these businesses might face.
What are Global Supply Chains?
Global supply chains are all the activities, processes, and operations that a typical supply chain will have, but this time it is done on a global scale.
So sourcing, logistics, production, and inventory management are done globally, involving more stakeholders and suppliers.
A global supply chain typically spans different countries, regions, and continents.
Benefits of Global Supply Chains for African Businesses
There are a lot of perks African businesses can enjoy from leveraging global supply chains.
𝟭. 𝗖𝗼𝘀𝘁 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆: supply chains can cut manufacturing costs and explore cheaper labour costs in specific areas. They can also improve operations by sourcing labour, materials, and other necessary components from around the globe.
𝟮. 𝗔𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗚𝗹𝗼𝗯𝗮𝗹 𝗠𝗮𝗿𝗸𝗲𝘁𝘀: Global supply chains facilitate the expansion of customer base and revenue potential by providing them access to international marketplaces.
𝟯. 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗲𝘀 𝗼𝗳 𝗦𝗰𝗮𝗹𝗲: African supply chains operating globally can save money by using economies of scale in their distribution, manufacturing, and purchasing.
𝟰. 𝗦𝗽𝗲𝗰𝗶𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻: Supply chains can increase overall efficiency and quality by concentrating on their core skills and outsourcing non-essential tasks to experts in other areas.
𝟱. 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗱𝗶𝘃𝗲𝗿𝘀𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: By varying the sources of materials and components, global supply networks lower the likelihood of supply interruptions and increase resilience.
Challenges African Businesses Face With Global Supply Chains
Global supply chains are not all rosy. There are a few challenges to consider.
𝟭. 𝗖𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆: If you think local supply chains are complex, you would be surprised at the global supply chains. There are many more processes, redtapes, and compliance issues to navigate. Most importantly, there are customer preferences.
𝟮. 𝗟𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀 𝗮𝗻𝗱 𝗧𝗿𝗮𝗻𝘀𝗽𝗼𝗿𝘁𝗮𝘁𝗶𝗼𝗻: Transporting across cities and states is bad enough. Taking it up a notch and transporting it across countries can be challenging. This is because of differences in infrastructure, customs process, and other possible delays.
𝟯. 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲: Import/export requirements, trade policies, and laws vary throughout nations. It can be complicated and time-consuming to ensure adherence to these laws.
𝟰. 𝗥𝗶𝘀𝗸 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: You never know the real challenges in a country until you start doing business there. Political instability, natural disasters, and economic volatility are just a few external hazards you might face.
But what about the internal challenges from suppliers and other stakeholders in that region? Risk management gets complicated.
𝟱. 𝗗𝗶𝘀𝗿𝘂𝗽𝘁𝗶𝗼𝗻𝘀 𝘁𝗼 𝘁𝗵𝗲 𝗦𝘂𝗽𝗽𝗹𝘆 𝗖𝗵𝗮𝗶𝗻: Events like pandemics, trade disputes, and geopolitical tensions can disrupt the flow of goods and impact the continuity of supply chains.
How to Navigate Global Supply Chains
There are benefits and challenges to global supply chains, but how you navigate can tell all the difference. These tips will serve as a guide.
1. Research, Research, Research
You may not know everything about the countries you are expanding into, but it is important to know enough. This way, you are better prepared against surprises.
Research the market situation in that country, whether or not your product is needed, the competitors, and the ease of doing business.
You don’t want to get into a market, spend so much resources, and then have to back out immediately because you did not understand the situation you were coming into.
Conducting thorough research is important. It also allows you access to all the necessary information about culture and market volatility.
2. Local Hires
Many organizations, businesses, and supply chains like to enter new markets with trusted personnel. This is for various reasons, and chief among them is trust.
However, it is the local hires that will help with penetration into these markets. No matter how much you study, it will be difficult to beat experience, which is what local hires have in spades.
With local hires, you can easily identify, connect, and partner with market leaders who can help propel the business forward. Many times, they have the relationships that will open such doors.
When hiring locals, you want to be careful to hire people who know what their stuff is and can add value to your supply chain.
3. Make Compliance a Must
“When in Rome, act like the Romans” is a famous quote with much wisdom. Compliance varies between countries and may not always be convenient.
However, you must adhere to the customs and local laws of whichever country you operate in. This could range from taxes and levies to sustainability policies.
To achieve this, you will need the help of a homegrown chief compliance officer who can help ensure operations are in line with the laws and regulations.
Ensuring compliance also ensures your business can mitigate risks and avoid disruptions in the supply chain operations.
4. Localization
Even though it is a global supply chain, its roots must be in localization if the operation or system will have any chance at survival.
This means partnering or collaborating with local vendors and supply chains to help propel the production and delivery of goods to the market.
Localization typically involves sourcing raw materials and services such as transportation, warehouse management, and last-mile delivery.
5. Invest in Communication
Communication is a key aspect of any supply chain management operation. In the middle of a global supply chain, it can make all the difference.
Communication aids in visibility and transparency, two critical aspects of the modern supply chain. It also empowers stakeholders to send and receive vital or necessary information at the right time and at the right scenarios.
Investing in communication infrastructures will help bridge the divide in cultures and languages. This helps optimize each process, leading to a better running supply chain.
FAQs on Managing Global Supply Chains
1. In a global setting, how can African enterprises improve the visibility of their supply chains?
Utilize real-time tracking tools and technological solutions to obtain insight into the complete supply chain, from sourcing to distribution.
2. What are some successful ways African businesses can employ to mitigate the risks connected with international supply chains?
Strong risk assessment, supplier diversification, creating backup plans, and operational flexibility are some strategies.
3. What factors are crucial for African businesses when choosing international partners and suppliers?
Financial stability, moral behaviour, high standards of quality, and the capacity to satisfy supply chain and demand demands are all considered.
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.
