Adapting Supply Chain as a Service (ScaaS) in Africa

Supply chain as a service in Africa is a growing concept with so much potential, and in this article, we evaluate what it is and how companies can take advantage.

Supply chain management is fast becoming the foundation of most economies in the world. The same is true in Africa. Most businesses have an element of supply chain in their core operations, whether procurement, logistics, or manufacturing.

Taking advantage of supply chain as a service helps you unlock your business potential one link at a time.

 

What is Supply Chain as a Service?

SCaaS is outsourcing the whole or parts of your supply chain to third parties, allowing your business to focus on its core competencies.

Running a business is hard enough. Why complicate it with complex supply chain processes? That is the entire point of the supply chain as a service industry.

SCaaS is prevalent in the e-commerce and manufacturing industries. It is a technology-driven solution that leverages automation, machine learning, and AI to offer end-to-end solutions for your business.

For example, an e-commerce business may partner with a 3pl company to help its order fulfillment. They will also rely on cloud-based software to foster this partnership and facilitate real-time tracking and operational visibility.

Examples of companies doing these in Africa are Jumia Logistics and Konga Logistics.

 

Components of Supply Chain as a Service Businesses Can Leverage in Africa

SCaaS caters to different parts of the supply chain. However, there are a few important components businesses in Africa can leverage for the best results.

 

1. Strategic Procurement

Procurement is the gateway to every supply chain operation and, as such, is a very important component for businesses trying to optimize their supply chain management.

African businesses can partner with procurement or sourcing organizations and applications to take advantage of their expertise and relationship with suppliers to enjoy reduced costs of raw materials.

These procurement businesses tend to have multiple customers, which gives them stronger leverage when negotiating with suppliers, allowing them to activate the economics of scale model.

 

2. Supplier Relationship Management

Suppliers are important stakeholders in every supply chain but can be difficult to manage. Businesses across Africa tend to run into problems with their suppliers which can impact customer service.

This is prevalent with e-commerce businesses and fast food. The challenge is that customers are not waiting around to understand the situation. Difficult suppliers also distract from the overall goal of the business.

To get around this, your business can partner with supply chain companies to help you source and manage reliable suppliers. These SRM businesses are already well-established in the industry, which allows them to identify suppliers best suited to your business.

 

3. Warehousing & Inventory Management

Warehousing as a service is another growing industry in Africa. Many small businesses or start-ups have difficulty holding inventory. This is primarily because of the cost involved. From security costs to insurance and cost of maintenance, not all businesses are able to handle this.

There have been stories of warehouses across Africa that got burnt down, and the business involved took a huge loss. To combat these and save costs, you can outsource your warehouse operations and rely on the expertise of the business you partner with.

Inventory management servicing allows a business to outsource its inventory planning, including demand forecast and production, to third-party applications. With this model, your business can focus on research and sales while the application focuses on production planning and scaling.

 

4. Order Fulfillment

Whether B2B or B2C, order fulfillment is a huge part of supply chain operations. It is the most popular component of Scaas, and it is the one that directly interacts with the customers. However, not every business is skilled at this.

From e-commerce businesses to brick-and-mortar stores, order fulfillment is important to ensure the goods or services get to the customer in time. There are 3PL companies across Africa, such as Kuehne + Nagel.

Platforms like Kobo 360 and crowd sourcing logistics applications like jumia foods help facilitate or connect logistics businesses to potential companies or customers needing their services. Popular applications under this are TMS, WMS, and OMS. Transport management service, Warehouse management service, and Order fulfillment management service.

 

Importance of Supply Chain as a Service in Africa

There are a few advantages for businesses adapting SCaaS in Africa.

 

1. Exposure to Expertise

Not every business will handle supply chains properly, especially when their core competencies are not remotely supply-chain oriented. Supply chain as a service allows you to leverage the experience of experts, which helps the supply chain operations flow efficiently. It also enhances lead time and resilience.

 

2. Cost Reduction

Supply chain and its components can get infinitely more expensive, especially when it is not been run very well. Leveraging SCaaS helps you reduce your supply chain cost while ensuring it is running efficiently.

SCaaS also allows companies to pay for their supply chain only when used rather than servicing an entire supply chain department during demand highs and lows.

 

3. Supply Chain Visibility

With SCaaS, real-time tracking and various communication systems often allow monitoring capabilities for all parties involved. With applications like these, there is enhanced supply chain visibility which allows increased efficiency and utilization of the supply chain.

 

4. Streamlining Operations

By integrating cloud-based technologies and automation into routine tasks such as forecasting and order processing, businesses can streamline and optimize their supply chain operations, which allows them to enjoy less complexity and speed throughout the business.

 

How Businesses Can Implement Supply Chain as a Service in Africa

There are steps to take to integrate SCaaS into your business successfully. In this section of the article, we review some of them.

 

1. Supply Chain Assessment

Before integrating SCaaS into your business, it is important to assess your supply chain completely and find out areas you may need to outsource. Sometimes your business might excel in warehousing and storage or logistics but not so much in procurement or production.

During the assessment, it is important to determine if you want to revamp the supply chain process and continue managing it in-house or if you are confident outsourcing will give you the best results. This is akin to a “make or buy analysis”.

 

2. Find the Right Service Provider

Not every supply chain service provider is compatible with your business. It is important to vet supply chain service providers to ensure they are the right fit for your business both in experience and expertise. For example, a warehouse provider and an inventory management solution application are not the same solutions.

When choosing the right supplier or application, check the track records, testimonials, and abilities to solve your problems.

Ensure the selected service providers can integrate with your system or process successfully.

 

3. Integrate with Supply Chain Service Providers

Whether in procurement, production, or logistics, your supply chain service providers should be able to integrate successfully with your existing systems. This will help your business flow seamlessly rather than cause disruptions across your supply chain.

 

4. Train your Employees

When you outsource your supply chain, different factors come into play. For example, new technology, new processes, and new stakeholders. Training your employees to help them handle the new developments is important.

Training your employees gives them the skills, capabilities, and technics to handle the new supply chain process, elevating your operation.

 

5. Monitor the new Process

After integrating the new supply chain service providers with your business, it is vital to monitor it and note areas you think need improvement or a bit of adjustment. You may also evaluate the entire process to see if it fits your business and its vision.

Sometimes Scaas providers may not be the right fit, and when you notice, it is important to disengage immediately to prevent further damage to the business.

 

Challenges in Implementing Supply Chain as a Service in Africa

Although Scaas holds so much promise, there are a few challenges to implementing it on the continent.

 

1. Finding an Expert can be Challenging

As much as SCaaS on the continent holds a lot of potential, the fact that is there aren’t many supply chain service providers on the continent or in some parts of the continent. This makes it difficult to source and engage their services.

Many service providers lack professionalism and, in many cases, are not a great improvement for businesses, making them sceptical about the solution.

 

2. Change can be difficult

Partnering with third-party SCaaS companies can be challenging, making businesses resist the entire idea. Whether it is coming from the staff or the amount of resources that will be needed, businesses in Africa tend to find it difficult to outsource parts of their supply chain.

 

FAQs on Supply Chain as a Service in Africa

Q1. Is SCaaS appropriate for African small and medium-sized organizations (SMEs)?

SCaaS may be very advantageous to African SMEs since it allows them to access advanced supply chain capabilities without investing heavily in infrastructure and technology.

 

Q2. What technologies are typically used in Africa for SCaaS?

SCaaS providers in Africa frequently use IoT (Internet of Things), blockchain, AI (Artificial Intelligence), and cloud computing technologies to optimize supply chain operations.

 

Q3. How can SCaaS providers assure African supply chain security?

To maintain supply chain security, SCaaS providers in Africa can adopt security measures such as real-time tracking, safe data transmission, and compliance with local and international standards.

 

Q4. Can SCaaS assist African enterprises in expanding into new markets?

SCaaS can give African firms the flexibility and scalability they need to enter new markets while maintaining effective supply chain operations.

 

Q5. How can African firms select the best SCaaS provider?

Businesses should assess the provider’s track record, technological skills, scalability, cost-effectiveness, and alignment with their specific supply chain requirements.

 

 

Conclusion

Supply chain as a service in Africa is growing, and with it comes a lot of promising possibilities for businesses and supply chains on the continent. The solution is organization and application based, which allows more flexibility and operational excellence for the businesses.