Why is risk assessment is so important for African supply chains?

One of the reasons why African supply chains are so strong is because of their embrace of risk assessment philosophy. This is why they can display much resilience in the face of adversity and potential disruptors.

Compared to other local and global supply chains, African countries are less modernised than most. About 70% still spot some element of the traditional method in their operations.

So, how come they function so well? The answer is that they face more challenges, which has made them find a way to make it work.

African supply chains typically face more challenges than the average global supply chain, which makes them more prone to risk management and assessment.

Why have they embraced risk management so much?


1. Geopolitical and Economic Volatility

From the political crisis plaguing different parts of the continent to the economic instability and mounting inflations, there is no shortage of tensions. Businesses and supply chains are some of the most impacted by these.

This has forced African supply chains to adopt careful risk assessment strategies in sourcing, production, and other key areas that could be affected by the supply chain. The supply chains must also consider the cost of goods to the consumers.

They must find a way to help steady the selling prices or lose their customers to the competition. It’s a very technical process for these supply chains, and the reason they have remained so successful is because of their incessant push to know every risk. Then, come up with very good contingency plans.

2. Infrastructure limitations

Poor infrastructure is the great African underbelly. It is a great weakness for supply chain management and business operations across the continent. 

Poor infrastructure entails every issue, from poor roads, underdeveloped rail networks, poor energy supply, and lack of adequate security protocols or measures. Supply chains across Africa are weary of all these, which makes them very careful in carrying out their operations.

The poor state of infrastructure ultimately costs them more money to operate their supply chains than their international counterparts, but it has presented itself as a blessing in disguise. These supply chains are now forced to take risk assessment as seriously as possible.

That way, it helps them prevent any major issues and any smaller disruptive force as well.

3. Lack of resource availability and reliability

Because of the poor infrastructural situation across the continent, more supply chains must rely on indirect and direct raw materials for production. But the kicker is that these resources will often not be available, or there might be some form of scarcity.

To get around it, supply chains across the continent are constantly evaluating or analyzing factors that impact the availability of these resources. This forces them to evaluate factors impacting other supply chain areas.

Again, this makes the supply chain more effective and more resilient to minor issues that could cause a bump in the supply chain.

4. Lack of tech solutions

Technology is the main feature of any modern supply chain management. However, these solutions can be expensive to purchase and integrate into the supply chain operations.

The issue is so bad that many African supply chains operate without it or in limited capacity.

Because they do not have tech to carry some of the burdens off of them, they turn to traditional risk assessment solutions. This is usually cumbersome, but many of these supply chains would rather spend that time than the money.

The lack of tech solutions has prompted them to have a robust risk management system, however traditional it may seem. These systems include supplier vetting, quality control, and information analysis.

They know they need it, but because they cannot afford the tech solutions, they focus on making the traditional method as efficient as possible. However limited that may be.


Tags: Nigeria, Ethiopia, Ghana, Sierre Leone, Benin, Burkina Faso, Cote d’Ivoire, Togo, South Africa, Mozambique, Egypt, Niger, Senegal, Tanzania, Madagascar, and Cameroun.