The critical coordination of transport in less mature logistics environments
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1) East and Central Africa have a combined GDP of $117 billion and population of 140 million, but logistics environments remain less mature with evolving supply chains. 2) Significant improvements have been made in reducing transport times within East Africa through initiatives like a single customs territory and reduced road blocks and weigh stations. 3) Mobile technology is helping address limited legacy infrastructure through widespread 3G/4G coverage and growing smartphone adoption across East Africa.
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The critical coordination of transport in less mature logistics environments
- 1. The critical coordination of transport in less mature logistics environments Presenter: Carsten Schubert Director at Transnova 13 June 2016
- 2. Agenda • East & Central Africa in Context • Retailer perspective of Africa • Evolving Africa • The China effect • Facilitation • South African confidence • Supply chain neglect • Developing a logistics strategy • Be Bold
- 3. EAC & CA In Context • GDP $ 117Bn • Population 140m
- 4. EAC Getting it right Mombasa to Kigali *Previously = 21 Days Currently = 6 days If you believe Google you can do it in 28 hours Mombasa to Kampala *Previously = 18 Days Currently =4 days How did they do it? • Single customs territory • Removal of road blocks • Reduction in weighbridges Cost savings • $400 on clearing fees alone 50% *Glen Tancott on June 30, 2014 in Articles, Supply Chain Logistics
- 5. Mobile technology Mobile coverage • Limited legacy landline infrastructure • Great coverage 3G & 4G • Calls and data are relatively cheap • EAC Roaming • Smart phones are on the up • Embrace technology
- 6. Technology in Taxi’s Kigali Nairobi / Mombasa
- 7. Kenya SGR
- 8. Retailer’s perspective Source: AT Kearny Retail in Africa
- 9. Stages in retail proposition • Supply chains need to evolve as the customer requirements evolve • This is true for all supply chains not only Retail • Cement • Automotive
- 10. Traditional Africa • Traditionally Africa has been a collect market • Long supply chains & borders delays made imports unattractive • Traders / distributors dominated the market As clients evolve from basic to more mature requirements, the pressure on the manufacturer’s value proposition and the supply chain will increase
- 11. Distributors • Have a place for traditional business • Own the clients • Offer credit to clients • Dictate what product is sold in the country • If 3 distributors do 90% of your sales, a competitor only needs to swing 3 customers • Add costs to your product • Makes brand building initiative complex • Migrate them to transporters, and warehouse 3PLs (if possible)
- 12. Evolving Africa • Credit is now a real factor • Convenience – Want a delivered service • More and more clients want to deal with a manufacturing company and not the distributor • Choice in packaging & product – More efficient supply chains make imports more attractive – Exposure to the internet drives desire for choice brands • Reduced order to delivery cycle • Rebates • After sales service & technical support Africa is no longer a “Build it and they will come” market
- 13. China effect Significant investment in infrastructure • Roads • Rail • Ports • In exchange for key resource rights • Often the infrastructure investment is integral to the extraction of the resources They are taking control of their supply chain
- 14. Facilitation Be prepared as to how you respond and deal with the situation when it comes • More prevalent in some countries • Understand the level of corruption and the impact before entering a market • Comes in many forms • Allocations in times of shortages • Load preferences • Duties & taxes • Prevalent in countries with strong distributor networks • Cross border creativity • Competitors can be gaining an advantage over you • Understand all duties & taxes and do a cost build up • Two different invoices are not uncommon
- 15. South African confidence • Our confidence is often mistaken for arrogance • The South African way in not the only way • Consider local knowledge & build the best solution with SA experience and local knowledge • Value input from local team • Develop local business where possible • Be reasonable and fair when contracting • No one likes an “INSAWE”
- 16. Supply chain neglected at design Establishment of production facility • Great new office building • World class production equipment • Right up to the point of warehousing Supply chain is neglected • Due to overspend on plant • Insufficient understanding of S&D • Run out of space • No clear channel to market strategy • The assumption that existing capacity will suffice despite volumes increasing exponentially
- 17. Supply chain neglected at design Classic errors • Insufficient finished goods inventory storage space • Limited network design, or supply chain strategy • Use of existing warehouses in the country • Loading area, site layout, weigh bridges, shift hours, lighting, turning circles, mechanisation of loading, • Existing order process continues, despite a new ERP • Fleet requirements • Order sizes dictated by existing fleet • Sales are driven by vehicle availability • Service is a factor of vehicle availability • Distribution costs are dependent on supply and demand • Formal contracts are limited
- 19. Take control of your supply chain
- 20. Developing a logistics strategy • Distribution strategy must support business strategy • Iterative process • Art of the possible can influence the sales & distribution strategy and by default the business strategy
- 21. What to consider • Begin with the end in mind (Business, Sales & Logistics Strategy) • Develop a comprehensive strategy & supporting supply chain • Get local input (Traveling speeds, Curfews are a reality we are not used to) • Invest in understanding the market • Ensure supply chain representation at design phase • Involve local companies – Markets are small – Transporters & traders are influential businessmen • Take control of supply chain – Push advancement and efficiency – Push new equipment & optimise – Capitalise on inbound / outbound • Cabotage issues can be resolved
- 22. Be bold Keys to success • Research & be sure • Be inclusive • Make the step change • Redefine the rules of the game • Persevere • Successful companies take charge of their supply chain, and do not fall into the trap of making do with what is there • Distributor model vs Delivered • Execution is key!
- 23. Don’t lose you shirt in Africa