the critical coordination of transport in less mature logistics environments
TRANSCRIPT
The critical coordination of
transport in less mature
logistics environments
Presenter: Carsten Schubert
Director at Transnova
13 June 2016
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
EAC & CA In Context
• GDP $ 117Bn
• Population 140m
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
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
Technology in Taxi’s
Kigali Nairobi / Mombasa
Kenya SGR
Retailer’s perspective
Source: AT Kearny Retail in Africa
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
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
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)
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
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
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
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”
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
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
Sales vs Production
0
5
10
15
20
25
30
35
40
45
Production Sales
Take control of your supply chain
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
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
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!
Don’t lose you shirt in Africa