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