IntroductionAfrica is one of the fastest growing economies globally, and as such is a rapidly becoming the focus of local and international interest as an emerging market , . The opportunities to expand into Africa are many, varied and most importantly, potentially highly lucrative. Despite the benefits and potential for growth organizations are finding there are several barriers to entry into, and growth within, the emerging African market, particularly from a supply chain perspective , . One of the largest supply chain challenges to overcome in any emerging market is that no two countries, or even regions within a country, are the same . This requires organizations to devise innovative solutions to ensure their supply chains are efficient. Coca Colas’ unique transportation logistics solutions , and Twiga Foods’ innovative use of available technologies combined with market understanding , are just two examples of organizations successfully entering the market through novel Supply Chain solutions. While it is imperative that organizations thoroughly research the country they plan to enter to identify unique challenges that they might face , there are many common challenges to overcome from a Supply Chain perspective. Piotrowicz and Cuthbertson have identified and classified these from the literature , at the Macro, Market and Supply Chain levels, as listed below. Macro
- Geographic constraints in the form of access to multiple transportation modes (sea, inland waterway, rod and rail) and the physical location of the market base, including distances between these and established transportation routes.
- Instability (economic, political, social, etc.) leading to high variability. This is often linked with high risks and a lack of security.
- Political and regulatory barriers can come in many forms, including corruption, lack of legislation and/or transparency and sudden policy changes.
- Limited transport and logistics infrastructure which can be of poor quality where extant.
- Lack of supply chain structure resulting from a fragmented supply chain and narrow supply base.
- Market structure variability including customer disposable income and local competitors.
- Shortage of basic skills and/or knowledge specifically related to Supply Chain and logistics. This is often exacerbated by a lack of resources to address the skills gap.
- Differences in culture (business and otherwise), language and trust in partnerships prevents inter-organizational growth and visibility.
- Poor strategic Supply Chain planning.
- Supply Chain Volatility/Variability: This can result from all the barriers listed at the Macro and Market Levels.
- Lack of Supply Chain Visibility: This can result from a lack of infrastructure, Supply Chain structure, and a paucity of skilled individuals.
- Lack of Supply Chain Skills: This is largely caused by those barriers listed in the Supply Chain level, however a lack of resources is a large contributor.
DDMRP to Address Supply Chain Volatility/VariabilitySupply chain volatility is a term that is often used interchangeably with supply chain variability . It’s also a term that is being used more frequently as supply chains grow in size and complexity. But what exactly is ‘supply chain volatility’? This is a question that has been asked repeatedly by supply chain professionals and academics, to the point where a conceptual framework has been developed to attempt to align all the different definitions out there . Regardless of the definition used, the result of Supply Chain volatility is that organizations fail to get the right product, to the right place, at the right time, and for the right price. In the African Market sources of variability are extremely varied and can come from within an organization and from external sources . With so many sources of variability in an emerging market it’s no wonder that growing an organizations’ presence in that market is a challenge , . The best way for organizations to combat volatility, regardless of the source, is to start taking a proactive, rather than reactive, approach to supply chain planning. While it is impossible to plan for and guard against every perceivable source of volatility, there are methods which can be employed that can lessen the effect of variability on supply chain performance. One of the more common methodologies for reducing the impact of supply chain volatility is to shift from push driven supply chain planning to pull driven supply chain planning , , . In the African market the need to adopt a more demand (pull) driven planning approach is evident as more organizations shift to a customer-centric operational model (Barloworld Logistics, 2015). This is seen in the pharmaceutical industry, where ensuring that the supply chain moves efficiently and can be a matter of life and death , . Forecasting has long been used as a technique to anticipate customer demand and plan accordingly. This method has been shown to be inaccurate at best, and more often than not has a negative effect on inventory, as well as on customer service levels , . The inherent inability of forecasting to predict demand has left the door open for the development of demand driven strategies which allow organizations to respond to actual demand fluctuations in real time , , . A methodology which has garnered a significant amount of attention recently is that of Demand Driven Materials Requirements Planning, developed by Carol Ptak and Chad Smith , . Demand Driven Materials Requirements Planning (DDMRP) uses the placement of strategic, dynamic inventory buffers to mitigate the negative effects of demand volatility. These buffers are NOT safety stock, rather they are defined by the average daily usage of an item, it’s lead time, variability in its’ supply and variability in its’ demand . By capturing all the volatility data intrinsic in these parameters, strategic buffers are able to negate common effects of demand volatility, such as stock outs and conversely over-stock, which can be detrimental to customer service, profitability and the customer centric shift described above . In emerging markets such as Africa, where supply chain volatility is far more prevalent than in established markets , organizations must take advantage of all methods of mitigating this volatility to successfully grow within the market. DDMRP offers an effective means of managing supply chain volatility in emerging markets, as can be seen in the success reported by ABE Construction Chemicals in South Africa. After implementation of DDMRP they have seen a significant reduction in stock outs and overstock situations and a corresponding increase in customer satisfaction .
DDMRP to Increase Supply Chain VisibilitySince the early 1990s, when the concept of supply chain visibility was introduced as Supply Chain Event Management , the need for end to end supply chain visibility has been rising on the list of top supply chain improvements which organizations need to address. This is highlighted by a recent GEODIS survey which showed that improved supply chain visibility is considered the third most important strategic objective for organizations to achieve, up from sixth two years previously , . This is particularly true in emerging markets, where modes of transport vary drastically, access to some geographic locations is limited at best, and resources are limited . This makes gaining visibility across the supply chain a challenge . Supply chain visibility, also known as supply chain transparency, can be defined as the ability of an organization to access data about any part of their supply chain (from production suppliers to customers) in real time . The ability to have sight of all aspects of the supply chain provides businesses with the building blocks for increasing their agility, and ultimately can lead to massive inventory reductions without reduction in customer service . Other benefits of increased supply chain visibility include :
- Enhanced end-to-end business process efficiency
- Visibility to supply chain “blind spots”
- Real-time visibility to customer requirements
- Enhanced customer responsiveness
- Superior handling and execution
- Decreased material and labour costs
- Better inventory management
- Improved business metric monitoring and outcomes
- Optimized logistics and transportation efficiency
DDMRP to Bridge the Supply Chain Skills GapThe field of supply chain management is facing a skills crisis in both established and emerging markets, with demand for skilled supply chain professionals exceeding supply six to one . This crisis is occurring at the same time as the field needs skilled professionals more than ever, as it is becoming one of the most critical areas for overall business success in all markets . This situation has occurred because supply chains have become increasingly complex and customer centric , the roles of supply chain managers are changing , , and a large proportion of the expertise in this field being contained in supply chain personnel at or past retirement age . This skills gap has been felt at all levels of the supply chain, from picker/ packers to senior management . In emerging markets this skills gap is exacerbated by lower literacy levels and limited access to education , . In addition, those individuals who do receive supply chain specific education often gain the knowledge needed to understand the supply chain, but not the skills required to be effective supply chain personnel . These have been addressed to some extent by both government and private upskilling initiatives, however the success of these has been limited due ineffective inter-departmental collaboration and bureaucratic delays . In order to address the skills gap a succinct definition of the skills required at all levels of the supply chain is needed. he definition of skills has proved difficult in that many regions have different definitions of what a skill is, and in emerging markets the understanding of a ‘skill’ is further hampered by the fact that the word may not exist and/or be defined in languages other than English , . To address this Kotzab et. al. (2018) undertook a study to identify the specific qualifications and competencies required in the field of supply chain management . They identified five main skill types:
- Generic: Tasks performed in a wide range of occupations.
- Specific: Tasks performed in one or a few occupation types (cannot be defined generically).
- Cognitive: Tasks requiring thinking activities such as problem solving.
- Interactive: Tasks requiring all types of communication and/or cooperation.
- Physical: Tasks requiring dexterity or stamina.