Many South African manufacturers’ efforts to expand into Africa have failed. Two mistakes – according to speakers on the line-up for the 2016 SAPICS conference for supply chain professionals – are applying familiar product-focused processes, and discounting the importance of working within the existing framework of local culture.
Think distribution first, manufacturing second “Focusing too much capital expenditure on the production and manufacturing side without enough investment in the outbound supply chain – warehousing and distribution – is probably the single biggest mistake that South African companies make when expanding into Africa,” says Carsten Schubert, Director (East Africa) at Transnova Africa. “South African businesses readily accept the status quo of logistics systems and processes already in place in the country targeted for expansion, rather than challenging them and looking for more efficient ways of getting the product to market,” says Schubert. It is a dangerous practice to decide to make do with existing warehousing facilities and distribution processes if they are not suited to requirements for expansions into that particular territory. Another related mistake is abdicating control of the internal supply chain to distributors, with too much reliance placed on the local distributor’s network. “It is important to have visibility and control over your end to end supply chain,” warns Schubert. “Interacting directly and managing the relationship with your new customer base when you are trying to establish a foothold in a new market is a key success factor.” Productive interaction with a new environment relies strongly on working to understand local culture and their capabilities, and respecting the historic lessons that inform existing processes. Become immersed in the new culture “Every step of a new process needed to be designed through the eyes of the local workforce and their capabilities,” advises Bryan Baylis, Associate Director of Supply Chain with US-based Merck & Co Inc. “When local supply chain owners completely understand the proposed solutions, only then can your team execute a sustainable process, which can successfully meet the needs of the organisation today and well into the future.” Baylis explains that, as an outsider in a new environment, success is realised through complete immersion of oneself into the local culture, clearly understanding any existing processes, and working together as a cohesive team to provide viable solutions. “While new environments present unique challenges when designing supply chain systems, there is a common need to create a flexible system that can quickly adjust to today’s global environment,” says Baylis. The key to the success of an expansion project seems to be dependent upon keeping solutions smart enough to be effective, but simple enough to be sustainable in the local environment. Carsten Schubert and Bryan Baylis will present their unique supply chain insights at the 38th Annual SAPICS conference and exhibition for supply chain professionals in Sun City from 12 to 14 June 2016. More information is available at conference.sapics.org
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Different to the tourism or marketing environments where digital integration has been absorbed organically, supply chain and manufacturing professionals have been sluggish to phase out what is a deeply entrenched traditional mentality. Thinking must change Prominent supply chain analyst and founder of Supply Chain Insight, Lora Cecere, believes that supply chain professionals have defined their processes as linear and inflexible; trusting enterprise resource planning (ERP) and advance planning and scheduling (APS) to optimise production and distribution processes. “To become digital, we need to define processes from the customer’s customer to the supplier’s supplier and use new technologies to listen, sense, and adapt,” explains Cecere. “This is not the platform of traditional technologies and the belief structures of traditional supply chain leaders. This is an opportunity for Africa. Consider the adoption of mobile phones, alternative payment structures and collaborative sharing in economies such as in Nigeria. It’s time that we question the status quo and traditional principles.” Cecere will in June join Flatiron Strategies’ Senior Industry Analyst, Peter Vanderminden; and Oracle’s digital supply chain expert, Maha Muzumdar; to speak at the 38th Annual SAPICS Conference and Exhibition for supply chain professionals, to be held at Sun City, 12-14 June 2016. The trio, while encouraging organisations to pursue a digital supply chain, accepts that this progression isn’t without flaws that businesses must take cognisance of. Big data, big concerns While the emerging IoT (Internet of Things) delivers huge dividends, it also presents potential data security risks for manufacturers as numerous corporate assets and end products will be linked via networks to provide a steady flow of real time data. As data volumes and Internet connectivity grow in the supply chain and on the manufacturing floor, there is increased risk of data security being compromised, cautions Maha Muzumdar, Vice President of Industry Transformation, Oracle Cloud Business Group. “Manufacturers today need to be more vigilant of intellectual property and trade secret violations and potential corporate espionage,” adds Muzumdar. “Today there are new security issues for companies to deal with as automation and data volumes increase. Data security needs to be addressed at multiple levels - the enterprise level, the shop floor level and at the user device level. Companies need a comprehensive portfolio of security strategies such as identity management, access management and mobile security to ensure data privacy, protect against internal and external threats, and enable regulatory compliance.” While IoT devices – such as digital sensors – forgo the need for manual input of data, thus achieving greater accuracy, businesses must also be able to use this new flood of data effectively. This, too, can present a problem, explains Peter Vanderminden, Senior Industry Analyst at Flatiron Strategies “This does result in a flood of ‘big data’ which organisations may not have the capability to analyse and use effectively. That is where the breakdown often happens. As you implement IoT capabilities into your products, making them digital, it’s all about how we bring both these worlds together – converging IoT operational with traditional SCM IT and bringing the physical and digital supply chain together,” he says. For more information on #SAPICS2016, or to register, visit conference.sapics.org ENDS MEDIA CONTACT: Juanita Vorster, juanita@thatpoint.co.za, www.atthatpoint.co.za For more information on SAPICS please visit: Website: www.sapics.org.za Twitter: @SAPICS01 LinkedIn: SAPICS group Facebook: OperationsManagement The supply chain management community of South Africa wants to highlight another critical error made in shifting the blame of the Nkandla scandal to supply chain mechanisms: the correct terminology to use would have been public procurement mechanisms.
The term supply chain describes far more than just procurement. This very specialised profession encompasses all activities needed to deliver the right product or service to the right customer, at the right time, place, and cost. Supply chain management theory delves deep into the efficiencies of sourcing, processing, manufacturing, transporting, storing, distributing, tracking, and returning anything from raw metals to household products sold in retail stores. References to supply chain problems in the public sector as catchall term for public procurement policies that lead to fruitless and wasteful expenditure are not only inaccurate, but dangerous, as it shifts the focus away from the true problem at hand. It is also an insult to highly qualified professionals that ensure on a daily basis that South African consumers have easy access to a wide variety of local and imported products and services that make their lives possible and enjoyable. Managing a supply chain demands an understanding of an entire value chain; all the suppliers that work seamlessly together to ensure that doctors have the necessary machinery to perform life-saving operations, that enjoying fresh seafood is possible even thousands of kilometers away from the sea, and that your online shopping order arrives at a time and place convenient for you. The Western Cape province is an example of public sector organisations that have a solid grasp of the true meaning of supply chain. The proof is evident in an increase in clean audits, exceptional delivery of basic services to its citizens, and a number of other statistics that show that local government can serve with excellence its constituents within the framework of the Public Financial Management Act (PFMA) that set out public procurement – referred to as supply chain – processes. While it can be argued that the matter at hand is one of semantics, something as small as a change in understanding that there is more to supply chain – and content citizens as a results – than just procuring goods and services within a legislative framework. The next step would be to ensure that all civil servant employed in a supply chain capacity are well trained in the theory of comprehensive supply chain management. It would be a great feat if a year from now media reports could reflect the numbers of Certified Supply Chain Professionals ensuring service delivery to South African citizens, rather than the number of times supply chain mechanisms were blamed in error. ENDS Issued by: SAPICS - your supply chain community MEDIA CONTACT: Juanita Vorster, juanita@thatpoint.co.za, www.atthatpoint.co.za For more information on SAPICS please visit: Website: www.sapics.org.za Twitter: @SAPICS01 LinkedIn: SAPICS group Facebook: OperationsManagement |
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