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