Please visit our new blog that is focusing on supply chain related issues.
Wherever you go in emerging markets, there seem to be an affordable way of getting your goods around. In Dar Es Salaam and Nairobi you have the two wheel push cart (Mikokoteni) and in Accra a more modern four wheel version.
South East Asia prefers the three wheel motor-cart version, known for its high noise and air pollution. Not to mention Popeye like arms to steer the thing. In South Asia a three wheel Chinese agriculture machine is responsible for getting the job done, especially in rural areas.
With fuel prices on the rise at the pump (and at the shop selling fuel out of an oil drum) you are likely to see more of these delivery vehicles as trucks fall out of favour. With electric bike sales going though the roof in Vietnam, is the three wheel delivery edition just around the corner?
I am currently in Ghana and evaluating a distributor network for a company in the media industry. Some key learnings from my trip to date:
Be aware of the distributor powerbase. Competent distributors are key to most supply chains and collaboration is critical in expanding your footprint. However, distributors should not hold you and your decisions hostage. In emerging markets, even big distributors are likely to have limited reach in key regions and areas. Distance yourself from you current situation and ask yourself the following questions:
If I have to start this business from scratch today, what would the selection criteria look like and which key areas and regions do I want to penetrate?
Take note of the evolution. Too often supply chains in emerging markets just evolve without any strategic intend. Modern trade and retailing are expanding in Africa (maybe not as rapidly as Asia) and middle class consumers shopping patterns are changing. How will these changes in the market affect your business and are you taking the necessary steps to adapt to these changes?
Invest in people and partners. Training budgets should not be limited to employees but must include strategic partners. Develop and invest in your partner base and they will grow with you. Training is gold in developing economies and will also go along way in building relationships.
Don’t be an evil gorilla. When it comes to your distributors in emerging markets, you are likely to be the 800 pound gorilla. Be transparent and handle them with the respect they deserve. There is a lot to learn from even the smallest of partners.
Senior executives who create a vision for the implementation of a supply chain system will achieve success with the roll-out and implementation. Without a clear vision, the project team will struggle and are unlikely to get the required buy-in.
The lack of a project approach without clear goals and timelines is likely to fail in any organization. Many businesses think that line managers will make the time to implement the required supply chain initiatives. The pressure of daily operational activities makes this an unlikely option.
Bureaucratic processes can lead to scope creep and have a severe negative impact on the project. Senior executive can play an important role in removing barriers and red tape and insuring a smooth transition.
Overlapping IT systems or future software implementation for resource planning systems (ERP), can slow down the implementation systems. It is important for the project team to have a clear understanding of the current and future IT infrastructure, and where overlap might occur. In some organizations, a combination of computer generated information and manually recorded information can create further confusion.
Organizational culture and change management are also two aspects that will impact the organization. Creating the right culture for change needs to commence prior to project team implementation.
Senior Executive untrained in the specific capabilities and requirements of supply chain often find it difficult to make operational decisions. Training requirements should not only focus on line managers,. They should be extended to senior executives also. Executive training programs and workshops can provide an important support structure for senior executives.
Supply Chain requirements are frequently designed based on production and raw material constraints. Process mapping and design must take into consideration customer needs and economic factors. The supply chain design should not be constrained by production and supply inefficiencies.
Prior to system development and roll-out, a model design is essential. The model should include current and future supply chain requirements. Furthermore, the decision making process needs to be clearly mapped out, with a clear process flow.
The importance of best practices is sometimes underestimated. Having clear best practices, within the organization, but also within the industry, will assist in the creation of a roadmap for supply chain effectiveness.
The decision making process must clearly map out and include all key stakeholders. Often, critical line managers are excluded from the process, and are not given the opportunity to design their own process goals.
Regular feedback meetings must be scheduled with all key stakeholders. Feedback meetings often provide the opportunity for senior executives to track progress and make necessary changes, if needed.
The right people must be on board from the start of the project. Often, project teams lack critical human resources and skills as key individuals are assigned to operational tasks and unable to devote their full attention to their respective project team.
The project team will benefits from using proven implementation methodology. The lack of a clear methodology will severely affect the project roll-out.
Buy-in and support is probably the best way to describe the successful implementation of a supply chain system. While the long term impact and benefits of having a supply chain are undisputed, the project implementation process should not be taken too lightly. Ensuring that all key stakeholders are onboard is one of the best ways to get there.
Southern Africa has been consuming our time of late, and I we have been missing in action. We recently conducted a supply assessment and pilot roll-out for a media company in Zambia. Our workstream focused primarily on the Go-to-Market strategy and partner selection.
The following key issues were identified during the assessment:
Select the right partners. Ensure you have a clear understanding of the partner selection criteria. Identify the key drivers of partner success and include it in your selection criteria e.g. retail expertise. Communicate the selection criteria to all stakeholders and constantly evaluate if you are on the right track. Focus on distribution partners that hold real growth potential. Poor partner selection can severely affect your Go-to-Market strategy.
There is gold in those mountains. Emerging economies provide unique opportunities outside of the capital. Regional town populations and GDPs are always understated and hold great financial rewards with often little competition. By expanding your footprint, it is also important to create the necessary support structure for your more rural partners. They are too often left to their own devices.
Take the guess work out of your business. Standard Operating Procedures (SOPs) and retail standards (for example) simplify your business procedures and help to ensure the same quality in all operations. Emerging market operations often lack critical skills and don’t make any assumptions what people can and can not do.
What gets measured gets done. Focus on the key performance drivers of your business and don’t overextend yourself. Sometimes less is more. Include key performance measurements to your business planning process and evaluate on a yearly basis whether you are using these measurements to track and improve your business. There is no point it tracking something just for the sake of tracking.
Ethiopian recognized as the birthplace of coffee, has unveiled three logos for the three varieties of Ethiopian coffee beans. Ethiopia, Africa’s largest coffee producer, will trademark its most famous coffee names, Sidamo, Harar and Yigacheffe. It follows an agreement reached between Ethiopia and Starbucks in their long trademark dispute. It is the first time the country has introduced an international brand for export.
Organic food and drinks companies are increasingly looking at teaming up with MNCs (multinational corporations). MNCs with large distribution networks provide easy access for niche product companies that are struggling to penetrate larger chains.
The natural product segment is currently one of the fastest growing segments, making it very attractive for MNCs. As large companies try to diversify away from slower growth segments, natural product companies are being snapped up.
However, staying independent within a large conglomerate can be challenging. Brands can get diluted, and some consumers might view it as “the nice organic guys selling out to the evil empire”. Cost cutting efforts such as substituting for cheaper ingredients, will also have severe negative implications in the long run. As one executive put it, maintaining “we are the world let’s hold hands” culture, is sometimes very difficult for larger organizations.