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.
