African Supply Chain Trends: What We Learnt From 2020

In 2020, the different unfortunate events including the pandemic, economic devastation, and many others forced the supply chain to evolve in different forms that never existed previously. The different facts supply chain facts that were revealed are explained below.

The Importance Of Outsourcing

Last year, several organizations in Africa realized the importance of outsourcing the activities of their supply chain to supply chain specialists. This was especially noticeable in companies who executed integrated end-to-end services, and this outsourcing helped them reduce the risks they faced, concentrate on their core business, improve the flexibility of their business, and also become more proactive to the changes that occurred. Several reasons have contributed to the increase in outsourcing activities making, six out of the 15 fastest-growing economies in the world be in Africa the factors include cheap labor, improving infrastructure, and growing investment from international companies. Modernization of ICT infrastructure increased technology adoption – including data analytics and cloud computing – and regional government’s investment and incentives are also contributing to place African countries under the outsourcing spotlight.

The Importance Of Digitization

Although digitization in the supply chain was already becoming popular before last year, however, the importance of Digitization was reinforced by last year’s events. Several companies realizing this began to heavily invest in digital technology and as a result, they were able to immediately react to the demand fluctuations, whilst simultaneously ensuring that their level of productivity rises in order to cater for extra volumes, notwithstanding the different difficulties (such as social distancing, low level of cash flow amongst others).

The Rise of E-Commerce

In 2020, there was a great rise in online shopping activities across Africa, as E-Commerce activities and shopping sped up to almost 20 times. Especially considering the fact that consumer behavior last year was very unpredictable, which made forecasting of this behavior very difficult, the importance of being able to quickly and immediately react to the needs and demands of these customers immediately they are declared, and this can only be carried out by applying a properly-thought out tactic/ plan, E-commerce being an epitome of this. When one takes a look at the statistics; it is obvious that Africa is coveting e-commerce. Even if the African countries are not the first in the global ranking, the online buying itch is spreading steadily on the continent. To buttress this, according to a report by Statista, e-commerce in Africa was valued at 16.5 billion dollars in 2017. Another report by the consulting firm McKinsey, states that this value could well go up to 75 billion dollars by 2025.

The Level Of Redundancy

Throughout the whole of 2020, managers in the supply chain industry began to appreciate the value of reducing risks that resulted from disruptions. Following this, the level of Redundancy became a subject of deliberation and would even continue to be going into 2021. However, 2020 revealed that the providers of third-party logistics in Africa have become more and more equipped/ position to utilize their resources, engineering capabilities and general infrastructure go supply redundancy.

The Level Of Resilience

2020 exposed the need for resiliency in the supply chain as this has been exposed as a forefront concept. The tools of resiliency including visibility and the ability to monitor risks in real-time were especially employed by supply chain companies in Africa to tackle the challenges that affected the supply chain in 2020. Before 2020, the importance of resilience was glaring, however, the appetite of companies to invest reasonably in these tools were very low, the dynamics of the supply chain world and drastic changes that occurred help post this appetite way up, increasing the ability of these supply chains in Africa to be more resilient.

The Rise Of Near Shoring

The importance of near Shoring as a part of the supply chain was also revealed last year, as a lot of companies moved and adopted a near-shoring logistics strategy in a bid to avoid and evade inventory disruptions, This strategy was very effective as companies achieved higher efficiency with regards to leaner inventory, design of their networks, and tackle the increase in costs that occurred in labor wages and warehousing.