Hannes Dressler, Chief Business Officer at SAP Africa, says supply chain resilience has become a top strategic imperative for companies and governments throughout the continent. "Companies really awoke to the vulnerability of supply chains during the course of 2020. Since then, many organisations have taken steps to modernise their supply chain management processes and build greater resilience to future shocks and disruptions. And at the core of this modernisation is the adoption of technology."
A report by the UN Conference on Trade and Development (UNCTAD found that Africa is set to soon become a key link in global supply chains, driven by growing consumer demand and rich natural resources, as well as the implementation of a single market through the African Continental Free Trade Area.
Key supply chain risks
However, many organisations are still grappling with supply chain instability and uncertainty due to a mix of local and global factors.
Johan Diamond, Head of Connected Supply Chain at PwC South Africa, says globally connected supply chain networks are facing significant disruption from environmental, political and financial uncertainty. "The increasing amount of supply chain disruptions represents one of the most important risks for African organisations today. Shipping delays due to conflict in Europe and the Middle East are impacting supply chains as well as revenue, while political instability, skills scarcity and infrastructure challenges throughout the continent pose major risks for Africa's supply chains."
A study by PwC Germany identified six key supply chain trends that will have the greatest impact by 2030. These included growing talent and workforce scarcity, an increasing need to support new business models, and rising competition from fully-integrated ecosystems.
Three trends were expected to have an impact on supply chains in the immediate to short term, namely evolving technological advances, the increasing frequency of severe supply chain disruptions, and expanding ESG compliance.
ESG compliance forcing rethink
Diamond says the rising pressure of ESG regulations and compliance have driven companies to rethink value chains and devise effective strategies and tools to reduce and measure carbon footprints respectively. "Companies are viewing investments into carbon reporting tools and initiatives as a competitive advantage enabling greater value, transparency and trust for the consumer and the environment as a whole."
SAP Insights Research recently found that 38% of South African companies do not have accurate data about the volume and weight of their packaging or the materials that make up the packaging.
Dressler says a lack of data makes it exceedingly difficult for companies to maintain compliance with ESG regulations.
"African governments and their key trade partners are introducing a raft of new legislation aimed at curbing waste and building more sustainable supply chains in line with circular economy principles. Surprisingly, our recent research reveals that only three in ten South African companies feel they understand the impact of the EU Packaging and Packaging Waste Regulations on their business, which has extensive implications for any company selling products in the EU."
Impact of technology
According to Diamond, African enterprises should implement Strategic Risk Management and Planning to help build greater supply chain resilience. "This enables organisations to proactively manage risks through robust scenario planning. Identifying potential risks and developing contingency plans also helps organisations prepare for disruptions impacting their supply chains and ultimately makes them more agile when responding to changes. In addition, integrated business planning can help organisations gain enhanced visibility over their supply chains and align tactical plans across portfolios, customers and resources.
Dressler says modern supply chains are powered by ideas and insights. "Companies that leverage data to optimise their supply chain management processes benefit from greater efficiency, profitability and more future-proof business models. And while robust supply chain management systems excel at helping business operate more efficiently and become more responsive to customer needs, their power is increased exponentially when integrated with modern ERP systems."
Many African organisations are taking their supply chains to the cloud to gain greater flexibility and adaptability. Dressler says this positions companies to remain agile and responsive in the face of constantly shifting market demands and conditions. "The cloud's resilience and disaster recovery capabilities provide built-in redundancy and safeguards against unexpected disruptions, ensuring the protection of critical data and applications during emergencies. It's also a springboard to the effective deployment of artificial intelligence in supply chain processes."
AI’s emerging supply chain role
Diamond says sophisticated AI models are being used to predict future demand based on historical data, market trends as well as external factors, extending well beyond the capabilities of time-based, seasonality driven predictive models. "Data driven AI models and services have also been used to optimise route planning in logistic networks, estimate componentry failure in production lines to aid predictive maintenance schedules, and enable improved image recognition and anomaly detection strategies in product inspection processes."
Dressler notes the use of AI by African enterprises to strengthen their supply chains. "Companies leveraging advanced algorithms and machine learning techniques optimise their processes, generate actionable insights that improve decision-making, reduce costs and are better positioned to deliver personalised customer experiences. In addition, AI is being used to solve problems proactively, helping companies mitigate the potential impact of disruptions on their operations."
Generative AI also represent a growing set of use cases for various supply chain scenarios, says Diamond. "SAP has realised the benefit GenAI models can deliver to customers and provide platforms, such as the newly released SAP HANA cloud vector engine, designed to empower businesses with advanced data processing capabilities.
He adds that this is making it easier for companies to implement AI-driven solutions and improve decision-making processes. “SAP is also encouraging partners and customers to develop and create business use cases for BTP services with embedded GenAI capabilities, by providing access and support to the SAP BTP Lighthouse Program. The impact of GenAI and AI on supply chains is irrefutable and companies should awaken to the adoption of these services to empower decision makers and deliver greater value to their customers."