Effective, efficient supply chain management boosts GDP of developing countries

Supply chain management is the live wire of SME and entrepreneurial setting in any given economy. Nigeria has not been able to achieve much on this because of our poor transport network system. In this interview with Tunji Gomes, a Senior Manager, Supply Chain, in Accenture, Nigeria’s Consumer Goods practice, he revealed how a well planned supply chain management process boosts GDP of developed and developing countries. Excerpts: 

Could you explain what a supply chain is or what it should be?

The human body has many parts, which work in tandem to allow an individual perform daily tasks. There is however one organ which is most directly responsible for ensuring resources are supplied to all body parts – the heart. If the heart stops beating, the body will not function. A supply chain is to a business what the heart is to a body – if the supply chain does not ‘beat’ to the rhythm of customers’ desires, the organisation will

cease to exist. A supply chain is a network of interconnected modes from a source point to its intended recipient. A chain, in its pure state, is unbroken hence there is an inherent loop back to source. Supply chains exist in several forms; PHYSICAL – from the farmer who plants cashew nuts, grows cashew fruits, transports these fruits or nuts to merchants who may sell on to traders in a market and then to you and I. FINANCIAL – to the large establishment relying on paper to print currency notes which get transported from the mint to banking vaults and auto teller machines across the country for you and I, or in a more modern DIGITAL form where ‘Social’, ‘Mobile’, lots of ‘Analytics’ to better transform terabytes of data into business winning strategies and ‘Cloud’ are the norm.

So what can we say supply chain management is? 

With that foundation, the concept of supply chain management, the more expanded term for which was historically known as logistics management, has to do with the management of the interfaces and relationships that exist from the raw material stage of a product or upstream component of a service down to the end consumer. Along this chain you may find several modes in the form of suppliers, transport, process (production or manufacturing), storage and consumers. The saying goes, ‘you are only as strong as your weakest link’; if force is applied along the chain greater than the strength of that link in the chain, a break could occur which would cause disruptions along the entire chain. Such disruptions could cause a ‘bullwhip’ effect (greater disruptions) further upstream. The headache of any Supply Chain Manager is to ensure their supply chain is robust and resilient enough to withstand disruptions that occur (and they will occur) and protect service delivery to their businesses’ customers. The concept and importance of contingency planning cannot be touched without first understanding the flows that exist along the supply chain.

To ensure its profitable and efficient deployment, what are the key pillars of supply chain management? 

There are traditionally four flows that exist along the supply chain, they are, information, goods/services or people, cash and the ‘reverse’. Each of these flows is very crucial to the successful execution of activities along the chain. Similar to body parts, they cannot exist in isolation hence need to work together to ensure there are no bottlenecks along the chain. These flows are vulnerable to external and internal factors which could hinder movement from source to intended recipient. A supply chain professional requires these four flows to move unconstrained in order to build resiliency and conduct contingency planning along his or her supply chain. The relevance of the aforementioned concepts will be broached after an insight into each supply chain flow.
 

You said that planning is key to effective logistics and transportation, has Nigeria been able to harness these to profit? 

Goods rely heavily on several transport modes for movement from one location to another. The third quarter of 2015 Nigerian GDP report by the National Bureau of Statistics provided an insight into the contribution of each of the transport modes, to the share of the transportation and storage sector in the GDP. Over the first three quarters of 2015, rail, the most suitable for movement of heavy goods contributed 0%, road, the most commonly used mode contributed an average of 85%, water contributed an average of 0.66% and air an average of 7% (transport services, post & courier services made up the difference). This heavily skewed distribution already paints a picture of the kinds of challenges faced by logistics managers operating within these shores.
 

What is the role of the logistics professional? 

Let us consider a Logistics professional who intends on moving goods from point A to point B. In Nigeria, transporters are heavily reliant on the road network that exists (rail network no longer mature enough to be a suitable alternative) to move loads which are greater than the capacity of the pliable road network. This then leads to traffic congestion and in turn to delays. Any Logistics manager will tell you that the metric ‘on-time in full’ (OTIF) is one which is of grave importance to them; a clog in the road network (well at least the type you witness on Apapa-Oshodi Expressway or the Lagos-Ibadan expressway on the last Friday of the month), would make a mockery of that metric. Whilst still on the road network, security poses to be another challenge for Logistics managers. The transporter moving alcoholic beverages through some very interesting parts of the continent prays and hopes that his or her goods get to the final destination in the same quantity that left the plant or warehouse.