Firms in digital race to stave off supply chain disruptions

Doug Hunter, head of customer and ecosystem enablement for SYSPRO Africa. FILE PHOTO | NMG

The Covid-19 pandemic has come with many lessons for businesses. It has been a learning curve but Kenyan manufacturers and processing companies are fast tapping into technology to address supply chain hiccups that resulted from lockdowns and restricted movement in 2020.

For close to two years, these companies were unable to source raw materials to manufacture different products. Warehouse fees went up at ports and the cost of importing materials rose.

A 2022 report by South African business management software provider SYSPRO, indicates that 70 percent of businesses experienced material handling and supply chain disruptions while 60 percent were unable to engage with customers and suppliers.

To solve the problem, industry players have committed to digital transformation initiatives, with 69 percent building digitisation strategies.

"As businesses began to realize that the shift created by ongoing disruptions was long-lasting and innumerable, many geared up digital transformation," the 2022 report states.

In their digital road maps, 58 percent have optimised operational processes that also include upskilling staff, improving customer services (48 percent), boosting resource efficiency and cost reduction (46 percent) as well as fostering internal collaboration (50 percent).

Doug Hunter, head of customer and ecosystem enablement at Syspro told Digital Business that although Covid-19 broke supply chains in South Africa and Kenya leading to the delay of many goods in ports, business leaders in both countries have shown resilience against the effects of the pandemic.

"The crisis opened the eyes of many companies to use technology to achieve efficiency. Most African companies don't implement technologies fully but over the past two years, they have seen the need to do that. With IoT software, they are seeing more benefits such as higher production volumes in shorter durations and the general quality of the production cycle. There is more feasibility and auditability,” he said.

The findings suggest that many businesses failed to set up a solid foundation in their digital strategy and only jumped straight to digitisation and digital transformation without a clear vision. That has caused them constraints in getting the best from technology.

To execute digital strategies, however, businesses have made a number of technology investments to improve operations management, quality management and warranty management (34 percent), improving sourcing, procurement and inventory management as well as investments in product design and order configuration.

Key technology investments being internet of things (IoT) and sensors (47 percent), cloud computing (45 percent), collaboration platforms (27 percent), alternative sales and marketing digital channels (21 percent) as well as big data and analytics (20 percent).

Others include connectors and APIs (20 percent), virtual or augmented reality (seven percent), AI (five percent), robotics and cognitive (five percent), distributed ledgers (five percent), others (four percent) and 3D printing (three percent).

Benefits accrued from digital transformation have been cost efficiency to 49 percent of firms surveyed, improved employee engagement (35 percent), improved product quality (32 percent), improved customer satisfaction (26 percent), revenue growth (22 percent), none of the above (20 percent) and other (six percent).

“Companies need staff that understand how to fix a broken supply chain. And that staff must be aware of the latest technologies. Manufacturing needs IoT so that data can be leveraged even outside the normal supply chain,” said Mr Hunter.

“You can get better predictions about the market using machine learning. The more you do this the more experience you get. If a machine is fed with more accurate data then it gets more intelligent. And that cuts costs and gives you better clarity on how to improve your business.”

According to the SYSPRO report, digital transformation plans over the next 12 months among distributors and firms include optimising operational processes at 66 percent, improving resource efficiencies and cost reduction (54 percent), improving customer service (53 percent), improving employee performance (44 percent) and increasing internal collaboration (44 percent).

The survey further indicates that the biggest disruption in the automotive parts and accessories industry has been supply chain and material handling disruptions at 83 percent followed by engagement with customers and clients at 58 percent.

"This can be largely attributed to the fact that a large portion of automotive parts are derived from the far East," notes the research.

To address these challenges, 42 percent have invested in alternative sales and marketing channels such as e-commerce, while 41 percent have pumped resources into IoT and industrial internet of things (IIoT), big data and analytics (25 percent) and in collaboration technologies (eight percent). Food and beverage industry also experienced a 77 percent disruptions on customers and suppliers engagements.

Due to the fact that the sector also needed to consider new pandemic-related hygiene requirements and the knock-off effect of supply chain disruptions, 45 percent of businesses experienced major internal operations disruptions, says the report.

"Many people started to use online e-commerce platforms to buy food and households. Even supermarkets and stores went online because all the consumers were now there. That led to minimal use of cash and a great shift towards cashless societies,” said Mr Hunter.

However, the report indicates that one of the barriers to digital transformation was the overdependence on outsourced short-term advisors.

"To implement their digital strategy, 71 percent of businesses engaged with outsourced external service providers with no real understanding of core business challenges or everyday reality of what was affecting the business," says the survey.

Another challenge was the lack of top management support and a wide skills gap. The true champions of digital transformation within businesses were middle management (60 percent), while only 44 percent of C-level management supported digital transformation.

For companies that are yet to get back on their feet due to the disruption, the report shows that they have been slow to adopt modern technologies in managing their businesses because they feel it is unnecessary.

"At the same time, some businesses feel that digital transformation is unnecessary as the way they have manufactured products has not changed in years," Syspro head of product management Roger Landman says.

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