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<\/figure><\/div>\n\n\n\nAll these lines and these arrows, are going from Asian\ncountries to the rest of the world and concern Apple, IPhone, Computers, Jeans,\nPharmaceutical products, and Toyota cars. You can notice amazingly that the\nwhole world is supplied by Asian countries especially China. African countries\nare one of the biggest consumers of these products apart from Apple IPhone.\nThis shows that China had become before the covid-19 disruption, the\nmanufacturing workshop of the whole world.<\/p><\/p>\n\n\n\n
Many companies in America, Europe and Japan had relocated in China and\nwere producing from there. Zara whose suppliers and manufacturers were located\nin China and were producing almost all their items from there is one of the\nexample. But nobody seems to have noticed this or knew about this before the\nCovid-19.<\/p><\/p>\n\n\n\n
In Cameroon and in\nAfrica, the situation is the same. Many sole traders are ordering from China in\nmost of the businesses. Almost all the sellers and distributors in most of the\nmarket places here are being supplied from China and also most of the companies\nare also sourcing from china. So in Africa as well as everywhere in the world\nChina has become the main sourcing and manufacturing place.<\/p><\/p>\n\n\n\n
The consequences of the Covid-19 disruption<\/strong><\/p><\/p>\n\n\n\n Because of this key and\ncentral role of China in the supply side of worldwide supply chains concerning\nraw materials, parts and finished goods, the consequences of the Covid-19\ndisruption are numerous. The most\ndifficult to handle are:<\/p><\/p>\n\n\n\n <\/p>\n\n\n\n It is obvious that if a\nsupplier has a problem the rest of the chain will suffer from this problem. The disruption came by the fact that the main supplier of the world has a problem and it has affected the three main processes of the supply chain: source, make, and deliver.<\/p><\/p>\n\n\n\n All these disruption\nconsequences were favoured by lack of collaboration, anticipation and\ninnovation such as digitalization, relocation and substitute products in most\nof these companies.<\/p><\/p>\n\n\n\n How To Come Out Of This Supply Chain Disruption<\/strong><\/p>\n\n\n\n Now, what do we have to do to come out? From the three main processes of\nsupply chain, we can design strategies to come out of this crisis.<\/p>\n\n\n\n Audit<\/strong><\/p>\n\n\n\n Since these three processes are affected, the best\nthing is to start doing an audit for each of the processes. An audit of the Source, an audit of the Make, an audit of the Deliver. This audit needs to be carried out by the managers and those who are taking care of the strategies:\nthe different officers, the operational officers. So that at least they can see\ntogether the strengths, the weaknesses of each process and evaluate the\ninfluences, the opportunities together with the threats.<\/p><\/p>\n\n\n\n SWOT<\/strong><\/p>\n\n\n\n A SWOT analysis of the total company must be made.\nThis will help to come out of the disruption and to prevent the next\ndisruption. <\/p>\n\n\n\n and then from there, draw a contingency plan of\nactions for example the BOT strategy.<\/p>\n\n\n\n BOT Strategy<\/strong><\/p>\n\n\n\n The BOT (Built-Operate-Transfer) strategy can help the\ncompanies in developing countries to become resilient. Its leads always to a\nresilient and flexible Supply Chain and is based on the two great parameters of\nSupply Chain that use the supply<\/strong> management <\/strong>and the demand\nmanagement<\/strong>.<\/p><\/p>\n\n\n\n The first thing to do here is to balance supply and demand\nby putting in place a strong supplier relationship. The best way to balance the\ndemand and supply in time of disruption is to see how we can substitute the\ncurrent products by new products: Bakeries in Central and West Africa that\nseize this disruption to substitute wheat flour with cassava and potato flour,\ngood examples. This disruption is therefore an opportunity for companies,\nSupply Chain managers, procurement managers and R&D teams to innovate by\nintroducing substitute raw materials to produce substitute end products.\nAnother example concerns companies that were producing cosmetics, soaps that\nturned into the production of hands sanitizers and any other items useful to\nfight against covid-19. They just had to change some moulds on their machines\nto adapt the production line to the current situation. These best practices\nneed to be improved and applied forever even after the crisis.<\/p><\/p>\n\n\n\n Market Research<\/strong><\/p>\n\n\n\n At this step Market Research is the best tool to use.\nIt consists of looking for new suppliers in new countries and in new markets.\nMarket research is thus very important in procurement. It is the base to reduce\nthe cost in procurement. Carrying out Market Research can also help to conquer\nnew customers; to know the exact prices in the sourcing market and to help to\nget in. From this knowledge you can negotiate the best price, build a network\nof relations, and a database where you can find all the suppliers for all the\nitems or raw materials you need. A procurement manager from one company told me\nthat when he noticed that China was having problems in December, he ordered the\nraw materials for the next 6 months to be supplied immediately, and now in\nspite of the disruption, his company has been able to produce and to supply its\ncustomers without disruption for the next 6 months. This is an example of a\nprocurement manager who has been able to plan and to anticipate. Most of the\ncompanies did not excel in diversification and anticipation that is why with\nthis disruption they were in shortage of raw materials. The following Supply Chain formula can\nsummarized this:<\/p><\/p>\n\n\n\n Sales price = cost price + profit<\/p>\n\n\n\n Cost price = purchase price + charges<\/p>\n\n\n\n The sales price is equal to the cost price plus profit. The cost price\nis the purchasing price plus additional expenses (charges). The sales price\nwill then be the purchase price plus the additional expenses plus the profit.\nThere is no need to focalise on the profit. In this formula it is just enough\nto focalise on the sales price because during disruptions you can only make\nprofit by keeping the sales price while reducing the cost price. You have to\nact on the cost price. How to reduce the cost price? It is to act on the\ndifferent costs of production and also the cost of sourcing (purchase cost)\nlooking for the best price where you can buy less. Since the time, it has been\nknown that the Artemisia leaves and roots can cure malaria disease, since it\nhas been used for covid-19 in some countries, the price has risen from XAF 3500\nto XAF 10 000 for a packet of 500g. But that is not the real policy because it\nwill give the opportunity to all the clients to look for substitute products or\nto source from the retailer\u2019s suppliers. In this case for example people who\nknow that a bag of Artemisia ordered from villages (where it is produced) will\ncost only XAF 5000 will call relatives living there and have the product the\nday after with more profitability.<\/p><\/p>\n\n\n\n How to prepare for the next disruption? The need of\nbuilding resilient Supply Chains<\/strong><\/p>\n\n\n\n To prepare for the next disruption is to acquire\nskills, means, resources and flexibility necessary to be able to anticipate.\nThese are the characteristics of a resilient Supply chain. Because only\nresilient supply chains can face disruption with efficient and effective\ncontingency plans put in place. For that, some very important ideas have to be\nhighlighted in order to anticipate the next disruption. Collaboration<\/strong><\/p>\n\n\n\n The efficient use of collaboration is not based only\non the use of a collaboration platform as we are seeing now with Webinars,\nVideo conferences or Zoom meetings. Collaboration means to understand the\nvision together, to understand together where the company is going and to make\nsure the team is looking in the same direction and focusing on the same goals.<\/p><\/p>\n\n\n\n Relocation<\/strong><\/p>\n\n\n\n The other point is relocation. Most of the foreign\ncompanies that were located in China are trying to relocate in other countries\nlike Malaysia, Cambodia, Taiwan, and Vietnam. The Japanese government has for\nexample budgeted about 2 billion dollars to help Japanese companies to go back\nand establish home. But those companies that are relocating are no more going\nto count on the cheap labour that China was offering to them.<\/p><\/p>\n\n\n\n Digitalisation<\/strong><\/p>\n\n\n\n The solution for this loss of cheap labour will be to\nautomate their production and to put emphasis on the use of artificial\nintelligence, Internet of Things. And this is the next revolution. The next\nrevolution after this disruption is the numerical revolution. Going back in\n1918, the Spanish flu pandemic was followed by the industrial revolution that\nbrought sophisticated equipments and help to modernize production. For this\nnumerical revolution companies will be compelled to adjust their supply chains\nby introducing software linked to blockchain. The direct benefit will be that\nSupply chains will gain more transparency.<\/p><\/p>\n\n\n\n Companies will have to learn how to digitalise\neverything including processes, to implement blockchain in procurement. Instead\nof fighting against people that are smuggling money, the best thing is to\nrobotise everything by implementing smart contracts by putting all the\ninformation needed on smart contracts in blockchain technology.<\/p><\/p>\n\n\n\n The opportunity blockchain gives is that you cannot\ndecide alone. That means that a manager cannot just approve that he has\nreceived the product and triggered the payment process. All the team of\nmanagers need to validate before payment can be done. This is one of the\nadvantage of digitalisation. And today we are talking about digital marketing.<\/p><\/p>\n\n\n\n Multiple sourcing<\/strong> Dell is not having any problem with the Covid-19\ndisruption. What they did is that they relocated their suppliers from China to\ntheir warehouse built around their factory to make sure that raw materials used\nin their factory is always available and free of charge. So when the disruption\nhappened they were having all the raw materials available regularly. The\nmultiple sourcing is another strategy and means that you do not need to rely\nonly on one supplier. When you rely on one supplier, you will always face trouble\nin case the supplier is facing trouble.<\/p><\/p>\n\n\n\n Substitute products<\/strong><\/p>\n\n\n\n The fact of anticipating on substitute products is\nanother strategy. It means that you have to look at ways to innovate: if a\nproduct or a raw material comes to lack, what can you use as a substitute. You\nhave the example of this West African bread and there are so many examples we\ncan take. You have to sit down together. That is collaboration. The team has to\nwork ahead on the contingency plan they could refer on when disruption will\ncome.<\/p>\n\n\n\n Training<\/strong><\/p>\n\n\n\n To achieve all this, to achieve all your objectives,\nto meet up your goals, training is essential. The company teams must be\ntrained; not only on the technics of procurement and sourcing but in the\ndigital. Procurement agents and managers would need to master the digital\naspects of Procurement, Supply Chain Management, Artificial Intelligence (AI),\ndigital marketing and production teams as well would need to acquire new\nmanufacturing technics. Moreover people have to be trained to face changes and their\nsubsequent adjustments. It is indeed very difficult for people to accept the\nchanges when the time comes. They therefore need to be gradually prepared to\nface it.<\/p>\n\n\n\n What then can African\npeople do to reduce the level of dependency on other continents?<\/strong><\/p>\n\n\n\n We have noticed with this Covid-19 breakout that\npeople are creative: They are manufacturing masks locally, it was something\nthat was not feasible if there were no Covid-19. China was the only country\nmanufacturing masks and many other technological products. Today Taiwan has\nentered into the market. This is the time for African entrepreneurs to study\nthe market and see which type of products they can produce locally. Local\ntraders are going to China to buy items, building materials and other products\nthat is worth billions and billions. It is unfortunate that these traders that\nare going to the same market place, buying the same products, living in the\nsame hotels and when back in Africa, selling these same products in the same\nmarkets, are unable to think collaboratively. Why can\u2019t they put these huge\namount of money together and build at least assembly plants and distribution\ncentres? That\u2019s collaboration. This is a way to start thinking about the next\ndisruption. When people will have a good understanding of what is happening in\nChina today they will start to think otherwise. Read the book \u201cChina Silent\nwar\u201d<\/strong> and you will understand how the China Supply Chain is functioning and\nwhy they have been able to come out from this Covid-19 crisis so quickly and how\nthey have been already preparing for the next crisis. On the other hand,\nSupply Chain managers have to invest their knowledge in educating people. There\nis no development without knowledge. And to make sure that people become aware\nof the fact that their economic difficulties are due to lack of vision and lack\nof collaboration, Supply Chain managers have to train them to think\nstrategically and to put in place managerial, production and distribution\nstrategies. It is easy to blame others of being responsible for all the\nstructural problems but people must stop to think that way. They can start\ntheir collaboration in small areas and then collaborate with local\nadministration. For example because of the Covid-19 a small lemon can cost up\nto XAF 200 in Douala town but some 50km farther, you can have for the same\nprice a dozen of this fruit. The worst is that most of them get rotten because\nthe farmers are not collaborating and are therefore unable to design an\nefficient distribution strategy. That is why prices are rising and falling down\ndepending on market forces. And even if we should need government regulations\nto stabilize prices, it is critical to know that government do not invent\nprices of items. They always fix the price from the assessment of the flow of\ninformation they received. So people do not need a government decree to sit\ndown and collaborate. The government assistance must come in support through\nmarket price regulation and not to help them to carry on feasibility studies\nthey need to start or develop a business.<\/p>\n\n\n\n <\/p>\n\n\n\n Dr Ing Albert Njamen Njanke, A supply chain disruption is a breakdown that can occur in the production and distribution processes, including events such as<\/p>\n","protected":false},"author":1,"featured_media":65,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,2],"tags":[],"class_list":["post-60","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","category-supply-chain"],"_links":{"self":[{"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/posts\/60","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/comments?post=60"}],"version-history":[{"count":2,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/posts\/60\/revisions"}],"predecessor-version":[{"id":67,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/posts\/60\/revisions\/67"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/media\/65"}],"wp:attachment":[{"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/media?parent=60"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/categories?post=60"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globaldominiumservices.com\/blog\/wp-json\/wp\/v2\/tags?post=60"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/globaldominiumservices.com\/blog\/wp-content\/uploads\/2020\/06\/supply-chain-disruption.png\")
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The results of the audit\nand the SWOT must be used:<\/p><\/p>\n\n\n\n
<\/p><\/p>\n\n\n\n![\"\"](\"https:\/\/globaldominiumservices.com\/blog\/wp-content\/uploads\/2020\/06\/supply-chain-resilience.png\")
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Consultant in Supply Chain & Procurement
www.globaldominiumservices.com<\/p>\n","protected":false},"excerpt":{"rendered":"