Logistics and supply chain management plays a vital role and are critical contributors to the economic competitiveness of any country. However, the demand for products can only be satisfied through proper and cost-effective delivery of goods and services. Closer to home, South Africa’s main economic activity is in Gauteng, and this has a serious effect on logistics costs.
According to the Johannesburg Business School (JBS), Small, Medium Enterprises (SMEs) are the key cornerstone of most economies and mainly account for half of global Gross Domestic Product (GDP) and 60%-70% of employment. Furthermore, SMEs make up about two-thirds of the African continent’s formally employed workforce. In South Africa, the small business sector employs roughly 47% of the workforce and generates about 20% of the country’s annual GDP
SMEs are the main contributors and lifeblood of any economy, however, to sustain their role and contribute to the mainstream economy, SMEs should implement effective strategies in all their business operations, and look into digital transformation strategies.
While large corporates are highly pressed to support smaller businesses as part of their compliance obligations, or adherence to the Broad-based Black Economic Empowerment (BBBEE) policy, the importance and value of supporting SMMEs into the supply chain networks should transcend more than ever.
Whilst the global pandemic had a major impact on disruptions of global supply chains, South Africa is struggling to counter the fallout of the Covid-19 pandemic and lockdown responses. Research shows that the overall maritime cargo for January 2021 decreased by 15% compared to the same time last year, and according to industry body the South African Association of Freight Forwarders (SAAFF), there will be no “quick fix” to the situation.
In a recent survey by Orange Business Services, 83% of respondents stated that there is a heightened concern of supply chain risks, such as raw material shortages, manufacturing shutdowns, or transport blockages than twelve months ago. The pandemic has made them realise they require more speed, agility, and innovation to cope with change. And the importance of building resilience and sustainability into supply chains through digitalisation and real-time data insights is a concern for a greater transformation strategy which is essential for the survival of many businesses.
Through digital transformation, companies in the logistic sector can build business resilience. Well-coordinated operational processes coupled with the effective application of information and communication technology (ICT), will bring the basic advantage for more efficient, cost-effective operations.
In addition to this, the suitable application of electronic technology will help accelerate the speed of movement through the demand and supply pipeline, to make planning easier, in return help reduce uncertainty and eliminate barriers that may result in high levels of inventory holding among production, the warehouse, and the retail outlets. Therefore, advanced digital technologies will help business models in Africa to become better, more sustainable and equip them to be globally competitive.
Lastly, technology will cause a drastic shift in how trade is conducted. Businesses are currently witnessing increased market volatility in an intensely competitive environment, therefore reinforcing new approaches to doing business can help businesses to grow and become sustainable. It is rather important that we navigate the current shift and properly reinvent and execute the operations landscape to help transform trade and economic development across Africa.
Global logistics and supply chain activities are key facilitators of trade around the world, and the acceleration of ICT can help emerging economies to become globally competitive as well as help build resilience and sustainable supply chains post COVID-19.