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Supply chain management reduce out-of-stock situations, as well assessing mid-tech solutions and While just-in-time remains a fantasy as using pushcarts (called mikokoteni identifying the appropriate technology for most, with some ingenuity a in east africa) or motorbikes to lessen for their operation. examples of such fragmented outlet base can be converted distribution costs. notable examples are technology include sales-force automation into a quick-delivery and low-cost model. Coca-Cola’s micro-distribution system using mobile phones, or an enterprise Overcoming these distribution challenges and Unilever’s shakti programme, resource planning (erp) system (software can then become a major distribution a direct-to-consumer distribution scheme that allows an organisation to integrate strength – and a major barrier for pioneered in india. and manage various functions). competitor entry as well. building a successful distribution model takes time and boots on the Base of traditional outlets ground. Often distribution roll-outs are Modern retail will continue its growth Tielman Nieuwoudt bundled together with support for the path. However, for most businesses the is Principal of The wholesalers/retailers in terms of training focus will remain on reaching a large base Supply Chain and account development. of traditional outlets. For companies, Lab and has extensive supply beyond capability, visibility – the it is important to identify third party chain experience ability to ‘see’ what is going in the supply logistics (3pL) partners that understand covering more chain via technology – remains one of the regulations and have the necessary than 30 emerging the biggest challenges. as outlets are relationships with customs and port markets in Africa and Asia. The Supply small and contribute low volume, the officials. Few 3pL companies handle the Above left: Don’t ignore the hawking channel. Above right: Many retailers are located in narrow streets that make delivery diffcult. Chain Lab is a group of supply chain Opposite page: Small grocery stores often have limited space to stock product cost of installing hardware and software ‘last mile’ of logistics, and companies need improvement specialists with a focus on to enable visibility is a major stumbling to look at alternative distribution models to factory-to-village supply chain solutions. block. african companies are increasingly successfully service their outlet base. The wholesale table tops as a channel to expand its to-market by making use of distributors. distribution footprint. channel can help or While few companies have the necessary the Go-slow, or hawking, channel hinder marketers product portfolio and sales volume to sells merchandise that is normally easy set up exclusive distributors, there is an to carry – biscuits, for example – and increasing move towards distributors anybody who has been stuck in Lagos who are often selling a basket of non- traffic would have come across this competing and complementary brands. distribution mechanism. depending on tapping into the wholesale structure However, finding the right partner can your product category, these channels can be a sound business strategy for be challenging as distributor footprints matter and, according to one nigerian marketers, but for many brand owners are often limited to wholesale and key executive, biscuit companies avoid the the wholesale channel is also a barrier account outlets. a number of companies Go-slow channel at their peril. to doing business. that’s because have also opted for multiple distribution wholesalers provide limited control and networks focused on geographic areas the problem of stock a limited number of brands and within a country and types of customers, fragmented markets stock keeping units. as there are few distributors in africa that For any manager setting up a route- Hence, launching new brands and stock are able to offer a national footprint. to-market system, it is important to keeping units into the market can be a understand how products flow into challenge. Wholesalers are motivated by congestion problems the market. Often small grocery stores prices and deals, and so should rarely be Most african cities suffer from congested purchase product via the wholesale used as the exclusive long-term strategy. roads and it’s a reality that retail outlets of channel, using a wholesaler who is often For brand owners in this situation, providing whatever size are often located in these in close proximity, say a two to five additional wholesale support and account densely populated and congested areas, kilometre radius. development can go a long way towards or in markets with narrow roads where the wholesaler provides a basket of creating demand. However, product trucks can’t enter. goods and, in some cases, credit if they portfolio and margins will determine if this Given these difficulties, companies PHOTOS: Supplied and Tielman nieuwoudT have a good relationship with the outlet. is necessarily a viable strategy. are increasingly looking at alternative executives in the beverage industry will as african markets become more distribution strategies, including micro- attest to the fact that wholesalers will attractive, companies are moving away distribution to reach hard to access often provide returnable glass and crates from trading (e.g. using an export agent) areas. Micro-distribution methods on loan to the small grocery outlets. and adopting a more organised route- include high-frequency deliveries to 22 strategicmarketingafrica Second quarter 2014 Second quarter 2014 strategicmarketingafrica 23