3. Africa Rising
Africa Today
$1.6 trillion
Africa’s collective GDP in 2008
$860 billion
Africa’s consumer spending in 2008
316 million
the number of new mobile phone subscribers signed
up in Africa since 2002
60%
Africa’s share of the world’s total amount of
uncultivated, arable land
52
the number of African cities with more than 1 million
people each
20
the number of African companies with revenues of at
least $3billion
Africa Tomorrow
$2.6 trillion
Africa’s collective GDP in 2020
$1.4 trillion
Africa’s consumer spending in 2020
1.1 billion
the number of Africans of working age in 2040
128 million
the number of African households with
discretionary income in 2020
50%
the portion of Africans living in cities by 2030
Lions on the move: The progress and potential of African economies (2010), McKinsey Global Institute
4. Africa Rising – More Than a Resource Boom
Sector share of change in real GDP, 2002 - 07
Percent, 100% = $235 billion
“When we were investigating the growth in Africa, one of the myths that was always there was
that the growth in Africa is only coming from resources… But actually when you go and look
into the numbers, a big part of this growth is actually driven by the rise of the consumer,” said
Reinaldo Fiorini of McKinsey & Company.
Understanding the African consumer (2012), http://www.howwemadeitinafrica.com;
Lions on the move: The progress and potential of African economies (2010), McKinsey Global Institute
5. Rise of the African Consumer
Discretionary
Income
Basic Needs
Households with
Income >$5 000
millions
59 85 128
The rise of the African consumer (2012), McKinsey’s Africa Consumer Insight Centre
6. Fresh Produce Supply Chain
Packer Landside
Transport
Grower/
Producer
Cold
Store
Port
Terminal
Freight
Carrier
Regional
W/houses
Distri-
bution
Retailer ConsumerPort
Terminal
Exporter Importer Transport
Importer Activities (Demand Side)
Exporter Activities (Supply Side)
7. Global Supply Chain Pioneer
“Lieutenant Dan got me invested in some kind
of fruit company. So then I got a call from him,
saying we don't have to worry about money no
more. And I said, that's good! One less thing.”
“That day, for no particular reason, I decided to
go for a little run.”
8. The Global Supply Chain
Article at http://fancydresscostumes.co.uk/blog/forrest-gumps-investment-apple/
Based on a nominal initial amount of 100,000 shares - “After accounting for two more
stock splits in 2000 and 2005, Forrest and Lieutenant Dan’s holding now stands at
11,811,680 shares.”
What Forrest Gump’s investment in apple could be worth today?
Today that stock is worth US$ 5,019,609,649.60
Adapted from G. Linden, K.L. Kraemer, and J. Dedrick (2009), “Who Captures Value in a Global Innovation Network? The Case of Apple’s iPod”,
Communications of the ACM, March 2009, Vol. 52, No. 3, pp. 140-144.
15. Current Perishable Food Trade
9.8
418.0
386.5
629.8
134.9
Based on data from UNCTAD - Merchandise trade matrix (2011)
US $, millions
16. Exporting to the Rest of the World
• Fresh fish (Nile Perch)
– Kenya, Uganda, Tanzania
• Fresh fruit and Vegetables
– Ghana, South Africa, Côte d’Ivoire, Kenya,
Mozambique, Swaziland
• Organic coffee and cocoa
– Uganda
17. South African Case Study
Apple 12,5 kg equivalent to Europe in week 14 (Rand Values)
Value Chain Element Rand Value
Retail Selling Price 175.00
Retail Profit 42.00
Efficiency driven SC Costs 48.94
Other SC Costs 38.57
Gross Farm Income 45.49Europe transport; R 4,25
Importer’s commission; R
8,65
Europe logistics; R 13,00
Europe duties; R -
Freight; R 26,88
Insurance; R 0,75
Exporters commission; R 5,10
Port cost; R 2,26
Wharfage;
R 0,42
Transport to port; R 2,13
Finance charges & Interest
advances; R 1,00
Levies; R 0,30
PPECB/Inspections; R 0,36
Packing materials; R 11,08
Packing charges
(Tipping Cost); R
11,33
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
18. Europe transport;
R6,50
Importer’s commission;
R7,28
Europe logistics; R5,85
Europe duties; R-
Freight; R13,40
Insurance; R0,75
Exporters commission; R4,00
Port cost; R0,50
Wharfage; R0,16
Transport to port; R3,90
Finance charges & Interest
advances; R0,50
Levies; R0,36
PPECB/Inspections; R0,30
Packing materials; R8,60
Packing charges
(Tipping Cost); R2,30
Value Chain Element Rand Value
Retail Selling Price 126.75
Retail Profit 29.25
Efficiency driven SC Costs 30.31
Other SC Costs 24.09
Gross Farm Income 43.10
South African Case Study
Grape 4,5 kg equivalent to Europe in week 52 (Rand Values)
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
19. Europe transport;
R10,59
Importer’s commission;
R5,60
Europe logistics; R13,00
Europe duties; R-
Freight; R25,93
Insurance; R0,63
Exporters commission; R5,36
Port cost; R5,00
Wharfage; R0,23
Transport to port; R1,91
Finance charges &
Interest advances;
R0,90
Levies; R0,32
PPECB/Inspections;
R0,22
Packing materials; R11,08
Packing charges (Tipping
Cost); R18,06
South African Case Study
Citrus 15 kg equivalent to Europe in week 27 (Rand Values)
Value Chain Element Rand Value
Retail Selling Price 159.25
Retail Profit 42.97
Efficiency driven SC Costs 56.66
Other SC Costs 42.17
Gross Farm Income 17.45
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
21. Demystifying the African Consumer
“For the younger guys in the range between 16 and 24, more than half of the people [surveyed]
think that the brand is important. So you see that this consumer is emerging, and this consumer
is not the same consumer that we are used to. It’s a new consumer. So you have to understand
how they think and how they behave to be effective.” - Reinaldo Fiorini, McKinsey & Company
The rise of the African consumer (2012), McKinsey’s Africa Consumer Insight Centre; Understanding the African consumer (2012), http://www.howwemadeitinafrica.com
22. The rise of the African consumer (2012), McKinsey’s Africa Consumer Insight Centre; Understanding the African consumer (2012), http://www.howwemadeitinafrica.com
Demystifying the African Consumer
“It actually turns out, especially in West Africa, people are very
loyal in apparel. Women are unbelievably loyal to local brands.
But generally Africans are very loyal,” added Yeboah-Amankwah.
23. Demystifying the African Consumer
The rise of the African consumer (2012), McKinsey’s Africa Consumer Insight Centre
Low-price shoppers
Local, quality shoppers
Brand-loyal shoppers
Experimental shoppers
Fresh lovers
• Most price conscious
• Will make sacrifices for
lower prices
• Believe price indicates
quality
• Shop locally
• Prefer brands
• Will pay more for them
• Like to try new things
• Enjoy shopping
• Prioritize freshness over
others
Grocery category segments
25. Forms of Supply Chain Collaboration
Suppliers
External
Own Company
Internal
Competitors
External
Customers
External
Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008)
Non-Competitors
External
26. A Framework for Supply Chain
Collaboration in the Agri-food Industry
Managing
Trust
Supply Chain Collaboration
Managing
Power
Designing & Governing
SC Activities
Establishing & Maintaining
SC Relationships
Managing
Dependence
Sharing
Risks
Selecting Partner
(number of
entries)
Selecting
Information
& Data
Sharing
Techniques &
TechnologiesCollaboration
Width
(SC activities)
Collaboration
Depth
(Strategic, tactical,
operational)
Sharing
Rewards
Adapted from A. Matopoulos, M. Vlachopoulou, V. Manthou, B. Manos, (2007),"A conceptual framework for supply chain collaboration:
empirical evidence from the agri-food industry", Supply Chain Management: An International Journal, Vol. 12 Iss: 3 pp. 177 - 186
27. Supply Chain Practices and
Inter-organizational Governance
Retailer’s
store
Retailer’s
warehouse
Manufacturer’s
warehouse
Manufacturer’s
factory
Raw
materials Consumer
Product flowInformation flow
Low HighBenefits and Costs of Collaboration
Relational
contracting
Standard
contracting
CRP
DRP
CPFR
ECR
Vertical
integration
28. Sharing of Real Time Information
Retailer’s
store
Retailer’s
warehouse
Manufacturer’s
warehouse
Manufacturer’s
factory
Raw
materials
2-3 days 2-3 days1-2 days
1-2 days 1-2 days
1-2 days
1-2 days
1-2 days
Total: 10-18 days
Total: 4-8 days
Demand
spikes
250%
Traditional
supply chain
1-2 days 1-2 days 1-2 days 1-2 days
Total: 4-8 days
Demand-driven
supply chain
The flow of information and products across a hypothetical supply chain
Demand
spikes
250%
Product flowInformation flow
Real time information – no delay in passing information across the supply chain
Adapted from John Budd, Claudio Knizek, and Robert Tevelson, (2012), “The Demand-Driven Supply Chain: Making It Work and Delivering Results”, bcg.perspectives
29. • Traditional Information Policy = exchange order information only
• Full Information Policy = exploit shared information
The Value of Shared Information
• Implement IT to accelerate and smooth the physical flow of goods
through a supply chain
Average Maximum
Numerical Study 2.2% 12.1%
Simulation Model 3.4% 13.8%
Percentage SC Cost Reduction of Full Information Policy vs.
Traditional Information Policy
Average
Half Lead Times 21%
Half Batch Sizes 22%
Reduction of lead times and batch sizes due to
faster and cheaper order processing
Gérard P. Cachon, Marshall Fisher, (2000) “Supply Chain Inventory Management and the Value of Shared Information”, Management Science, Vol. 46 no. 8, pp. 1032-1048
30. South African Case Study
Saving due to
efficiency driven
by Information
policy
Saving due to
acceleration and
smoothing the
physical flow of
goods
R1.07 to R5.92 per
carton
R10.27
R0.66 to R3.66 per
carton
R6.36
R1.24 to R6.85 per
carton
R11.89
FPT Analysis based on data from M.C. Dodd & G.P. Cachon et. al.
31. Investing in Supply Chain Value Creation
Next-generation supply chains: Efficient, fast and tailored; Global Supply Chain Survey 2013; PwC; 2012
It is evident from the survey that leaders achieve excellence and
competitive advantage by focusing on differentiating capabilities.
Maximum delivery
performance
Supplychain
valuedriver
Sustainability
Complexity management
Minimised costs
Minimised risks
Maximum volume
flexibility and
responsiveness
Tax optimisation
and efficiency
Valuecreation
Activated value drivers
Path To Supply Chain Value Creation
32. Next-generation supply chains: Efficient, fast and tailored; Global Supply Chain Survey 2013; PwC; 2012
Investments in Differentiating Practices of
Leaders
Supply chain value driver Top three differentiating practices of leaders
Maximum delivery
performance
1. Collaboration with key customers on planning (e.g.
effective forecasting)
2. End-to-end supply chain planning and visibility
3. Vendor-managed-inventory direct-replenishment model
Minimised costs 1. Best-cost country sourcing
2. Differentiated order-to-delivery time
3. Differentiated service level, including potential reduction
Maximum volume flexibility
and responsiveness
1. Internal capacity flexibility 80%-120%
2. Flexible shift models/payment structure
3. Regional supply chain set-up
Minimised risks 1. Multiplication of sources and sole-sourcing avoidance
2. Regular review of suppliers’ financial risk and mitigation
through risk-sharing partnerships
3. Visibility and regular monitoring of main suppliers’
operational indicators
33. Next-generation supply chains: Efficient, fast and tailored; Global Supply Chain Survey 2013; PwC; 2012
Investments in Differentiating Practices of
Leaders
Supply chain value driver Top three differentiating practices of leaders
Complexity management 1. Development of multi-skilled employees to cope with
complexity
2. Late-stage product customisation
3. Use of distributors and other channel partners
Sustainability 1. Agreement with supply chain partners to adhere to highest
ethical standards
2. Responsible supply chain partner footprint and
procurement framework
3. Internal carbon footprint optimisation and improvement
Tax optimisation and efficiency 1. Manufacturing and assembly optimisation (toll
manufacturing)
2. Localisation of inventory ownership in tax-efficient
countries
3. Localisation of procurement organisation in tax-efficient
countries (e.g., Singapore, Switzerland, Cayman Islands)
35. Last Year A Man Fell From Space*
It was a fall that caught the
imagination of all humanity. But it
was a thousand years of human
imagination that caught him.
*Ok, the actual border of “space” is much higher than the altitude Felix’s capsule attained, the lowest point being the Kármán line, recognized by aeronautic agencies at 100 km (62 miles) up.
Still, Felix was above 99% of Earth’s atmosphere, where air pressure is virtually non-existent and the sky above is black. I don’t know about you, but that’s good enough for me!
