25 February 2013

Rwanda: How to Improve Your Supply Chain

Mukotanyi has always had problems getting his merchandise on schedule. Although he pays and handles the paperwork in time, the issue has persisted. This has affected his business as some of his clients started buying from this competitors since Mukontanyi's supplies always delay. How can Mukotanyi overcome this challenge to keep his business thriving?

"Today, organisations are increasingly finding that they must rely on effective supply networks to compete both in the local and global markets," says Dan Ntagugura, a business consultant with KPS Associates.

He notes that supply chain management is a cross-functional approach, including managing the movement of raw materials into an organisation, certain aspects of the internal processing of materials into finished goods and the movement of finished goods out of the organisation and towards the final consumer. Ntagugura advises firms to address the following issues in their supply chain to achieve the best results:

Distribution strategy: Details of operating control and delivery schemes like mode of transportation, be it by trailer containers or smaller trucks, ocean freight or airfreight have to be efficient in order to save time and overhead costs.

Inventory management: Quantity and location of inventory, including raw materials, work-in-progress and finished goods should be well-controlled and documented.

Distribution network configuration: The number, location and network missions of suppliers, production facilities, distribution centers, warehouses and customers should be clear.

Cash-flow: Arrange the payment terms and methods for exchanging funds across entities within the supply chain to ensure smooth operations and timely delivery.

This has worked for Jean Damascene Habumuremyi, a Nyabugogo-based cement importer and distributor. He says his clients always first deposit them for the cement they want, after which he supplies them.

"At times, I don't even know the people I am selling to; but once the payment is made, I send them the amount of cement they would have ordered for," he says.

Habumuremyi owns three tailors which he uses to buy and import Ugandan cement.

Trade-offs in logistical activities: "The above activities must be well co-ordinated in order to achieve the lowest total logistics cost," Ntagugura says.

"Trade-offs may increase the total cost if only one of the activities is optimised. For example, full truckload rates are more economical on a cost per platform basis compared to when the quantity is less. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs.

It is therefore imperative to take a systems approach when planning logistical activities.

These trade-offs are key to developing efficient and effective logistics and supplies chain strategies."

Information: Integrate processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation and potential collaboration must be handy at all times.

"Once all the above are covered, always work to ensure that your chain is efficient and sustainable," Ntagugura advises.

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