Strategic Sourcing and Industrialisation insights with Prof Douglas Boateng
While the terms ‘Made in Ghana, or South Africa or Kenya or Nigeria’ have become common components of goods and services produced on the continent, a broader focus on ‘Made in Africa’ may be the key to long-term business success and continental wide socio-economic development.
This is particularly pertinent when it comes to the AfCFTA initiative and strategic sourcing practices on the continent.
With a potential market of approximately 1.347 billion people, organisations need to begin to think beyond their own communities, national and regional boundaries and start to consider the opportunities available to them throughout the continent.
Not only will a focus on a ‘Proudly African’ way of doing business increase access to greater markets and suppliers, it will also allow organisations to strategically source continentally produced products and services, thus supporting socio-economic growth, SMME development, AfCFTA and long term industralisation in Africa.
Price-driven acquisitions an ongoing threat to strategic sourcing and industrialisation
Current organisational procurement and consumer buying behaviors – which tend to focus on price-driven acquisitions – are hampering long-term industrialisation and socio-economic development in Africa.
While price is always an important element of sourcing and procurement, organisations and consumers in Africa need to recognise that the cheapest price does not always equate to the best value for money for society as a whole.
But, how can organisations and individuals alike begin to move away from short-term price-focused sourcing and consuming behaviours, and initiate long-term focused and developmental driven procurement habits? The possibilities vary. But from a strategic industrial and consumer sourcing perspective, the following should be considered.
Local should mean continental
To begin with, a mindset change, when it comes to the term ‘local’ needs to be promoted. Instead of understanding the idea of ‘local’ as being related to national, for example, Ghanaian, or South African or Kenyan or Nigerian or Namibian, production and services should instead be viewed as an African (ie continental product).
This focus on continental instead of national will open up greater opportunities for access to a larger number of products and services, while at the same time allowing for an expansion of potential markets.
Sourcing must be value driven and not price driven
Next, when it comes to sourcing, organisations and individuals on the continent need to be value driven and not cost driven. This means that instead of sourcing products and services based on just the ‘best price,’ they should rather take the quality and subsequent long-term value of the goods for industry and society into consideration.
Cheaper does not always mean better or value for money, and in a market rampant with low-cost, poor quality products, organisations should be weary of the influence that short-term price gains may have on the sustainability and success of their business and in the long term, on society
Organisations should be encouraged to first source products produced locally (ie on the continent). If such sourcing attempts are unsuccessful, only then should they turn to the international market.
This practice of providing African organisations with the opportunity to supply products and services to their peers and continental counterparts, allows for the development, support and growth of SMMEs, long-term industrialisation and socio-economic development on the continent.
Support ‘Proudly African’
With the concept of sourcing locally first in mind, there needs to be a movement towards promoting ‘Proudly African’ and ‘Made in Africa’ products.
Instead of focusing purely on individual countries in which products are produced, a ‘Made in Africa: produced in Ghana, South Africa or Mozambique’ concept needs to be supported.
This support of African products and services will not only encourage a break in popular trade barriers, but will also enable the continent to tackle supply chain issues and challenges as a collective whole, rather than as individual, separate nations.
By following the above-mentioned suppositions, organisations on the continent may begin to reverse current short-term industrial and consumer behavior, and as such, prevent mainly price-driven acquisitions from continuing to de-industrialise the continent.
In addition, by promoting a continental rather than an individual country procurement and sourcing environment, organisations can contribute towards the acceleration of industrialisation, SMME growth, job creation and regional development in Africa.
In short, large political and socio-economic issues need to be tackled as a collective to break down artificial trade barriers. In time, African economies can move away from country specific initiatives to ‘Proudly African’ initiatives.
For strategic sourcing to change the economic fortunes of the continent, it is crucial that Africans educate and encourage individuals and organisations to think beyond their own community and national boundaries, and to use strategic sourcing practices to promote continent-wide development.
Douglas Boateng, Africa’s first ever appointed Professor Extraordinaire for supply and value chain management (SBL UNISA), is an International Professional certified Chartered Director and an adjunct academic. Independently recognised as one of the vertical specific global strategic thinkers on industrialization, supply and value chain governance and development, he continues to play leading academic and industrial roles in sectorial reforms both in Africa, and around the world.
He has received independent recognitions and numerous lifetime achievement awards for his extraordinary contribution to the academic and industrial advancement of supply chain management from various international organisations including the Chartered Institute of Procurement and Supply, the Commonwealth Business Council and American multi-national Hewlett Packard (HP). For more information visit www.douglasboateng.com and www.panavest.com