…a trillion-dollar blow to Africa’s supply Chain
Unplanned downtime is a major challenge for the global manufacturing industry, but it can be particularly disruptive in Africa where supply chains are often complex and fragile. According to a recent study by McKinsey Global Institute, unplanned downtime costs the manufacturing industry an estimated US$1trillion each year globally. In Africa, the impact is even more severe; with some estimates suggesting that unplanned downtime can cost manufacturers up to 20% of their annual revenue.
Causes of Unplanned Downtime
There are a number of factors which contribute to unplanned downtime in manufacturing, including:
- Equipment failure: This is the most common cause of unplanned downtime, and it can be caused by a variety of factors, such as wear and tear, improper maintenance and power outages.
- Process disruptions: These can be caused by factors such as human error, material shortages and quality problems.
- External factors: These can include natural disasters, strikes and political instability.
In sub-Saharan Africa, there are a few more factors which can contribute to this downtime disruption:
- Poor infrastructure: sub-Saharan Africa has a significant infrastructure deficit, including in areas such as roads, railways and power. This can make it difficult and expensive to transport goods and materials, and it can also lead to power outages which cause unplanned downtime.
- High levels of bureaucracy: The business environment in many sub-Saharan African countries is characterised by high levels of bureaucracy and red tape. This can make it difficult and time-consuming to obtain permits and licences, and it can also lead to delays in Customs clearance.
- Political instability: Many sub-Saharan African countries have a history of political instability. This can lead to disruptions in the supply of raw materials and components, and also make it difficult to transport goods and materials safely.
Impact of Unplanned Downtime on Supply Chains
Unplanned downtime can have a significant impact on supply chains, both upstream and downstream. Upstream, it can lead to disruptions in the supply of raw materials and components. Literally, if a manufacturing company experiences unplanned downtime, it may not be able to produce enough goods to meet market demand – resulting in a down-tick on the supply side. Given the demand, this results in shortages, uncompetitive pricing and, ultimately, negative bottom lines for the entire trade ecosystem – corporate and national. Additionally, this can equally disrupt the supply value-chain of raw materials and components to other manufacturers – with its attendant consequences.
The Case of Unplanned Downtime in a Kenyan Manufacturing Firm
In 2022, a Kenyan manufacturing company that is into food and beverages production experienced a major equipment failure that resulted in unplanned downtime for about 14 days. The production machinery downtime caused a significant disruption to the production schedule and led to shortages of its products in the market. Consequently, the company made revenue losses and suffered reputational damage.
The impact of unplanned downtime on the company’s supply chain was equally disruptive. The company’s raw material and component vendors were unable to deliver on schedule, resulting in production lags per schedule. The market was forced to find alternative suppliers outside Kenya, resulting in GDP losses and negative trade balances.
Crushing Unplanned Downtime
In addressing the critical issue of unplanned downtime in Africa’s manufacturing sector, it is imperative to explore innovative strategies and initiatives which have potential to mitigate the challenges associated with poor infrastructure, high bureaucracy and political instability. One such closures involves harnessing the benefits of Special Economic Zones (SEZs), like the example of Ghana’s Dawa Industrial Zone in West Africa. SEZs have gained prominence in recent years as catalysts for economic growth and manufacturing efficiency, and they hold promise for alleviating some of the problems causing unplanned downtime.
Special Economic Zones offer access to various tax incentives, streamlined regulatory processes, and infrastructure improvements to attract domestic and foreign investors. Leveraging SEZs presents a multifaceted strategy for mitigating unplanned downtime challenges in Africa’s manufacturing industry. These zones provide improved infrastructure, streamlined regulatory processes and a platform for research and development and skill development, collectively enhancing manufacturing efficiency. SEZs can be wholly private, public or a partnership between both (public-private partnership)
The public-private partnership model plays a pivotal role in sustaining SEZs’ growth, contributing to economic development, job creation and reduction of unplanned downtime risks. By proactively embracing the PPP-SEZ model, governments and private enterprises can foster a conducive environment for manufacturing growth; ensuring a more stable and prosperous future for the region’s manufacturing sector.
Proactive Planned Maintenance
Preventive maintenance is one of the most important strategies for tackling unplanned downtime in manufacturing. It involves regularly inspecting and servicing equipment to identify and fix potential machinery failures before they cause downtime. In Africa, preventive maintenance can be challenging due to several factors, including limited access to spare-parts and skilled technicians. It can be difficult and expensive to obtain spare-parts and skilled technicians in sub-Saharan African countries, especially due to the large nature of small and growing businesses (SGBs) and their lack of funding. This makes it difficult to carry out preventive maintenance on schedule.
Despite these challenges, there are a few things manufacturers in Africa can do to implement preventive maintenance – including developing a preventive maintenance plan: a maintenance plan that specifies the tasks needed to be carried out on each piece of equipment and the frequency at which they need to be carried out. Next is to train staff on preventive maintenance procedures. This will help to ensure that preventive maintenance tasks are carried out correctly, and potential problems are identified proactively and fixed before they cause downtime. Manufacturers can also partner with suppliers to obtain spare-parts and skilled technicians at a more affordable price.
Predictive Planned Maintenance
Predictive planned maintenance is another important crushing tool for unplanned downtime in manufacturing. It involves using sensors and data analytics to predict when equipment is likely to fail, so that preventive maintenance can be carried out in advance.
Predictive maintenance is still a relatively new technology in Africa, but becoming increasingly popular. The growing need for adopting planned maintenance is influenced by a number of factors, such as:
- The increasing availability of affordable sensors: Sensors are becoming increasingly affordable, making it possible for manufacturers to implement predictive maintenance.
- The increasing availability of data analytics tools: Data analytics tools are also becoming increasingly affordable and accessible, making it easier for manufacturers to analyse the data collected from sensors.
- The growing awareness of benefits from predictive maintenance: Manufacturers in sub-Saharan Africa are becoming more aware of the benefits from predictive maintenance, such as reduced downtime and increased productivity.
- Install sensors on equipment: The first step is to install sensors on equipment to collect data on its performance.
- Implement data analytics tools: Data analytics tools can be used to analyse the data collected from sensors to identify patterns and trends. This information can then be used to predict when equipment is likely to fail.
- Develop a predictive maintenance plan: Once you have a good understanding of when equipment is likely to fail, you can develop a predictive maintenance plan to carry out preventive maintenance tasks in advance.
Business Continuity Planning
Business continuity planning is the process of developing plans to mitigate the impact of unplanned downtime on the business. This includes identifying critical business processes and developing plans to ensure these processes can continue to operate even in the event of unplanned downtime.
Business continuity planning is important for all businesses, but it is especially important for businesses in sub-Saharan Africa where unplanned downtime can be more common. There are a number of things that manufacturers in Africa can do to implement business continuity planning, including:
- Identify critical business processes: The first step is to identify the critical business processes that need to continue operating even in the event of unplanned downtime.
- Assess the risks to critical business processes: Once you have identified the critical business processes, you need to assess the risks to these processes. This includes identifying the potential causes of unplanned downtime and the impact that unplanned downtime would have on each critical business process.
- Develop contingency plans: Once you have assessed the risks to critical business processes, you need to develop contingency plans to mitigate the impact of unplanned downtime. These contingency plans should outline how you will ensure that critical business processes can continue to operate even in the event of unplanned downtime.
In sum, unplanned downtime in manufacturing poses a significant challenge globally – with a cost of US$1trillion annually and is particularly disruptive in Africa (especially SSA), due to the fragile nature of supply chains caused by equipment failure, process disruptions, poor infrastructure and political disruptions. The impact is disruptive and anti-growth.
The writer is an award-winning financial advisory, trade and transformation consulting professional with almost two decades of enterprise leadership experience across EMEA.
