(IAP ’13) Andre Calmon, G
01/23/2013 Flying Blind
Managing a company with little supply chain and market data is like flying a plane without instruments. You might get to your destination, but it will probably be a rough ride. Here in Kenya, most managers are flying in pitch-black darkness.
Lack of data and performance measures is a huge issue for businesses in emerging markets. Most companies have limited information about their suppliers and even less information about the distributors of their product. Even within a manufacturing plant or warehouse, ERP systems are rare and mostly non-existent. This leads to numerous issues, such as theft, expired inventory, and cash flow problems. More importantly, with little data, it is difficult to plan operations, identify the business processes within a business and identify customers’ needs. Ultimately, this affects a company’s bottom line and ability to grow.
After talking with a few supply chain managers based in Nairobi, it seems that one of the main victims of lack of data is supply chain visibility and, more specifically, visibility of distribution channels. Many businesses in Kenya rely on distribution partners to distribute and sell their product but only have a vague idea of how these partners operate. In fact, in many cases, they do not even know how many tiers these distribution channels have. There is no visibility into how products are flowing, at what price point they are being sold, and what contracts are in place between distribution tiers.
To exemplify this issue, consider the dispute between Serengeti Breweries (SBL) and Tanzania Breweries (TBL). Between 2005 and 2007, SBL and TBL were competing fiercely for Tanzania’s beer market. At the time, Tanzania’s GDP was growing at a rate of about 7% per year and business was booming. TBL, the market leader, was being challenged by SBL and was rapidly losing market share. Taking advantage of TBL’s lack of supply chain visibility, SBL decided to purchase TBL beer, empty bottles, and crates from TBL’s distributors, dump the content if necessary, and reuse TBL’s bottles in it’s own manufacturing process. In fact, when the issue went to court, TBL argued that most of SBL’s crates and bottles were from TBL, and SBL failed to show evidence to the contrary. During this period, most of SBL’s sales used TBL bottles and TBL had no idea that this was happening. At the time, TBL collected little data about its distributors operations and had little visibility into their supply chain. Details of the dispute can be found on-line.
Developing software and strategies to increase supply chain visibility is a big opportunity for businesses, and I am working with mSurvey to create and expand product tracking and supply chain coordination tools tailored for the African reality. These tools are based on mSurvey’s system and use SMS technology and smartphone apps to track products. This technology will allow managers to have more visibility into supply chain, to gather data about their sales and distribution channels more efficiently, and to establish relationships with their suppliers and distributors. I am also helping mSuvey develop an analytics platform that will allow for real-time analysis and visualization of the data collected. More importantly, my goal is to help African managers identify what are the best business strategies, map their business processes, and ultimately gain knowledge about how to do business in Emerging Markets. After all, it is not a matter of Big Data, but of the right data.
01/17/2013 Karibu Kenya!
It is an exciting time to be in Kenya. Fueled by a new constitution that was engineered to mitigate corruption, Kenyans went to the polls today to vote in party primaries. With streets littered with political flyers and posters, people are hopeful and the future looks bright. Despite the jet lag, I feel like I am in the right place, at the right time.
I am spending IAP in Nairobi funded by the Technology Dissemination Fellowship from MIT’s International Development Initiative. My trip to Nairobi is the culmination of over a year of discussions and planning with mSurvey, a start-up created by Kenfield Griffith, PhD ’12. Together with his team, Kenfield developed a system that uses mobile devices for distributed data collection and surveys. They currently have a few clients that use this technology for product registration and market research.
My goal is to help mSurvey take their technology to the next level. More specifically, using mSurvey’s distributed data collection system, we will develop mobile phone based tools for new and existing businesses that operate in emerging markets. These tools will allow them to increase supply chain visibility and better manage their operations. More importantly, they will allow businesses to rapidly and easily test different strategies for supply chain coordination, customer relationship management (CRM), and vendor relationship management (VRM). These tools will be backed by mSurvey’s system and the information collected will be stored in the cloud. Ultimately, we will gain insight about best business practices in emerging markets and reduce uncertainty and risk for companies operating in Africa. In a country where the number of mobile subscribers is four times the amount of people that have access to electricity (according to the CCK and the World Bank), there is a huge opportunity to empower entrepreneurs, consumers, and businesses using mobile technology.
Besides working with mSurvey, I will also be cooperating closely with Barefoot Power (BFP), a social enterprise that provides affordable lighting and phone charging products for low income populations that do not have access to electricity (according to the World Bank, less than 20% of Kenya’s population has access to electricity). They are currently entering the Kenyan market and are setting up their distribution channels. Hopefully, by the end of my time here, we will be set to run a pilot project with them.
I am also trying coordinate meetings with a few companies that have figured out how to coordinate supply chains and operate in Kenya. Yesterday, I had the opportunity to attend a meeting at the headquarters of East Africa Brewing, one of the three largest companies in Kenya. I believe that understanding how these companies operate and learning from their experience is key to my project and will help improve mSurvey’s product and strategy.
This period will be tough and challenging, but I am very excited. During the next few weeks, I will be posting regularly about the project and its details. I will also post more about the challenges that businesses face when entering emerging markets and some success stories. Feel free to post any comments or suggestions below!