- The complexity of Africa’s supply chain management systems has inevitably fueled one of Africa’s greatest plagues; corruption.
- South African Pape Company Sappi partnered with Green tracker, which tracks fabric products from sustainable forests to prediction.
- The COVID pandemic was a highlight that significantly boosted the adoption of blockchain in business.
The concept of blockchain technology has revolutionized how the world views Africa. Its natural resources or agricultural produce no longer define the continent. Today, Africa is at the forefront of ushering in a new revolutionary idea, the Web3. To achieve this, many enterprenuers advocate for implementing blockchain in business, creating what is now termed a decentralized business system, more commonly known as a DAO. Blockchain in education, insurance policies and even health care have proven their contribution but non compared to its impact on Africa’s supply chain management. Blockchain in supply management has essentially changed its viewpoint.’
In most scenarios, you will often encounter the term blockchain technology in the supply chain. We will highlight the intricate factors that make blockchain technology crucial in advancing and improving Africa’s efficiency in supply chain management. In addition, we will highlight existing companies that have taken the first step in implementing this revolutionary technology.
Understanding the necessity of supply chain management in Africa.
The world’s trade industry has existed since immemorial and has transitioned through the different phases of humanity’s existence. The business industry had to undergo several significant changes to transition from barter trading to the current currency-ran system. Through the years, the supply chain management system became what it is today.
A supply chain management system is the centralized management of the flow of goods and services, encompassing all the intricate processes between the different entities and transforming raw materials into the final product.
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In actuality, Africa’s supply chain management system is the basis that supports most businesses today. Every business must have a definitive supply chain system to function. It’s necessary since it covers everything from production to product development to the information system to direct these processes. In addition, it outlines all the various elements associated with the business, both internally and externally.
Most of Africa’s supply chain systems are centrally structured. This means that the organization or a single entity within it essentially outlines and oversees every single process within the entire process. A supply chain management system varies depending on the scale of the operations. Some industries are large enough to facilitate the process from product design to product development, while others require several external entities.
The complexity of a supply chain management system depends on two crucial elements. The first is the number of processes involved in product creation and distribution—the more processes involved between product development and distribution, the more complex the system.
The second details the number of external entities involved. One of the major demerits of Africa’s supply chain systems is that it is still an ng developing continent. As a result, most organizations and companies in Africa require some assistance in product development and distribution. Due to this, supply chain managers must minimize shortages and low costs since each entity involved in the process requires some compensation.
Why are Africa’s supply chain management systems failing?
The COVID pandemic was one of the few highlights that significantly boosted the adoption of blockchain in business. Unfortunately, it also highlighted the various vulnerabilities in Africa’s supply chain management systems. During the Pre-COVID period, Africa’s supply chain management systems mainly thrived based on the benefits of cross-country variations in cost and resources.
In addition, it also steadily grew through the incorporation of international aid from developed countries. The gains of low-cost trade significantly aided most companies by reducing the cost of moving products from one country to another. The pandemic especially shut down one of the primary sources of Africa’s supply chain system. This created a bottleneck in production, and those unable to adapt to the changes had to shut down. Remember that despite this choke-hold on Africa’s supply chain management system, not all organizations suffered and may resume their normal activities post-COVID.
The complexity of Africa’s supply chain management system is another demerit. The incorporation of external entities reduces the amount of profit an organization can earn from its product. If the amount of profit cannot incur the costs of sustaining the supply chain processes, the organization will end up making losses.
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In addition, its complexity has inevitably fueled one of Africa’s greatest plagues; corruption. Due to its centralized system, most organizations have elements of crime deeply rooted in their processes. As a result, when comparing actual figures, at least one entity in an entire supply chain management process tends to suffer or gain little to no profit. This fact has also significantly contributed to Africa’s slowed economic growth.
Fortunately, the COVID Pandemic was an eye-opener for most organizations that incorporated blockchain in their supply chain management system. As a result, this led to the creation of decentralized business systems and blockchain companies within Africa’s ecosystem.
How is blockchain in supply helpful management?
From its definition, blockchain is a distributed, digital ledger system that is immutable. The ledger can record transactions or any other information in linked blockchains. Any alteration n of the system is virtually only possible if every entity within the network agrees on a specific change. Due to this factor, blockchain technology presents a single truth to a plan. Thus, implementing blockchain in the business allows complete certification, accountability and auditability of a transaction at a given time.Blockchain offers several unique criteria, such as; immutability, decentralization and transparency. These three have led to the creation of multiple blockchain companies in Africa, each from a different industry.
Below are some of the key benefits of blockchain in supply chain management.
Africa’s supply chain management system still needs to be developed compared to other continents. As a result, suppliers and logistics are in separate companies. As mentioned earlier, this increases the complexity of the supply chain management system. Fortunately, most African organizations have curbed this dilemma by implementing blockchain in business operations.
At its fundamental functioning, for a transaction to be valid, all parties must agree. In addition, no single entity can create or remove any block from the network unless all parties agree. This concept applies in the decentralized business system. All entities within Africa’s supply chain management system must agree on each vital process within the supply chain system. This brought in the form of consensus within business operations, which increased the trust between the entities. This is especially important since, at times African business system can have up to 7 different entities.
Africa’s supply chain management suffers from a high level of corruption. As a result, it is common for organizations to estimate a specific “loss” during the entire supply chain process, and implementing blockchain in the business system prevents this occurrence.
Blockchain technology’s immutable nature brings out its transparency. This means that since no single entity can alter any aspect of the supply chain, any authorized person can view the details of transactions. This allows organizations to know exactly where the raw materials or products are and where they will be in the supply chain.
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This brings about the provenance element, a significant feature within Africa’s supply chain management systems. It can be attached to any asset crucial to the product development cycle. It also reduces the cost incurred when a supply chain system is “too large” to map out fully.
Aside from assisting blockchain companies in Africa, accountability also helps consumers. Most consumers have to know a product’s origins and development processes. In Africa’s food industry, this is a critical factor in gaining customers for any organization. By proving that indeed a product is organic or does not have any harmful substance is a fundamental marketing strategy. Various organizations implement a decentralized business system to ensure that they can prove their legitimacy.
Blockchain in Africa’s supply chain management system is more efficient by reducing the number of entities. One of the primary goals of the blockchain system is to benefit its users directly. As a result, it increases the integration of financial and logistics facilities enabling greater data collaboration between stakeholders.
In addition, some decentralized business systems have supported a blockchain payment solution that reduces the tme between the ordering and payment processes within the supply chain system. This significantly increases the ly movement of products. In addition, blockchain in supply chain management incorporates smart contracts that enhance compliance and reduce the legal fees and fines incurred for late delivery and payments of products or raw materials.
Immutability and finality
Africa’s ecosystem is undergoing a metamorphosis as it steadily ushers in a new digital age. One of the few demerits of Africa’s supply chain management system is its centralized nature, and this relatively means it is susceptible to any alteration without the organization’s knowledge. Fortunately, blockchain companies in Africa are unaffected by this. Decentralized business systems have multiple copies of each entry, transaction and modification made over a certain period. Implementing blockchain in a business’s operation ensures the security of the data.
In addition, all copies of data represent a single truth. If an entity within Africa’s supply chain management system only distributes a set number of goods, it will reflect on all other nodes within the network. This could trust as all parties have a single view of the transaction and any theft or fraudulent activity.
Existing implementations of blockchain in Africa’s supply chain management system.
Ethiopia’s coffee supply chain.
Ethiopia’s government and Cardano have frequently formed a stable partnership ensuring the growth of blockchain in Africa, and Cardano created a blockchain-backed supply chain for coffee distribution.According to its media report, the country signed a memorandum of understanding with Cardano, and blockchain developers are currently working to implement blockchain in their agricultural supply chain management systems.
The benefits of this new decentralized business system will reflect on the entire continent because coffee exports make up over 30 % of the country’s export revenue. In doing so, the traceability of the coffee adds value to the country’s coffee production.
Coronet Blockchain is one of the upcoming blockchain companies in Africa that deals with the business-to-business-to-consumer marketplace. Shardrack Kubayane avidly believes in decentralized business operations and advocates blockchain in supply chain management.The primary focus of Kubayane is to use blockchain to effectively mitigate all the problems currently facing Africa’s supply chain system by elaborating on the benefits his company has attained. His company prides itself on working with global ethical manufacturers and achieving lower sourcing costs through implementing blockchain in their business operations.
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Kuyabane stated that they securely track human hair pieces from source to customer. In addition, they understand that 100% human hair requests 100% secure tracking.
Sappi Paper Company
South African Paper Company Sappi partnered with Green tracker, which tracks fabric products from sustainable forests to prediction. According to Kerlyne Andres, the general mange of Sappu Verve, the organization is committed to delivering practical innovations, building trust and creating shared value in the supply chain management system.To accomplish this, the organizations sought the aid of Green Track which offered their blockchain facilities. Sappi believes that traceable and transparent supply chains are crucial to providing brand owners and consumers with some assurance. Their customers can now confidently state the origins of their product from sustainable and renewable sources of food clearing all misunderstandings surrounding deforestation claims.
In conclusion, blockchain in supply chain management can transform Africa. Implementing blockchain in business operations will usher in a new age of systems. In addition, it will finally place Africa on the map as a technological continent.