Picture: ISTOCK
Picture: ISTOCK

Tap into any conversation focusing on reducing costs these days and inevitably you’ll find the knives are out for the middle man. While there was a time when there was a clear role for the middleman, with the advent of technology this is no longer the case. One of the areas ripe to go under technology’s scalpel is the supply chain and route to market.

Technology provides huge opportunities for manufacturers, wholesalers and distributors, particularly in the FMCG and financial service sectors. All manufacturers and distributors should understand both their route to market and the myriad challenges facing them along the way. To do so requires teams on the ground who have hardware, software and cash management experience.

Teams and processes take time to build and require commitment from the highest levels of management. And when the distribution map includes townships – home to a significant portion of SA workers and their families as well as huge cash-based spending power – it becomes even more challenging. Not surprisingly, the route to market has always been one of greatest challenges in the value chain of the FCMG sector.

In a recent article by Absa Investments, retail analyst Chris Gilmour argues that global retailers such as Amazon and Aldi could crush local competitors such as Pick n Pay and Shoprite Checkers. The gist of his argument is that local retailers are still to utilise technology fully in their operations to enable them to deliver products to their customers efficiently.

The big take-out:

While technology is challenging the role of the middleman in the route to market, it is creating huge opportunities for manufacturers and distributors in the FMCG and financial sectors, particularly in terms of access to the township market.

Still, advancements in technology have brought parity, greater efficiency, and transparency to the pricing chain. The data now available through apps allows the manufacturer to understand the supply chain and the consumer and his buying habits.

However, data requires skilled personnel to process and manipulate it in order to reach the desired outcomes. That in turn calls for continual training to cope with today’s economy in which disruptors have become the norm.

New research published by Supply Chain Management Review Magazine (undertaken by HfS Research and Accenture) revealed that organisations able to use innovative talent, diverse data and applied intelligence (intelligent operations in other words) effectively, derive better results and are consequently more competitive. Most organisations surveyed are unable to make data-driven decisions, pointing to a lack of skills to process the data. The situation is probably even worse in SA, giving the advantage to early adopters.

Because SA’s is a cash economy, like those of many developing countries, greater use of technology would decrease risks and costs and increase the value offering. This is especially true when seeking access to the township market. The move to electronic transacting also opens the door to financial inclusions and credit and risk management products. These products require data to understand the risks and the opportunities available in township markets and to build offerings that add value to the consumer.

However, disruptors are now entering this sphere, using technology to connect manufacturers, suppliers, merchants and consumers. By enabling manufacturers to better understand their customers’ needs, technology facilitates better planning, cutting out inefficiencies along the supply chain and providing customers with a better experience and more value.

Stephen Goldberg is CEO of Selpal.