ments are the major drivers for companies choosing this strategy. Other additional locations being considered include India, Vietnam, Mexico, Thailand and Malysia. This strategy is also a move closer to markets and customers. This strategy is challenged by the fact that these new“ plus one” countries lack the superior China infrastructure, logistics efficiency and massive supplier network which they cannot replicate.
Closely related to China Plus One strategy is reshoring. Reshoring is the strategic return of manufacturing and sourcing from foreign countries to the home country to enhance supply chain resilience, shorten lead times, and improve quality control. Driven by post-pandemic vulnerabilities, geopolitical instability, and rising foreign labour costs, this strategy involves shifting production closer to end-users to reduce logistical risks. The challenge with this strategy includes high production costs, high labour costs and difficulties in finding local suppliers for components. This strategy can be executed through back-shoring, near-shoring or an hybrid of both. Back-shoring is moving physical production facilities back to the home country, while near-reshoring is moving production to a nearby country closer to the home market. Hybrid sourcing is model that balances efficiency( offshore) with resilience( reshoring) based on the product type.
Technology deployment and advancements have been embedded in supply chain strategies. Technology is a key driver in increasing visibility within supply chains. This helps in early detection of supply chains risks in the multi-layered supplier networks. Data analytics, IoT, Cloud computing and predictive models support this now, as a must-have for resilient supply chains.
Companies are also deploying inventory cushioning strategy. This involves transitioning from " just-in-time " to " just-in-case " inventory management to mitigate sudden shocks. Inventory cushioning strategies are methods used to protect supply chains against uncertainties in demand, supplier failures, or lead time fluctuations. They involve maintaining buffer stock to ensure product availability and mitigate the risk of stockouts. This is an expensive strategy, which requires balancing financing and working capital levels.
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Further, inventory management risks like obsolescence, storage risks, security risks must be managed to avoid losses. The strategies focus on stock level optimisation through determination of the safety stock levels, diversified strategic sourcing, supplier network design management, advanced demand and supply forecasting. This strategy involves working very closely with suppliers to reduce the time between ordering and delivery, which directly reduces the amount of buffer stock needed. Shared technology platforms between businesses in the supply chain support seamless execution of this strategy. Stock parameters like expiries, product conditions like temperature and other exposures in handling are also closely monitored and managed.
In the Kenyan context and Africa in general, strategies for resilience must reflect the unique local realities. The supporting infrastructure remains a key challenge for connectivity. Most countries are net importers of finished goods and exports are mostly unprocessed raw materials, mostly from agriculture and other extractive industries. High energy costs render the supply chains very vulnerable to supply chain disruption waves. Inflation and high prices continue to be a huge bottleneck in having stable supply chains. The continent is endowed with affordable labour but struggles to attract investment required to develop manufacturing. The economies are dependent on MSMEs, whose challenges range from operating working capital financing to effective deployment of technology.
Some of the strategies that are applicable in Kenya include collaborations, supply chain re-engineering, building agility, embedding risk management culture, integrating technology, and supplier base diversification.
Strategic collaboration and partnerships include forming dependable alliances with local and international suppliers. This enhances sharing of information that assist in mitigating risks and managing demand fluctuations. Supply chain re-engineering involves redesigning logistics processes to manage transport, route redesigns, warehousing and storage sites to manage risks around access to markets and customers for example when routes are impacted by floods. This can also be deployed to manage delays emanating from ports of clearance, lengthy and complicated customs and regulatory delays which are quite prevalent.
Agility and flexibility strategies are applicable in agricultural and floriculture industries. This involves building capacity to adapt quickly to demand changes and production challenges. Handling of perishables requires investment in specialised equipment and storage facilities that assure longer shelve life to smoothen the supply and reach to customers. This can be layered with technology by utilising IoT, big data analytics and cloud-based systems to deliver visibility and assist in decision making during disruptions.
Disruptions have heightened the awareness of risk management. Companies have had to change their attitude to embed dependable risk management culture. They are now proactive in identifying, mitigating and transferring risk to manage the uncertainties from disruptions. The use of insurance is growing to minimize the impact of unforeseen events. Supplier diversification to mitigate against over reliance on single sourcing and widening supplier base is used to mitigate against supplier failure during disruptions.
It might just be the time for supply chain management to go back its roots. One of the core foundations of operations management is military science. Operations management and by extension supply chain management is anchored on military strategies. Strategies from military science are vintage and still relevant today in managing supply chain disruptions. Some of these strategies and tactics include focus, flexibility, manoeuvre, execution with precision and pace, staying ahead of the curve in technology and agility.
Players in supply chains must always be ready for the next possible battle to win the war in each wave of disruption. Supply chain disruption is a constant that will remain. Supply chain resilience strategies can reduce risk exposure, backed by adaptive systems capable of maintaining stability in this increasingly uncertain global environment.
CPA Michael Maithya Nzule is a specialist in Finance & Strategy, with extensive experience in the Logistics Industry, FMCG industry and Corporate Strategy advisory services in Eastern Africa. He holds an MBA in Accounting( with marketing) and a Bachelor of Commerce( Accounting Option Hons) from the UON. He’ s a PhD student in Advanced Operations Management at the University of Nairobi. Views expressed here-in are personal. You can commune with him via mail at: Mikemaithyanz @ gmail. com.