number of taxes levied to individuals in the region. The consumers have just resorted to survival modes. It is clear that particular consumer segments typically described as“ luxury goods” like imported motor vehicles underperformed and will continue to do so. Anecdotal evidence shows that consumption is now in a survival mode. Who knows what next?
The rejected Finance Bill 2024 is finding its way back, through piecemeal re-introduction, again, targeting to introduce more taxes, with very little to offer, to create the very much needed economic stimulus for growth. We hear that the turbulence is necessary for expected“ economic take-off”. However, it feels like the country is stuck even before clearance to taxing out of the runway. Is there any need to tighten the belts really, when even the flight taking off is not confirmed? With this underwhelming performance, it is inevitable that business closures and market exits are high this year. Players have reset to business closures; the short-term future does not look any brighter.
Trends in the logistics industry, that have been forced by economic performance include closures, business combinations, acquisitions and diversifications. Freight forwarders, transporters, shipping lines, airlines, warehouse operators, cargo handling agents, airport operators, are forced to work together, for effective performance in a very challenged industry. This is the only way to remain competitive, to protect margins and serve customers better. Those who cannot be part of this alignment will surely fall off the cliff. This is as natural as the old known law of natural selection. Let the fittest survive and thrive. This is now an accelerated re setting of the industry.
Cyber threats are a constant variable in the supply chain industry. Players have been forced to invest heavily in technological advancements that assure them of staying ahead of the curve. Such investments help to mitigate cyber attach risks and places organizations in a better position to anticipate and neutralize attempts to their ecosystems. This will continue to grow and will not at any time slow down.
As logistics technology-enabled solutions have become the norm, these investments and cyber security systems must be deeply embedded in all business processes. It is now a new layer of fundamental investment. Supply chain variables driven by technology include cargo location visibility, parameter monitoring, track and tracing, compliant and ethical data exchange and sharing, intricate payment platforms and financial information sharing, financial regulatory compliance, ethical business practices and partnering.
AI is here to stay and is revolutionizing businesses. This is a given. It is an advancing constant variable in supply chain. Nearly all perspectives of supply chains are impacted by AI revolution. Decision making continues to be improved as real time data and insights are provided to the decision makers. Workflow streamlining through automation has greatly improved efficiencies within supply chains. Customer experience continues to improve with sophistication brough about by AI. Functional efficiencies in warehouse management and inventory management have been supported by AI.
Other facets now impacted by AI include transportation. This includes route planning, optimization leading to reduction in transportation costs. AI improves accuracy and brings better experiences in data sharing and exchange. With growing requirements for ESG compliance, AI continues to support tracking of critical factors like carbon emissions in the whole supply chain ecosystem.
The other critical earworm is environment and social impact. This is no longer a wish list. It is reality. Accountants now must prepare to report on compliance from ESG point of view. It is now part of the financial reporting disclosures. This calls for additional layer of not just financial reporting, but also ensuring that corporates become real“ community citizens”, who care and are concerned with sustainable business practices and protection of the communities and environment. Supply chain communities are compelled to remain connected to this. The initiative is costly. Sadly, this can never be wished way. It is neither a cosmetic nor a nice to have initiative. The returns on investment can be measured and are real. Consumers are more“ woke”, choosy and know their rights. It is another reset, necessary to be always on the right side. It is strategic too.
Faced with these trends, supply chains require the right skills sets. Digital proficiency is a must. Staff must exhibit agility. Traditional culture clouded with what has worked in the past is a redundancy that must be eliminated. It has no space in the much-needed reset. Demand forecasting, sensitivity and real time scenario planning and execution are now the norm and form the foundational skill sets necessary for an effective supply chain management. It is worth noting that these skills are scarce, but they are the differentiators.
Data is now an important factor in business, or should we say, factor of production? It is therefore crucial that data analytics is included as a core skill that drives the performance of supply chains. Data analysis, organization and insights generation must be embedded in the ways of working and supported with the right tools and technology.
As we sign off, 2024 has been without doubt a challenging year. Great and resilient business and innovations are known to come from such challenges. From the supply chain point of view, we expect more deployment of technology, use of AI, compliance pressure from regulatory and global ethical requirements, more business convergences, upskilling staff, mergers and acquisition activities, and sadly market exits. These are necessary for survival, before real growth can be realized. This is the required reset. It is the chalice that the businesses must drink from. Onwards to the next frontier.
CPA Michael Maithya Nzule is the Finance & Strategy Director of Mitchell Cotts Freight Kenya Limited, a leading total logistics services provider in Eastern Africa. He holds an MBA in Accounting and a Bachelors of Commerce( Accounting Option Hons) from the University of Nairobi, and is a member of the Institute of Certified Public Accountants of Kenya( ICPAK). Views expressed here-in are personal. You can commune with him via mail at: Mikemaithyanz @ gmail. com.