#86 The Last Mile of Logistics
Development aid, social entrepreneurs and micro-finance – all seem to run into similar problems of getting their products and services to their target groups in emerging markets, post-conflict zones, or developing nations. With the kind permission of the author, Tielman Nieuwoudt of the Supply Chain Lab, the following is a re-post of an article that discusses how the sometimes very long last mile in these areas can be managed successfully. Tielman is an experienced supply chain manager who has multi-year expertise in various industries in some of the most difficult and exotic countries around the globe, including many African and Asian nations. Here’s what he suggests:
Territory and road infrastructure – Gain a clear understanding of the road conditions and travel time required for delivery. Also, consider seasonality and how the rainy reason will affect your distribution. Not all roads are passable during the rainy season and your mode of transport, e.g. four wheel drive, may also change. Road infrastructure and seasonality will also impact your network design, e.g. designing routes.
Service delivery point growth – In a number of African markets there are aggressive plans to expand and increase the footprint of health facilities. It is important to understand what impact this will have on the supply chain or pipeline.
Distribution centers (DCs) or cross docking – In Africa, distribution distances tend to be large and DCs limited. Overnight routes and driver per diems can increase costs and reduce truck utilization. Evaluate the need for more DCs and the role cross docking can play in streamlining distribution processes and reducing cost.
Demand planning – Tanzania has moved from a push system (demand determined at central level) to a pull system (demand determined at health facility level). Health workers at health facilities are responsible for submitting demand requirements (or R&R forms). Common problems include delays in submitting forms and limited capacity or capability to complete forms. It is important to identify and understand bottlenecks. Determine what can be done to simplify the process, e.g. limit the pull to certain Stock Keeping Units, and help reduce the workload for health workers, e.g. introduce regional demand coordinators.
Ordering cycle – Review the ordering cycle (or frequency) and order groupings, if any. Assess unplanned orders and volume per drop for each segment, e.g. health facilities versus dispensaries.
Scheduling – Ad hoc deliveries need to be evaluated, especially at the “last mile” level. Ensure that documented scheduling is in place.
Delivery process– Determine how long on average the delivery process takes (time) and review the written guidelines for delivery. For example, in Tanzania all goods received in villages need to be checked by the Village Health Committee. It is a good system to ensure checks and balances, but has the potential to create delays due to committee members not being available.
Use the right vehicles – The Landcruiser is widely used but not always the right vehicle for the job. A number of African countries have poor infrastructure but Landcruisers, with high capital costs, are not always required. See my previous post on this issue.
Distribution incentives –Review how incentivizing employees can drive efficiencies. Incentives could focus on truck turn around time, loading and dispatching.
The use of 3rd party distributors – 3rd party distributors (3PLs) can play an important role in distribution. Local operators allow you to tap into a lower cost structure and can also provide greater flexibility.
Fourth party logistics (4PL) or transport agents – A 4PL is defined as an organization that assembles resources, capabilities, and technology of its own organization and other organizations to design supply chain solutions. In Africa, health facilities tend to have limited capacity and capability to identify and manage 3rd party distributors. 4PLs or agents have the potential to play an important role here and help reduce the workload for health workers. Local operators or 4PLs are also in a much better position to negotiate better transport rates and manage scheduling.
March 7, 2017 @ 11:30 pm
Entering the emerging market seems to be the most promising opportunities for many companies seeing only the potential business but maybe disregarding the challenges or road blocking circumstances in the targeted countries. When going international to African countries it is often recognized that there exists a strong need for, e.g., improving health care. However, in order to be a market opportunity not only a need is necessary but also a demand (need combined with the ability to buy the product) must be present. Even if a demand is identified, a company should thoroughly evaluate the political stabilities in the countries as well as cultural and infrastructural situation.
Being myself in Tanzania for vacation a few years ago, I luckily was hosted by a German tour provider how offered safari tours as well as climbing tours to the Kilimanjaro. Talking with the owners provided some interesting insights in how business might work in African countries. Aside to the mentioned challenges regarding the infrastructure, I would expect two major elements to be critical for successfully establishing a business in Tanzanian. Maybe most important would be that criminal elements do exist from highest political level down to the streets (even) in small cities and villages. For example, even the natives did not leave the house after sunset in the small city Moshi close to the Kilimanjaro. Furthermore, as an example, when the financial aid of a humanitarian project arrives at the villages and homes of families, those aids will be corruptly confiscated by local people.
However, even if one is able to establishing a business by, e.g., collaborating with a local company, one should be aware about the working mentality of the Swahilis. Finding incentives to motivate the employees might by a big challenge while trying to build up a reliable work force. According to the experience I got in this country it often happen that workers just do not come to work, if they do not want to. Even though I personally did not experience any delay during the numerus organized transportations, getting reliable workers might be a challenge.
Coming back to the topic of the post, drone delivery for the last mile delivery in healthcare might be a promising concept. Despite the weather conditions might sometimes prevent flying, the limitation would be significantly less compare to ground transportation, which often is restricted for a longer period due to flooded streets. Companies definitely should thoroughly evaluate their company readiness and in case of logistics even more important the product readiness. Being dependent on locals for checking the delivered goods, as by the mentioned Village Health Committee, might prevent establishment of a reliable drone delivery.
I would highly recommend any company entering the Tanzanian market thoroughly considering the Swahili “pole pole” (slowely, slwoley). It’s all about “pole pole”!