As an entrepreneur you need to focus on your strengths and make them work for you, for example Coca-Cola focuses on its strengths and outsources its weaknesses
A brief history about how Coca-Cola’s FDI system was birthed, after the Vietnam war, the locals who had tastes Coca-Cola and wanted to know how they could still have the drink in their country offered to invest in bottling equipment and buy concentrate from the Coca-Cola company since shipping finished products wasn’t going to be a sustainable solution.
The African perception to the rest of the world is portrayed as a place full of war corruption, disease and many other negative things and as entrepreneurs you need to find a way to change this perception especially through technology.
The Rentier states
African GDP which is very volatile moves hand in hand with the commodity price for example the case of Nigeria which had lots of natural resources most notably oil. Due to the presence of high revenue from oil the government neglected taxing of businesses based in Nigeria and the Nigerian currency had gained significant strength which made doing business in Nigeria expensive hence the Nigerian based businesses to close shop. When the oil prices suffered a dramatic drop and oil revenue in Nigeria reduced significantly, the Nigerian economy was shaken to a pulp since there were almost no businesses to tax in the country
“An abundance of young people is like gearing on a balance sheet; it makes the good situations better and the bad ones worse”
By 2035, Africa will have the world’s largest workforce (in 6000 days). Imagine having the worlds largest workforce and having things for them to do in relation to the growth of Africa. Which makes it exciting to see so many entrepreneurs to help utilize this large resource.
The mobile phone has been pivotal in the current African community, growing faster than availability of water and many other services, being 93% ahead of other basic necessities, “In a lot of communities all over Africa, people can talk on their cellphones but cannot turn on their light”. While this highlights how African infrastructure isn’t growing fast enough it also shows the opportunities that are available. Through tech so many of the numerous African challenges have been countered with one common example being mobile money which is big in countries like Kenya and Uganda has created a sense of efficiency in the financial sector. Again, this is a highlight of how tech is helping Africa and the kind of situation we are in.
- Information Vs Data
- Asking simple questions
How do you run a business (operations), whether it’s a supply chain, sales and distribution? These are some of the things which resonate with me (speaker).
What is the difference between data and information?
- Information is what we make decisions off of while data is a mass of knowledge that you need to put together to create an analysis
- Data is raw while information is processed
- Information is more of feedback while data is the metrics that put a system together.
- Information is processed data while data is unprocessed information/ more of flow.
Most importantly, your business is an operation and you need to think of ways to optimize it and therefore you need to know the information you need, because without information you can’t run an operation (“you are just doing stuff”). And there are two things around running an operation;
- Being efficient
- Being effective
Do you know the difference between the two?
Being effective is being able to get the job done regardless of the situation and being efficient is being able to get the job done with all the resources available.
You need to look at what kind of business you are, the type of customer (customer segmentation), you will need to know whether the decisions you are making are helping you to be more effective or to be more efficient and they are a bit different. If you try to be efficient while using something which is not effective you may not get the results that you want. For example if I was a business with two or three customers, I’ll basically do everything to make sure these guys are happy but if you were serving 50,000 customers it is less about how to make every one happy and more about how to consistently meet there needs which breed efficiency/cost effectiveness and the same thing goes for a product. The scale of business also matters, there are businesses where you need to be effective and there are businesses where you need to be efficient.
Information Vs data; one of the traps businesses the size of Coca-Cola and most that are starting to grow is the inability to step back and ask simple questions because sometimes that is what you need to get the right information. For example, while running business for Coca-Cola in Ethiopia, I was looking after planning, procurement and stores. First question is; how much do I need? The person who is planning had to understand the person who is buying, the person who is buying had to understand the person planning and then back to the stores guy in order to harmonize the operation.
What information does the planning person need to know from the procurement person for him to make the right decisions?
- Availability of materials in the market
- Know the lead times
- Know the arrival times
(The luxury for planning for a few days needs to be avoided)
What does the procurement person need to know from the planning guy?
- Market size
- Production capacity
- Storage capacity
End to end supply chain: you need to think beyond your four walls. You need to know how much you have in storage and how long it will last. You need to know how much your supplier has. You need to know how much you have in transit and when is it going to arrive. How much does your supplier have in transit and when does it arrive? Which is thinking beyond your supply chain and your business operations because there are things which you might be suffering for because you are not getting the bigger picture. Knowing some of these details in the long run saves on time and costs.
What should the stores person know about the procurement person and vice versa?
- Storage capacity
- Warehouse management system
- Nature of the raw materials/ Shelf life.
If you really want to run your operation smoothly based on transforming your data to information one thing you need to know is, what do you need to act on? It needs to be information that you can act on, if you cannot act on it then it’s not very useful. It needs to be information that can tell anyone else what to do in the event that you are not there.
‘Run your business if you have to in excel until your business out grows your excel capabilities.” a great way to collect data. Most of the tools that you need to collect data and process information are free; all you need to do is ask yourself simple questions such as “what do I need to see?”.
When you are especially running a small business, do not get too lost in the word capacity, it is a correct word but the reality is that it means “how big is it?”
When it comes to things like storage; you need to ask yourself basic questions such as how much material do, I need to store? how much space do I have? how much man power do I need to manage this material?
*In relation to the example he gave on what information should look like*
What are some of the questions you need to ask yourself?
Why are we renting storage space when we have free space? Such a question is a good example of why decisions are easier made when they are based off of information as opposed to data. The best approach to simplifying processes is to ask yourself the question “How can I make this thing work without me?”
Why are some of the stores completely empty and yet some are completely empty?
- Sometimes it shows that there is not enough production being done
- Sometimes the business environment requires you to have reserve material purchased in months’ worth and stored e.g. Coca-Cola Ethiopia bought sugar for 7 months and 2 weeks later the sugar prices shot up by 15%
In such a case, if you buy 7 months’ worth of sugar, what should you think about?
- Hazards like fire
- Storage management system
- Government decisions (which usually cause a butterfly effect; unemployment, loss of revenue from businesses for them)
Always ask yourself what could go wrong when doing operations, you have to stack plan upon plan in order to be able to quickly counter unintended circumstances.
What is the appropriate timeframe for proper sales and operations planning?
There are a variety of horizons:
For sales you can look at 6 weeks to a year and operationally you can look at things from a weekly point of view, what am I doing next week?
In the situation that you have a lot of money(revenue), use that resource to counter potential future problems for example if one of the suppliers fails to get the required amount of money from a bank in the required timeframe, you can loan your revenue to the supplier so that they can purchase material for you which adds a point to your supply chain.
When you think beyond your supply chain, you also need to think of the implications of the decisions you make to the eco-system of the supply chains. Aim to create win-win situations and maintain good working relationships with your suppliers which in turn lead to good and constant supply
How do you identify quality and maintain constant supply of that same quality?
- Deal with certified suppliers
- Go further into details that protect your reputation as a company e.g. child labor, proper employee compensation
“Who is fit?”
To be fit means to be fit for purpose. In terms of supply chain, you need to make sure your system is not “copy and paste” from some of the big companies like amazon. Make it is fit for what your purpose is, customer and business environment otherwise you will end taking the right solutions to the wrong companies.
Article by: Donald Byamugisha – Growth Catalyst, Uganda