We are at an inflexion point.
The warehouse automation market in Africa is projected to register a robust compound annual growth rate (CAGR) of 15.4% during the forecast period of 2022-2029. As Africa industrialises and urbanises, the demand for efficient warehousing facilities has never been higher.
Warehouse efficiency directly impacts industry competitiveness, supply chain reliability, and the continent’s economic prosperity. However, this impact extends beyond the surface. Africa’s significance in global supply chains is on the rise, propelled by its abundant availability of raw materials and cost-efficient solutions.
High-tech sectors such as electric vehicles (EVs) and mobile phones stand to gain from this development by generating employment opportunities and aligning with the objectives outlined in the African Union’s Agenda 2063. [Source]
However, realising this potential requires concerted efforts from African stakeholders, including governments, financial partners, and the private sector. The key lies in implementing network diversification strategies to enhance Africa’s competitiveness and attractiveness as a destination for global companies.
The UN Provides a Policy Roadmap for Africa’s Supply Chain Growth.
Seizing these opportunities requires concerted efforts from African stakeholders, including governments, financial partners, and the private sector.
This year, the United Nations Conference on Trade and Development (UNCTAD) released a document of strategic and actionable policies to help African countries become the next frontier destination for global supply chain reassessment.
Here’s the TL;DR:
- Develop infrastructure and logistics capabilities to improve connectivity and reduce transportation costs.
- Encourage investment in technology and innovation to improve productivity and competitiveness.
- Promote regional integration and cooperation to create larger markets and reduce trade barriers.
- Support small and medium-sized enterprises (SMEs) to participate in global value chains and access financing and technology.
- Strengthen institutions and governance to improve the business environment and reduce corruption.
- Invest in human capital development to improve skills and knowledge in the workforce.
However, Africa’s Road to Warehouse Automation is Paved with Bottlenecks
While Africa is on the journey towards embracing warehouse automation, the road is long. Smaller companies, in particular, find the costs of automation prohibitive.
Moreover, the continents’s infrastructure limitations, even in South Africa, challenge the integration of automation systems into existing logistics networks.
To this end, we’ve compiled some real-world challenges we encounter daily while dodging forklift trucks and speaking to managers about their modernisation journeys.
The unemployment rate is high, yet skills are in low supply
Operating and maintaining automation systems require specialised skills currently in short supply in Africa and South Africa. This scarcity of talent isn’t insurmountable. Implementing digital learning management systems (LMS) that automate the delivery of training materials, assessments, and personalised learning paths can accelerate plugging the skills gap.
Another practical solution is to establish apprenticeship programs with industry leaders. These programs offer hands-on training and real-world experience to individuals looking to develop specialised skills in automation and related fields. For instance, our company hires recent graduates, trains them, and lays a strong foundation for their future careers. These initiatives support other businesses and education in the local community, ultimately contributing to the skills shortage in the sector.
The road to warehouse automation is lined with red tape
Compliance is another bottleneck keeping Africa’s distribution leaders up at night. Securing the necessary approvals for local
regulations can become bureaucratic quicksand for companies looking to adopt warehouse automation. Resourcefulness is a hallmark of our continent, and no amount of red tape is unconquerable. However, crossing them requires resources always in short supply: time and money.
70% of IT-related projects fall short of their objectives
Research from Boston Consulting Group found that 70% of digital transformations fall short of their goals. This is consistent with the Modernisation Business Barometer Report finding that 74% of organisations that had started a legacy system modernisation project still needed to complete it.
We encounter this frequently.
One of the challenges in system integration is the compatibility with legacy backend systems that often rely on outdated technology. This can pose difficulties when trying to integrate them with modern systems.
The practical solution is piecemeal integration: breaking the process into manageable tasks, allowing gradual integration of legacy and modern systems, while minimising disruption to the distribution centre. However, this brings us to the skills shortage issue.
While third-party vendors with extensive experience in Africa can overcome most integration challenges, addressing the skills gap is essential. As mentioned, our company, along with many others, offer training programs and creates pathways for trainees and graduates. Expanding this approach is imperative for our continent to fully harness the opportunities that await it within the global supply chain.
Warehouse automation takes jobs away from people, or does it?
It doesn’t have to be that way. Just look at Amazon. The world’s largest e-commerce company now has more than 520,000 robotic drive units in its facilities worldwide. And yet, the company still needs human workers and it is likely Amazon will face a shortage of available workers for its US warehouses by 2024.
What this shows is that people are still needed, even in the world’s most automated warehouses. This is a good thing for Africa. Autonomous robots can take over many tasks but they can’t do everything. For example, people still have to put things on conveyor belts, even though robots do other parts of the job.
The lesson learned from Amazon is that embarking on warehouse automation without simultaneously focusing on retaining the workforce can have detrimental effects on both companies and the individuals reliant on automated warehouse jobs.
To mitigate the drawbacks of warehouse automation, long-term planning should prioritise strategic workforce planning, employee development, cross-skilling, and a supportive work culture promoting continuous learning, career growth, and job security.
One thing is clear: smart warehouses do not mean peopleless warehouses.
The costs of warehouse management systems are the biggest bottleneck of all
Occasionally, our company misses out on a project when potential clients opt for a competitor with a lower initial price that we cannot match. It’s difficult to fault them, as many warehouse managers recognise that while the competitor’s costs may be lower now, they might not be in two years when the time comes to upgrade.
Faced with this dilemma and a pressing need to automate their warehouse solution, they often choose the immediate cost savings, over the long-term ROI that only a “future-proof” Warehouse Management System (WMS) can bring.
However, there is a middle way.
You can’t smash costs away with a hammer – but you can with a chisel
Every day, walking through our clients’ warehouses, it’s heartening to see our clients’ faces light up when they realise the value of their investment in a Warehouse Management System (WMS) substantiated by tangible returns on their investment. These triumphs extend beyond just well-funded companies.
Piecemeal integration is a cost-effective approach to system integration that can help businesses of all sizes reap the rewards of warehouse automation. By breaking down the integration process into smaller, more manageable tasks, companies can reduce the risk of disruption and improve efficiency.
This approach is especially valuable for lean and budget-conscious companies relying on legacy back-end systems. It enables them to incrementally integrate these legacy systems with modern ones, eliminating the necessity for substantial upfront investments in exchange for a “future-proof” system.
Packaging up our thoughts
Africa’s role in global supply chains is growing, and efficient warehousing is crucial for its industrialisation. While automation faces challenges, it offers economic growth and job creation opportunities. Strategic planning and investment are vital in accelerating Africa’s ability to take full advantage of this inflexion point.
Yes, there are challenges, but we are witnessing green shoots everywhere in the industry. One thing is certain: African resilience and resourcefulness will find a way.