Designing the Last Mile of the Supply Chain in Africa

Designing the Last Mile of the Supply Chain in Africa: Firm Expansion and Managerial Inferences from a Grocer Model of Location Decisions

By Dave D. Weatherspoon and Anthony Ross. Presented to International Food and Agribusiness Management Association 16th Annual Forum and Symposium, Buenos Aires, Argentina - June 10-13, 2006

Over the last four years there have been numerous articles explaining the recent boom of modern retailing in developing countries and the implication of this investment which has primarily been foreign. One of the most surprising results has been the diffusion of supermarkets and restaurant chains in Sub-Saharan Africa which admittedly lags behind other regions. Nonetheless, this literature has opened up vigorous debates among academics, governments, firms, donor agencies and non-governmental agencies alike. The investment in public-private relationships and supply chains has increased dramatically from the donor agencies and foundations to address the perceived problems resulting from these new sophisticated supply chains which are competing against the most basic of food distribution networks, and which we will refer to as informal markets throughout the rest of the paper.

In order to realize those predictions from the literature of continued rapid growth, the agrifood system throughout Sub-Saharan Africa must be transformed into an efficient, highly sophisticated and capitalized agrifood supply chains. That is why this paper is so important to the understanding of how food firms are making investment decisions which amount to building entire supply chains from scratch (i.e. bricks and mortar, transportation, cooling equipment, identifying suppliers and etc). The second reason this research is germane to the future of the region is that currently, this diffusion and investment is dominated by one country and specifically one firm from South Africa, the furthest most south point on the continent. This begs the question of how can the most efficient supply chain for a land area equivalent to two times the size of the U.S., which contains 66 cities with more than half-million people, be dominated by one firm and its newly minted supply chain? Although it may seem counter-intuitive, Shoprite's supply chain is reportedly price competitive at the point of destination even though the costs of empty backhauling are included (Shoprite is located in 17 different countries in Sub- Saharan Africa).

This paper is a seminole approach to examining facility location modeling in the context of a developing/transitioning economy. The challenges are enormous with respect to identifying and obtaining the appropriate data to help suggest where (consumer product) food firms should locate in Sub-Saharan Africa. To do this, we utilize the experience of South African food retailer the Shoprite/Checkers Company. The objective of this research is to compare the prescribed supermarket and related retailing growth in Zambia to actual growth. The next section outlines the context in which food firms are operating in Sub-Saharan Africa followed by the methodology and data, model development, estimation results and then management implications sections.

Full paper at http://www.ifama.org/conferences/2006Conference/SymposiumFinal/1033_Paper.pdf