The African manufacturing sector is navigating an era of unprecedented threats and extraordinary opportunities – from the prospect of closer trade cooperation throughout the continent to COVID-19, which dominated many of the discussions at the virtual Manufacturing Indaba this week. 

In the aftermath of the virus outbreak, 2020 has certainly been a challenging year for the manufacturing sector. The World Bank predicts the pandemic will push Sub-Saharan Africa into its first recession in 25 years with growth predicted to fall to -3.3% for 2020. Reduced demand has taken its toll on the balance sheet and cash flow of most producers. 

Pandemic effects to linger 

Many side effects from the pandemic could linger for years – from a scramble to reconfigure global supply chains, to new consumer preferences formed under lockdown, to gluts of some commodities and products and shortages of others. Even as these challenges come to the fore, many of the old ones are very much in play – from growing global competition to the pressure to reduce carbon emissions. 

Yet, Africa also has the potential to grow into a manufacturing powerhouse. The nurturing of a larger and more integrated regional market via the African Continental Free Trade Agreement, the expansion of the middle class, a youthful population, and rapidly improving infrastructure all bode well for the future.

However, African manufacturers will need to boost efficiency, productivity and quality if they are to master the challenges of the current market and harness the emerging opportunities. Leaders are looking at the technology backbones they must put in place to drive operational excellence, optimise costs and accelerate innovation. 

New industrial revolution

Manufacturers recognise that a new industrial revolution is transforming how and where goods are made, and the African industry needs to keep up. Manufacturers also know their legacy technology environments are not yet ready to integrate emerging technologies like advanced robotics, the Internet of Things, big data and artificial intelligence (AI). 

According to IDC, at least 40% of companies worldwide are stuck in an ERP technical debt with heavily customised systems. Over the decades, most manufacturers have added layers of complexity to their ERP systems resulting in a tangle of interfaces and poorly integrated, best-of-breed applications.  

These antiquated solutions lead to high cost of ownership and low levels of business alignment. They also impede enterprise agility and make it hard to harness the next generation of emerging technologies. For that reason, forward-thinking manufacturers are looking to migrate to a new generation of intelligent business management solutions.

Business management solutions enable manufacturers to meet the challenges of today’s business world, providing insight into costs and operational performance, and providing information for smarter and faster business decisions. This, in turn, allows them to enhance efficiency, diminish costs, and increase sales and profitability.

Such modern, integrated business systems offer seamless communication across supply chains and access to real-time data. Next-generation business management systems enable companies to optimise manufacturing processes end-to-end, including production planning, project management, process scheduling, compliance, and mobile supply chain management, while reducing costs.

End-to-end optimisation

For most manufacturers, cloud technology offers a way to accelerate into this digital world. Cloud solutions can be rolled out relatively quickly, configured rather than customised, and adopted in a modular, incremental way that allows a company to bank quick wins on the way. Companies not ready to migrate all infrastructure to the cloud can adopt a hybrid cloud model and take the journey at their own pace.  

Next-generation business management solutions simplify operations to allow businesses to grow faster and stay agile. They’re easy to adapt to fit unique processes, roles and preferences. With minimal IT investment and resources, companies can enjoy rich, integrated functionality to support all core business processes.

By Gerhard Hartman, Vice President: Medium Business, Sage Africa & Middle East