The Challenges of Value chain in Nigeria

Doing business in Nigeria can be interesting, rewarding and a bit challenging at the same time.

Nigeria with its young population is made up of an industrious, creative, innovative, trusted and ever-ready workforce.

Like every other African nation, Nigeria is struggling to upgrade its infrastructure to meet up with the everyday demand.

This has an adverse effect on the value chain across the country.

I know you may be wondering what exactly is the value change.

Now before we continue, let’s understand the meaning of the value chain.

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In the simplest terms, a value chain is the series of activities that a business performs to deliver a product or service to the market. Each activity in the value chain adds some form of value to the product, with the end goal of delivering a product that meets the needs and desires of the end customer.

In Nigeria, the value chain faces several challenges that make it difficult for businesses to efficiently deliver their products and services to customers. In this article, I’ll explore some of these challenges and offer some recommendations on how businesses can address them.

Stages of the value chain :

First, it's important to understand the different stages of the value chain, the following are various stages of the value chain: ?

The value chain can be broken down into five primary stages:

1. ?Inbound logistics
2. Operations
3. Outbound logistics
4. Marketing
5. Sales
6. Service

Inbound logistics :

This involves the procurement of raw materials and other inputs that are necessary for the production of a product.

In other words, Inbound logistics refers to the processes involved in receiving, storing, and distributing inputs or raw materials from suppliers to a business's production or operations processes. These inputs may include raw materials, parts, supplies, or any other products necessary for the business's operations.

The goal of inbound logistics is to manage and optimize the movement of these inputs to ensure that they are delivered on time and in the correct quantity and quality. Inbound logistics is an essential part of a company's overall supply chain and is critical to the success of the business.

Key processes involved in inbound logistics

• Procurement
• Transportation
• Warehousing
• Inventory management

• Procurement: This involves sourcing the necessary materials or products from suppliers, negotiating contracts, and managing supplier relationships.
• Transportation: Transportation involves moving the inputs from the suppliers to the business's warehouse or production facility.
• Warehousing: Warehousing has to do with storing the inputs until they are needed for production.
• Inventory management: Inventory management involves tracking the quantity and quality of inputs to ensure that they are available when needed.

Examples of inbound logistics in practice:

1. A car manufacturing company sources steel from multiple suppliers. The procurement team negotiates contracts with the suppliers, and the transportation team arranges for the steel to be transported to the company's warehouse. The warehouse team receives the steel, checks its quality, and stores it until it is needed for production.

2. An online retailer sources products from multiple suppliers. The procurement team negotiates contracts with the suppliers, and the transportation team arranges for the products to be shipped to the retailer's warehouse. The warehouse team receives the products, checks their quality, and stores them until they are needed for fulfillment of customer orders.

3. A restaurant sources food items from multiple suppliers. The procurement team negotiates contracts with the suppliers, and the transportation team arranges for the food items to be delivered to the restaurant's kitchen. The kitchen team receives the food items, checks their quality, and stores them until they are needed for the preparation of customer orders.

It may interest you to know that inbound logistics plays a critical role in ensuring that the necessary inputs are available for the business's operations. By optimizing the processes involved in inbound logistics, businesses can reduce costs, improve efficiency, and enhance the overall quality of their operations.

Operations:

Just as the name implies, operations involve the actual production process, this may include all the activities carried out to transform raw materials into the finished product. In other words, an operation refers to the set of processes and activities that transform inputs into outputs, which can be goods or services. An operation can be viewed as a series of steps, each of which adds value to the input, resulting in a final output that meets customer needs.

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The process of operations is one of the stages of the value chain, which includes all the activities involved in the creation and delivery of a product or service. The value chain model describes the various stages that a product or service goes through before it reaches the customer. The operations stage is where the actual production or service delivery takes place.

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Operations process:

Planning: This involves forecasting demand, scheduling resources, and preparing production schedules.

Sourcing: This typically has to do with acquiring raw materials, components, and equipment required for production.

Production: As you may already know, this stage is very important because it involves converting raw materials and components into finished products.

Quality control: This happens to be the process of ensuring that the products meet the required quality standards.

Distribution: Distributing is one of the most important stages in the value chain, this involves the movement of finished goods to their intended destinations.

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Examples of operations in the value chain include:

?Manufacturing: A company that produces cars is an example of an operation in the manufacturing industry. The process involves assembling various components to create the final product.

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Healthcare: A hospital is an example of an operation in the healthcare industry. The process involves providing medical care to patients, which includes diagnosis, treatment, and post-treatment care.

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Retail: A supermarket is an example of an operation in the retail industry. The process involves sourcing and stocking goods, selling them to customers, and ensuring that the store is clean and well-maintained.

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Hospitality: A hotel is an example of an operation in the hospitality industry. The process involves providing accommodation, food, and other services to guests.

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In a nutshell, operations are the core processes that enable a company to create and deliver products or services. They are one of the key stages in the value chain and involve several sub-processes such as planning, sourcing, production, quality control, and distribution.

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Outbound logistics:

Outbound logistics focus on the transportation of the finished product to the market or from the factory to the consumer.

Outbound logistics refers to the set of activities involved in delivering finished products to customers or intermediaries, such as retailers or wholesalers. It is a key component of the value chain and includes all the processes involved in moving goods from the production facility to the end customer.

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Steps involved in the outbound logistics

1. Order Processing: This activity involves receiving and processing customer orders, verifying their details, and determining the number of products to be shipped.
2. Picking and Packing: You will agree with me that the importance of selecting the right products from inventory, preparing them for shipment, and packaging them securely cannot be emphasized.
3. Shipping: This falls under all the activities that have to do with arranging the products to be shipped to the customer or intermediary. It includes selecting the most appropriate shipping method, preparing the necessary documentation, and arranging for transportation.
4. Delivery: This is the process of physically delivering the products to the customer or intermediary, which may involve coordinating with shipping companies or delivery services.
5. Customer Service: Customer service is very essential in every business. This involves providing post-delivery support to customers, including handling any returns, complaints, or warranty claims.

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Examples of outbound logistics :

E-commerce: Online retailers, such as Amazon or eBay, rely heavily on outbound logistics to deliver products to their customers. They have complex supply chains and fulfillment networks to ensure that products are delivered to customers quickly and efficiently.

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Retail: Brick-and-mortar stores, such as supermarkets, also require outbound logistics to ensure that products are available on store shelves for customers to purchase.

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Manufacturing: Manufacturers often rely on outbound logistics to move their products from the factory to the customer. This may involve coordinating with distributors or wholesalers to ensure that products are available in the right locations.

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Service industries: Even service-based companies may require outbound logistics. For example, a courier or delivery service must ensure that packages are delivered to their intended recipients.

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Outbound logistics is a critical component of the value chain and involves a set of processes designed to deliver finished products to customers or intermediaries. It includes order processing, picking and packing, shipping, delivery, and customer service. Examples of industries that rely on outbound logistics include e-commerce, retail, manufacturing, and service-based companies.

Marketing

Marketing refers to the process of identifying, anticipating, and satisfying customer needs and wants through the creation, promotion, and distribution of products or services. It is a vital function of any business, as it helps to create awareness, build brand value, and generate revenue.

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Processes of marketing

• Research: This involves conducting market research to identify customer needs and wants, as well as gathering information about competitors, market trends, and consumer behaviour.
• Product Development: This involves creating products or services that meet customer needs and wants. It includes designing, testing, and refining products until they are ready for market.
• Promotion: This involves creating and executing a marketing plan to promote products or services to the target audience. It includes advertising, public relations, sales promotions, and personal selling.
• Distribution: This involves the process of getting the product to the customer. It includes deciding on the most appropriate channels, such as online or offline retail stores, or direct-to-customer delivery.
• Customer Service: This involves providing support to customers after the sale, such as offering warranties, addressing complaints, and handling returns.

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Examples of marketing

Digital Marketing: Companies use online channels such as social media, email marketing, search engine optimization, and pay-per-click advertising to reach customers and build brand awareness.

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Product Launches: Companies use marketing strategies to introduce new products to the market. They create hype and anticipation through advertising, press releases, and events.

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Retail Marketing: Retailers use marketing strategies to create in-store experiences that attract customers, such as product displays, sales promotions, and personalized recommendations.

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Branding: Companies use branding to create a distinct identity that sets them apart from competitors. This can involve creating a brand name, logo, and tagline that resonates with customers.

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Marketing is the process of identifying and satisfying customer needs and wants through the creation, promotion, and distribution of products or services. It involves several stages, including research, product development, promotion, distribution, and customer service.

?Sales :

This stage is responsible for promoting the product and finding customers, while service involves ensuring that customers are satisfied with the product after they have purchased it.

Sales refer to the process of exchanging products or services for money or other forms of value. It involves the final stage of the marketing process and is an important function of any business as it generates revenue.

Sales Process

1. Prospecting: This involves identifying potential customers and gathering information about their needs, preferences, and budget.
2. Preparation: This involves preparing the sales presentation, which includes developing a sales pitch, gathering product information, and creating a proposal or quote.
3. Approach: This involves making initial contact with the potential customer, either through phone calls, emails, or face-to-face meetings.
4. Presentation: This involves presenting the product or service to the customer and highlighting its features, benefits, and value proposition.
5. Handling objections: This involves addressing any concerns or objections that the customer may have and providing additional information or solutions to overcome them.
6. Closing the sale: This involves obtaining the customer's commitment to purchase the product or service, negotiating the terms of the sale, and finalizing the transaction.
7. Follow-up: This involves following up with the customer after the sale to ensure satisfaction, address any issues or concerns, and foster a long-term relationship.

Examples of sales

• Direct Sales: This is basically the selling of products or services directly to customers, either through a physical location, such as a store or office or through online channels.
• Business-to-Business Sales: This involves selling products or services to other businesses, such as suppliers or distributors.
• Telemarketing: This involves using the telephone to make sales pitches to potential customers.
• Retail Sales: This involves selling products or services to customers in a retail environment, such as a store or mall.
• E-commerce Sales: This involves selling products or services through online channels, such as a website or mobile app.

Let me refresh our minds once again, sales have to do with the process of exchanging products or services for money or other forms of value. It involves several stages, including prospecting, preparation, approach, presentation, handling objections, closing the sale, and follow-up. It might also interest you to know that, no matter how good your product or service may be, if no client or customer buys it, then the business may not survive.

Challenges facing the value chain in Nigeria

A. Inadequate Infrastructure:

One of the biggest challenges facing the value chain in Nigeria is the lack of adequate infrastructure. The country's roads, rail lines, and ports are in need of significant improvement in order to efficiently transport goods across the country. This lack of infrastructure leads to delays and increased costs in the value chain, ultimately making it more difficult for businesses to deliver their products to the market.

B. Corruption:

Another challenge is the issue of corruption. Corruption is a pervasive problem in Nigeria, and it can have a significant impact on the value chain. Bribes and other forms of corruption can lead to delays and other issues in the value chain, ultimately making it more difficult for businesses to deliver their products to the market.

C. Quality of raw materials and other inputs:

Additionally, there are issues related to the quality of raw materials and other inputs. In order to produce high-quality products, businesses need access to high-quality inputs. However, in Nigeria, it can be difficult to find reliable suppliers that can provide high-quality inputs. This can lead to production delays and increased costs in the value chain.

D. Skilled Labour

Another challenge is the issue of skilled labour. In order to operate efficiently and effectively, businesses need access to skilled labour. However, in Nigeria, there is a shortage of skilled labour in many industries. This can lead to delays and increased costs in the value chain, as businesses struggle to find workers with the necessary skills to carry out their operations.

E. Regulatory environment

Finally, there are challenges related to the regulatory environment in Nigeria. Regulations related to taxes, tariffs, and other factors can significantly impact the value chain. In order to be successful, businesses need to understand and comply with these regulations, which can be complex and difficult to navigate.

What can businesses do to address these challenges?

1. One potential solution is to focus on building a more robust supply chain. By developing relationships with reliable suppliers, businesses can ensure that they have access to high-quality inputs. Additionally, by investing in their own transportation infrastructure, businesses can reduce their dependence on the country's inadequate transportation infrastructure.

2. Focus on developing a skilled workforce. By investing in training programs and other initiatives, businesses can help to build the skills of their employees and ensure that they have access to the talent they need to succeed.

3. Focus on building relationships with regulatory agencies and other stakeholders. By engaging with these stakeholders and building relationships based on trust and transparency, businesses can gain a better understanding of the regulatory environment and identify opportunities to improve their operations.

4. Implementing anti-corruption policies. Finally, businesses can work to address the issue of corruption. By implementing strong anti-corruption policies and procedures, businesses can reduce the risk of corruption in the value chain and ensure that they are operating ethically and transparently.

The value chain in Nigeria faces a number of challenges that make it difficult for businesses to efficiently deliver their products and services to customers. However, there are steps that businesses can take to address these challenges and improve their operations.

By focusing on building a more robust supply chain, investing in a skilled workforce, building relationships with regulatory agencies and other stakeholders, and addressing the issue of corruption, businesses can overcome the challenges facing the value chain in Nigeria and achieve success in the market.

Moreover, it's essential to note that collaboration between the government and the private sector can be a significant driver in improving the value chain. The government can support the development of infrastructure, establish favourable policies, and create a conducive environment for businesses to thrive. Simultaneously, private businesses can leverage their expertise and resources to address the challenges facing the value chain.

It's also important to recognize that technology can play a crucial role in improving the value chain in Nigeria. Advancements in technology have the potential to increase efficiency and reduce costs throughout the value chain, from procurement to delivery to the customer. For example, the use of data analytics can help businesses to identify inefficiencies in their operations and make data-driven decisions to improve their processes.

As I round up this article, remember that the challenges facing the value chain in Nigeria are significant, but they are not insurmountable. By focusing on building a more robust supply chain, investing in a skilled workforce, building relationships with regulatory agencies and other stakeholders, addressing the issue of corruption, and leveraging technology, businesses can overcome these challenges and succeed in the market. Ultimately, the value chain in Nigeria has the potential to be a key driver of economic growth and development in the country, and it's up to businesses to seize this opportunity and drive progress forward.

Thanks for reading.

@sunnymbiam.com

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