The second in our series of tips for potential investors in the African telecoms market. Here Informa Telecoms & Media focuses on the importance of supply chain management.

At a time when operators look to transform their network-centric business to one that is service-led, there is the danger that supply chains can become even more fragmented and complex.

Whilst this business transformation concept is as real in Africa as anywhere else in the world – end users demand the most relevant services – networks also remain a major concern. Indeed, the quality, reliability and range of a network can still be a differentiator in Africa, and especially as operators look to rural expansion for new customers. Operators in Africa are fighting for differentiators on at least two fronts. This means that any carrier aiming to build up a pan-regional business must work closely with its partners for reasons of cost efficiency and because any supplier partnership will have a vital impact on its operational delivery performance.

The supplier landscape for the operator has become cluttered and confusing. No wonder that operators such as Airtel tend to work with a small number of trusted partners.  Indeed, the very language around supplier relationships has changed for the likes of Airtel, which no longer positions the relationship as one that is adversarial, but instead, treats the supplier as an extension of the operator’s organisation.

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Source: Intelligence Centre

A word of warning, however, about businesses reducing their number of suppliers comes from the automotive industry. One of the world’s first proponents of lean management (which includes having a small number of suppliers) was Toyota. In the face of its recent design problems and the need for it to recall many of its products, Toyota’s lean supplier network was overwhelmed. A lean operational model is all well and good but the reliability of one’s partners (rather than suppliers) is paramount to performance levels. Africa’s market is too competitive for a new operator to suffer from poor performance or sub-standard customer care.

AfricaCom 2010, takes place in Cape Town, November 10-11