Tag Archives: Distribution Chain

Collaboration@Rural in South Africa

Collaboration and Rural (C@R) is an EU project aimed at enabling the participation of European rural dwellers in the knowledge society. The methodology of the project involves the testing new technologies developed by the C@R consotium within 7 Living Labs, including the Sekhukhune Living Lab in South Africa.

Below is a video material presenting the technology developed by SAP to the benefit of SMEs and micro enterprises, within the C@R project. The featured procurement technology is focused on realising benefits through the aggregation of rural demand for manufactured goods andprocessed foodstuffs. The savings are realised due to the lower prices, achieved by a coallition of buyers who manage to order together greater quantities via mobile communication.

The main beneficiaries of the system are Spaza shops which are scattered all over the area and ensure the supply to the rural community of bread and other items such as soap, detergent, clothes etc. Stock replendishment is a challenge to Spaza shop owners because goods need to be sourced from the nearest town, which involves a transportation cost and the opportunity cost of day’s work. Ms. Sesina Mabuza, a Spaza shop owner recounts the financial constraints she faces in re-stocking her shop. Ms. Christina Zikhali, a Spaza shop owner in a very remote village explains the variability of the transportation costs incurred by using shared taxi services.

Vodpod videos no longer available.

Consistent with New Institutional Economics, C@R seeks to reduce transaction costs through vertical integration. The system implemented by SAP facilitates the establishment of virtual buying cooperatives, consisting of a number of Spaza shops and coordinated by local information service providers, known as “nfopreneurs”. The video presents the example of bread supply. Retail shop owners are enabled to order the bread they need via SMS. The messages retailers send to the “infopreneurs” consist of the name of their shop, a PIN number verifying their identity, the amount they are ordering and the code of the product. The SMS messages are aggregated by the “infopreneurs”, they are bundled and transmitted to the suppliers of the product. The system is of benefit to the suppliers by allowing them higher visibility of the market for their product. Mr. Hansie du Plessis, Manager of Tubatse Bakery in Sasko testifies to the benefit to suppliers. The savings realised are used for the delivery of the products to the Spaza shops.

The video suggests that in the future the entire basket of items carried by Spaza shops might be available through the C@R procurement system implemented by SAP in the Sekhukhune Living Lab. I think that this is a truely exciting prospect.

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