By: Mahmud Tim Kargbo
As the old saying goes, “the only constant is change,” and this is as true today as ever in Sierra Leone. Companies in Sierra Leone are navigating an uncertain market—inflation, capacity constraints, and supply-chain disruptions are challenging traditional savings levers. None of these variables is new by itself. However, their combination and the velocity of change coming out of the COVID-19 crisis is generating new forms of financial and operational risk—steering many organisations into uncharted waters.
With constant change creating new challenges and opportunities at every turn, corporate resilience needs to take over in Sierra Leone in a renewed importance manner . Procurement and supply-chain functions must be seen playing a critical role in enhancing resiliency by serving as orchestrators between a business and its suppliers. To build on their success, they need to take a broad set of actions across several time horizons:
Here and now, procurement ensures supply and price stability.
For the medium term, companies will deploy an advanced volatility toolbox, with a broad range of levers to minimise costs.
To be ready for the future, companies in Sierra Leone need to institutionalise the cross-functional approach and volatility toolbox as part of their next-generation procurement approaches.
One of the most promising early-stage approaches within this broad set of actions is a procurement nerve center. The structure brings together Sierra Leone’s specialists across the value chain—from supply chain, planning, finance, operations, and engineering—to triage supply-availability problems for raw materials, components, and related inputs. In a centralised, strategically informed way, a nerve-center team accelerates a company’s response to uncertainty. When facing inflationary pressures, a nerve center collaborates to capture cost savings, find and approve alternative commodities and their sources, and develop deeper partnerships with key suppliers to generate additional sources of value.
If companies in Sierra Leone implement nerve centers effectively they can structurally improve their cost base, protect and enhance margins, and drive organisational alignment. For example, a basic-materials company reduced a major supplier’s price increase by more than 40 percent, and a component manufacturer successfully navigated supply and price volatility to match the pockets of the suffering majority.
The truth is trends are fueling uncertainty. Wide range of factors in Sierra Leone, including rising commodity prices, supply-chain disruptions, expansionary economic policies, tightening poor labour markets, and the sustainability imperative are driving the current market uncertainty and inflation.
Sierra Leone’s rapidly increasing commodity prices largely reflect the impact of the COVID-19 pandemic on the business environment. Response to abrupt shifts in consumer demand and rebounding economic activity around the globe, some raw-material prices have hit all-time highs. gold prices, for example, more than doubled in early 2021, while the price of iron ore has risen by more than 150 percent in the same period as voracious raw-material demand compounded supply scarcity.
With input prices soaring, many international companies reported higher costs in the first quarter of 2021 and fear that inflation may continue. Identifying and implementing approaches to minimise exposure and protect margins has vaulted to the top of many C-suite agendas.
For Sierra Leone to respond to the urgent challenges in the current market, as well as any future uncertainty, procurement organisations can apply a much broader set of levers to create value. Many will rely on cross-functional collaboration. Breaking down silos and enhancing visibility among functions will be even more important.
Failing to coordinate across functions can have expensive consequences. Waver for rice importation or quarterly workshops for rice importers are not enough to handle fast-moving prices.
In this era of upheavals, procurement leaders have an opportunity to reinvent their function and broaden their mandates to promote greater resilience. To fulfill this broader mandate, procurement needs an end-to-end operating model that promotes the creation, preservation, and enablement of value.