Prof Kenneth K Odero
Performance measurement of any economic activity is considered valuable for a number of reasons. It allows for gauging the rate of return on investment. It enables continuous (strategic, financial, production, demand, revenue, scenario) planning for more informed decision making. It enhances collaboration within, and across, organisational boundaries, et cetera. ‘You cannot plan (let alone manage) that which you do not measure’ is an old adage, but nevertheless relevant for highlighting the functionality and importance of measurement, in general, and relevant, and high-quality data in particular. To be sure, it is not only measuring per se that is important, equally so, is what is measured! Let us use an example to illustrate the point.
A standard economic measure of most activities is their aggregate contribution to the Gross Domestic Product (GDP): The higher the contribution the greater its perceived role. However, the “contribution” of logistics to the economy (i.e., its % of GDP) ideally should be as low as possible for an economy to be considered competitive. According to this counter intuitive interpretation of logistics’ contribution to the GDP, optimisation of logistics (as well as the supply chain) is seen not just the right thing to do, but also desirable. This can be explained by the fact that logistics is a cost carrying activity, as such, minimising logistics cost is a strategic policy objective.
To put this into perspective, a key policy objective of Namibia is to become a “logistics nation” by 2025. This goal is well articulated in the Fourth National Development Plan (NDP 4), as well as in the 2015 Master Plan for Development of an International Logistics Hub for Southern Africa Development Community (SADC) Countries in the Republic of Namibia. The key ingredient identified for the attainment of the desired status of a logistics nation was that Namibia has “to make the most of its geographical advantages and streamline the whole logistics system by shortening the lead-time for cargo transit and reducing the handling cost in freight transport”. Arising from the above perspective, the natural question to ask is what is happening to the lead time for cargo transit, and the handling cost in freight transport? The answers to both questions pre-suppose a mechanism for continuously measuring the trend (read performance), over time, of these among other logistics and supply chain performance metrics. In other words, Namibia’s ability to attract higher volumes of transit cargo, both to and from her land-locked or infrastructure deficient neighbours (Angola, Botswana, Malawi, Zambia, and Zimbabwe), very much depends on how efficiently the logistics system performs relative to South Africa’s (the main competitor) in terms of lead time and freight handling cost (i.e., logistics cost), among other metrics.
Thus, measuring logistics costs and supply chain performance is an absolute imperative. The justification or rationale for this is straight forward. In today’s competitive and integrated global marketplace, excellent performance of national logistics and supply chains is a differentiator in terms of competitiveness. Arguably, it will enhance the prospects of an international logistics hub for SADC in Namibia that contributes to making the region more competitive in the global market, generating positive multiplier effects in the national economy, and creating skilled jobs while reducing income inequalities. This will not only attract additional investments, it will also promote much needed sustainable economic growth.
Towards this end, the Namibia University of Science and Technology (NUST) has partnered with the Walvis Bay Corridor Group with support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to measure macro level logistics and supply chain performance in Namibia. The results of this exercise will be published annually in the State of Logistics Report. The maiden issue is expected to be published in the last quarter of this year. This will usher Namibia into the league of nations that include Finland, South Africa and the United States, among others, who regularly publish their own versions of the State of Logistics Report. The value of the Namibia State of Logistics Report should be seen in the context of strengthening implementation, and realisation, of an agile, competitive, smart, and sustainable international logistics hub in Namibia. The Namibian-German Centre for Logistics (NGCL) at NUST is responsible for coordinating the research programme on measuring nation logistics and supply chain performance and preparing the report. Accordingly, NGCL will host a high-level stakeholders’ meeting next Thursday, the 28th June 2018, to discuss implementation modalities, particularly the issue of data architecture (quality, accessibility, and sharing across functional silos – both across departments and between organisations) aimed at more dynamic collaboration, as well as effective logistics, and supply chain planning and management.
*Prof Kenneth K Odero is an Associate Professor at the Namibian German Institute for Logistics, Namibia University of Science and Technology.