Food Brands Tap Digital Supply Chain Platforms to Streamline Logistics

For Africa’s restaurant and hospitality industry, the combination of global supply chain bottlenecks and rising wholesale prices have led to local logistics challenges and inefficient distribution networks.

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In that environment, the lack of the lack of a digitized end-to-end food supply chain process, from procurement, logistics and warehousing to delivery, has led to informal businesses missing out on significant growth opportunities, Tunde Kara, co-founder and CEO at B2B marketplace Vendease, told PYMNTS in an interview.

To bridge that gap, Vendease has built a marketplace that makes the movement of food “from point of production to point of consumption as seamless as possible,” Kara said.

Read more: Vendease Raises $30M to Improve Restaurant Procurement Across Africa

The firm’s procurement engine works like an enterprise resource planning (ERP) system for restaurants, he added, so that rather than basing purchase decisions based on an uneducated guess, businesses like restaurants can leverage data tools on the platform to determine with precision the amount of future inventory and production needs for a restaurant, for example.

“Because we can track everything they buy on our platform […], there’s reduced waste [and] better management of how food flows within the organization,” he noted, adding that the “data helps them to run their businesses as efficiently as possible.”

However, within a year of founding Vendease it became apparent that payment delays were still creating unnecessary bottlenecks in food supply chains. As Kara pointed out, “when you build your vertical deeply enough, the horizontal platform of payments almost becomes inevitable for you to address.”

See more: Supply Chain FinTech Breeze Teams With Finverity on African SMB Capital

To do so, Vendease first moved into vendor payments, ensuring that suppliers were paid promptly so that they could release the order as soon as possible, before launching a buy now, pay later (BNPL) service to free up cash flow for creditworthy food brands.

With their capital no longer tied down, this injected much-needed liquidity into the sector and enabled businesses to invest in other essentials, such as a new store location that they could build over time.

This presents “an opportunity to actively grow the industry as a whole, because there’s more capital for people to play with in terms of building their businesses,” Kara said.

Restaurants Demand Faster Delivery

Besides a lack of access to credit, logistics also presents a major challenge for Africa’s food supply chains, particularly where food delivery is concerned.

Here too, the Lagos, Nigeria-based B2B marketplace provider is using the data it has gathered from buyers to optimize its own warehouse and distribution network.

“We harness data to the point where we can accurately, to a large extent predict what their buying decisions are going to be a week or two ahead,” Kara explained.

Related: EU FreightTech Platforms Boost Supply Chain Efficiency

And thanks to this data-driven prediction of demand, Vendease’s “infrastructure for warehousing and logistics is structured in a way that whatever they need, even before they place the order, is already [available to] them,” he added.

By using data to predict where it needs to move wholesale goods to meet customer demand, the B2B company has also been able to reduce its delivery time from an initial turnaround of 24 hours when the platform first launched, to 12 hours in major urban cities across Nigeria and Accra, Ghana that are struggling with traffic congestion.

But while the drop in delivery time is significant, Kara said they are moving ahead of the curve and building the infrastructure needed to deliver a more rapid turnaround in anticipation of growing expectations on the B2B side.

“We suspect that in a few years, [food businesses will demand] the same quality [and speed] of service that direct customers expect from firms like Amazon and Delivery Hero,” he added.

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