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September - October, 2016 Issue No.: 05/2016 Eastern Africa Premier Supply Chain Magazine

PROCUREMENT & LOGISTICS

KSHS. TSHS. USHS. RFR. USD.

400.00 8,000.00 12,000.00 4,000.00 5.00

Management

SECO engineering

prowess Over 60yrs of service

28

The 16th Intermodal Africa 2016 Exhibition and Conference

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Global Port Outlook: Investment Robust Despite Economic Headwinds

54

Kenyan President, Uhuru, Commissions Container Terminal II


Editor’s note PUBLISHER Proc & Logistix Consult P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 (0)204404488/(0)2044002479 info@procurementandlogisticsonline.com www.procurementandlogisticsonline.com OFFICE: View Park Towers 13th Floor wing A Suite 1

Procurement & Logistics Magazine @ LogisticsProc CHIEF EDITOR Okumu S. Biko ASSOCIATE EDITOR Anthony Kiganda PRODUCTION GRAPHIC DESIGN Nicholas Amanya AUDIENCE DEVELOPMENT MANAGER Emily Martin WRITER Sandra Dinga EDITORIAL OFFICES Proc & Logistix Consult P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 0204404488/02044002479 info@procurementandlogisticsonline.com www.procurementandlogisticsonline.com ADVERTISING For information on advertising in future Issues of the magazine, please contact: KEN OKORE +254 702 799210 OKUMU STEVE BIKO +254 721 986284 SANDRA DINGA +254 713 199012 E-MAIL: adverts@procurementandlogisticsonline.com SUBSCRIBER CUSTOMER SERVICE Procurement & Logistics Management Magazine is a six times publication a year and circulated to professionals in the Supply Chain industry, members of relevant associations, government bodies and other personnel in the procurement, logistics and finance industries as well as suppliers in Eastern Africa. The editor welcomes articles and photographs for consideration. Material may not be reproduced without prior permission from the publisher. DISCLAIMER: The publisher does not accept responsibility for the accuracy or authenticity of advertisements or contributions contained in the journal. Views expressed by contributors are not necessarily those of the publisher. © All rights reserved. No part of this publication may be copied or reproduced without prior permission from the publisher.

Businesses must develop bespoke contingency plans for possible scenarios in these hard times

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n these volatile times, businesses must develop bespoke contingency plans for possible scenarios. This must start with gaining clear visibility of the supply chain to accurately assess emerging risks. Supply chains departments must be agile and flexible to adopt and react quickly to emerging opportunities, competition, changes and disruptions that may affect business line. Eastern Africa region has in the last half a decade witnessed significant onshore oil discoveries in Uganda and Kenya and offshore gas discoveries in Tanzania and Mozambique; this have made the region a subject of intense interest among the global energy industry, this is a logistics and supply chain intensive industry and the region’s professionals must meet international expectations in terms of service delivery. The speed and efficiency at which governments in these countries are developing hydrocarbon reserves is a clear indication of their will to cement the region’s reputation as the new hotspot in hydrocarbon exploration and production. According to StatistikSentralbyra of Norway, oil producing countries have of late been stricken by reduced oil barrel prices, violence and direct investments in those regions have reduced by a round 9.7 % in 2015 from USD 24 Billion. The downturn is mainly due to a further decrease in estimates in the category exploration, within oil and gas extraction. Governments have continued to invest in mega infrastructure projects with one goal of reducing cost of business and also attract further investments in these new industries. Kenyan government; just commissioned Container Terminal II at the port of Mombasa, Tanzania is reviving its railway link to Zambia (TAZARA ), Uganda investing USD 11 Billion in the Bujagali hydroelectric power station and Rwanda investing USD $ 200 Million in project to convert methane into electricity at the shores of Lake Kivu. International organizations with the know who and how have organized various summits and conferences in this region to help boost skills and association with global payers.In November, this year, Kenya and Uganda are hosting Oil and Gas summits plus the renowned 16th Intermodal Africa 2016 to be held in Mombasa. Tanzania hosted an oil and gas summit in August. Supply chain profession does not exist in a vacuum, it is competing for talent with other industries in this region- the simple fact is local supply chain needs to up its game to be able to handle both benefits and challenges of emerging opportunities.

Okumu S BIKO Chief Editor


CONTENTS CORPORATE PROFILE 22 Seco’s engineering prowess With years of experience in marine and civil engineering Alpha Group flagship firm Southern Engineering Company (Seco) continues to deliver high quality solutions to supplement its robust reputation

BRIEFS 4. 5. 6. 7. 8. 10. 11. 18. 19. 20. 21.

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Construction of UgandaTanzania oil pipeline set for January 2017 East Africa Oil & Gas Summit Kenya to export 10,000 barrels of crude oil per day The RwandAir begins Cotonou, Abidjan flights Tanzania’s leading port to improve Cargo Handling German carmaker VW returns to Kenya Budget forecasting and procurement dynamics CAA launches improvement of Entebe airport Kenya to construct a modern railway training institute Air Tanzania begins purchase of new aircrafts Kenya hosts TICAD VI Summit in Nairobi

INSIGHT 32. TPP Procurement Chapter Will Open up Substantial Opportunities 34. A mega project rises in East Africa 36. Warehouse Management disconnect 38. Experts call for urgent action to boost aviation safety 39. Beyond the crumbs: why big agencies need to invest in empowerment now

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PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


LOGISTICS 12. Supply Chain Logistics 26 has never been a 54 stagnant activity 14. SUPPLYCHAIN LINK IN THE OIL AND 52 GAS INDUSTRY 52. Mercedes-Benz reveals droneequipped delivery van concept 28 54. Kenyan President, Uhuru, Commissions Container Terminal II 16 55. How to Clear a Container in Mombasa Kenya. Procedures & Costs 16. Guidelines to Secure Outsourcing Explained 26. Managing a fleet 28. Global Port Outlook: Investment Robust Despite Economic Headwinds

OUTSOURCING

SHIPPING

31. 5 great ways to score free shipping

MANAGEMENT 40

40. Cloud Inventory Management in Supply Chain 44. DHL MAKING DELIVERY FOR ITS CUSTOMERS 46. International Bidding Process 48. Tanzania moves closer to LNG plant construction 49. Where is my Transport launches transit API following £1.165 seed funding 50. More SA visitors are choosing to ride with Uber - here’s why 51. EABL wins global supply chain award in London

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER 2016 Issue No.: 05/2016

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BRIEFS

Construction of Uganda-Tanzania oil pipeline set for January 2017

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onstruction of the multibillion-dollar crude oil pipeline from Uganda through Tanzania is set for January next year. Uganda’s Energy minister Irene Muloni made the announcement during a meeting with Tanzanian delegates in Hoima Town. The two countries have agreed to fast-track the project which will cover 1,443 kilometres. If the surveys prove positive, Uganda’s new round of oil exploration licensing may see the country increasing its petroleum reserves. So far, oil explorers have discovered more than 6.5 billion barrels of crude oil reserves in the Albertine basin in western Uganda. Ms Muloni said they will meet with Tanzania in October to launch the front-end-engineering-design for the project. “Every activity in respect to the project will be done in a fast tracking mode,” she said, adding that feasibility studies estimate the project to cost $3.55 billion. “Valuation of land acquisition, surveys, environmental and social impact studies will be conducted before construction starts. The pipeline is very viable and securing financing will be explored in much detail. We are currently in talks with potential financiers” She said a pipeline company will be set up with Uganda, Tanzania and other interested East African states getting shares in it. During a recently concluded meeting between Uganda and Tanzania political leaders, the two countries agreed to name the pipeline project reflect-

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“Every activity in respect to the project will be done in a fast tracking mode,” she said, adding that feasibility studies estimate the project to cost $3.55 billion. ing the East African Community. The second ministerial meeting endorsed “East African crude oil pipeline (EACOP)”. The meeting also endorsed the use of the East African community flag colours in the newly-created logo for the project given the regional connectivity. According to a joint statement by Ms Muloni and Tanzania’s Prof Sospeter Muhongo, the ministerial meeting agreed to come up with project schedule to accelerate land access, environmental and social aspects, routing and other project agreements. “Throught his partnership, we wish to assure Ugandans that we have the experience in pipeline construction. All our activities will be done in accelerated speed to achieve the project by 2020,” Prof Muhongo said. An estimated 95 per cent of the pipeline in the Tanzanian territory will be close to tarmacked roads and a railway line therefore making it easier to mobilise materials during construction. Tanzanians plan to use the pipeline to also export its huge gas resources to East African states.

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


PRESS RELEASE

East Africa Oil & Gas Summit

Hon Charles Keter to Address East Africa Oil & Gas Summit

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on Charles Keter, Cabinet Secretary of the Ministry of Energy & Petroleum in Kenya is set to present a keynote address at the opening ceremony of the East Africa Oil & Gas Summit (EAOGS), the largest exhibition and conference dedicated to expanding the region’s exploration success. Joined on stage by HajatianaRasolomanana, Director General of Hydrocarbons at the Ministry of Energy & Hydrocarbons in Madagascar and Keith Hill, CEO of Africa Oil Corp, Hon Charles Keter will help to provide a comprehensive overview of the oil and gas landscape in East Africa. Hosted by the Kenyan Ministry of Energy & Petroleum in Nairobi, the 4th edition of EAOGS will take place at the KICC from 15-17 November 2016. “We are delighted to have the support of Hon. Charles Keter and are honored to have him speak at our opening ceremony. Significant onshore oil discoveries in Uganda and Kenya and offshore discoveries in Tanzania and Mozambique have made East Africa a subject of intense interest among the global energy industry and we look forward to being at the forefront of discussions focussed on the opportunities for the industry in this region,” said Rob Percival, Director of EAOGS. Taking place alongside a large international exhibition, the conference at EAOGS 2016 will

“We are delighted to have the support of Hon. Charles Keter and are honored to have him speak at our opening ceremony.

welcome more than 450 delegates to discuss issues critical to future oil and gas production in the region: • East Africa’s Oil & Gas Landscape – a critical overview of both onshore and offshore exploration and development. • Sessions focusing on the East Africa Rift System, Uganda, and the Indian Ocean – Updates on licensing rounds, reserve forecasts, innovations in production technology and how to fund infrastructure projects. • Political and investment trends – overcoming issues of governance, policy implementation and local expectations. Over 150 experts are already confirmed to attend the conference, including senior executives from Africa Oil Corp, Bechtel, Tullow Oil, National Oil Ethiopia, KPMG, Baker Hughes, and Ministries from across the region. Find the full programme and booking information at www.eaogs. com

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BRIEFS

Kenya to export 10,000 barrels of crude oil per day

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enya’s crude oil will be transported by trucks and trains to Mombasa refinery before the Lokichar-Lamu pipeline is built, Petroleum ministry officials have said. The country will initially start by moving between 2,000 and 4,000 barrels per day and the consignment is expected to expand to peak at 10,000 barrels per day if global prices recover quickly. Kenya estimates its oil reserves at 750 million barrels which according to experts are commercially viable for exports. “We expect a rise in exports to 10,000 barrels through the period to completion of the pipeline but this will entirely depend on crude prices,” said Petroleum Principal Secretary Andrew Kamau. At an earlier cabinet meeting chaired by President Uhuru Kenyatta, the cabinet approved commercialisation of the crude oil and development of infrastructure, to evacuate the crude oil ahead of next year’s production. Construction of the Sh210 billion crude pipeline linking Turkana to Lamu port is set to start in 2018 and is set to be completed in 2021. Once complete, Kenya will be able to pump at least 80,000 barrels a day. This is expected to earn the country

Kenya Oil export Last year, Uganda, the home of Africa’s fourth largest crude oil reserve, was in talks with Kenya to build a 1,500 km pipeline to the Kenyan port of Lamu. But in February this year, the landlocked country decided to build its pipeline with Tanzania instead. This means that Kenya will transport its fuel on trains and trucks to

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about Sh1.7 trillion per year, based on the current crude prices.The government is, however, is keen to test the global market early enough with smallscale crude exports by June 2017. Trucks will move the crude from Lokichar fields in Turkana to Eldoret before being loaded on trains to Mombasa port in the absence of the pipeline. British explorer Tullow Oil first struck oil in the northwest town of Lokichar in 2012. This has since been followed by a series of other finds. At the expected peak of 80,000 barrels per day, Kenya lags behind Saudi Arabia which pumps over 10 million barrels. Crude oil prices are back to normal from $30 a barrel in February to the current $50, raising hopes for oil producers. The government has ruled out refining crude oil locally, saying it is not cost-effective and will continue importing all its refined petroleum. Kenya buys refined petroleum products following the closure of the sole refinery in Mombasa in September 2013 after plans for a Sh120 billion upgrade were abandoned. The government recently acquired the ageing refinery through the Kenya Pipeline Company and plans are underway to convert it into a storage facility for oil. the port of Lamu until the pipelines are constructed. Considering the amount of money that goes into transporting oil by land, the Kenyan government and the companies will have to spend an exorbitant amount in transporting oil between Lokichar and Lamu. To ensure the cargo’s safety, the Kenyan government also needs to put safety measures in place in order to avoid accidents while transporting these products.

Tanzania, DRC launch talks on crude oil pipeline project The Democratic Republic of Congo (DRC) is in talks with Tanzania to enable Kinshasa export its crude oil through the proposed pipeline system from Hoima in Uganda to the Tanga port in Tanzania. The preliminary discussions between the two countries kicked off last month in Dar es Salaam and involved DRC’s Ministry of Hydrocarbons and its Tanzanian counterpart. Giuseppe Cicarelli, the chief executive of Oil of DRCongo, a subsidiary of a Dutch natural resources conglomerate, said access to the less costly option to get the crude into market is vital to the next round of investment the company is supposed to make. The country is tasked with drilling two exploratory wells in order to establish findings from 3D seismic surveys they conducted two years ago and a further investment for more 3D exploration works focused in the most complex structures identified. In a statement, MrCicarelli said Oil of DRCongo is fast-tracking the entire process and is conducting feasibility tests for the future evacuation of the crude oil from Block I & II to the Indian Ocean. Oil of DRCongo continues to progress its exploration work in Blocks I & II of Lake Albert, having already completed an extensive seismic campaign. It remains committed to investing in and progressing the project,” the statement said. A seismic study conducted by the firm in 2014 revealed that about three billion barrels of oil in place in Blocks I and II on the Congolese side of Lake Albert. If proven recoverable, the alternative for Oil of DRCongo is construction of a 6,500km-long pipeline running west to the Atlantic coastline. However, Industry experts say that this would only be viable if massive oil reserves were discovered in the Central Basin as well. The discussions between the DRC and Tanzania come on the back of a recent invitation by Uganda’s President YoweriMuseveni to his Congolese counterpart Joseph Kabila to accelerate collaboration in the exploitation of oil resources in trans boundary areas. The invitation comes after the Ugandan President made a pact with Tanzania to construct a crude oil pipeline from Hoima to the port of Tanga. In his bid, President Museveni asked President Kabila to join the Northern Corridor Integration Projects which include the crude oil pipeline.

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


BRIEFS

Shipping in South Sudan declines, businesses close shop

The RwandAir begins Cotonou, Abidjan flights

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wanda’s national flag carrier RwandAir will commence flights to Cotonou in Benin Bujumbura, Lusaka, Juba, Douala, and Abidjan in Ivory Coast efDar es Salaam, Kilimanjaro, Johanfective September 2 and October 8 nesburg, Dubai, Lagos, Libreville and respectively, with three weekly flights Brazzaville, among others. each. As part of RwandAir’s expansion Both flights to Cotonou and to strategy, the airline is set receive two Abidjan will be operated by Boeing triple class wide-bodied A330 aircraft 737-700 and 737-800 aircraft. in next month as it prepares for long RwandAir chief operating officer, haul operations to Asia and EuroJean Paul Nyirubutama said the pean markets. flights to Cotonou will be tagged The acquisition of the two airto the existing Kigali – Douala and craft will significantly enhance RwanLibreville routes while the Abidjan dAir’s capacity to meet the growing flights will be tagged with Accra. demand, aviation players say. “The flights to Cotonou and In the first quarter of 2017, the Abidjan will be on Tuesdays, Fridays airline will operate new routes to and Sundays and the return will be on Mondays, WednesRwandAir continues to fulfill its days and Saturdays. commitment of connecting Rwanda with RwandAir West Africa and the additional flights continues to fulfill its commitment of is a sure sign that Rwanda will build connecting Rwanda sustainable ties with sister African cities, with West Africa and fostering trade and tourism between the the additional flights two countries, Nyirubutama said in a is a sure sign that Rwanda will build statement. sustainable ties with sister African cities, fostering trade and tourism between the two countries, Harare and Durban with Boeing Nyirubutama said in a statement. B737-800NG aircraft. Cotonou and Abidjan will take The airline renewed its IATA the airline’s growing network to 19 Operational Safety Audit (IOSA) destinations all connecting through certification for another two years to Rwanda’s capital, Kigali. remain competitive. IOSA certificaCurrently, the airline flies to tion is an internationally recognised more than 17 destinations in Westand accepted evaluation system ern, Eastern, and Southern Africa designed to assess the operational and the Middle East. The cities that management and control systems of the airline traverses in the continent an airline. include Nairobi, Entebbe, Mombasa,

South Sudan imports through Kenya’s main port have been on a decline, dealing a blow to a recent resurgence in business confidence in Africa’s youngest nation. The recent spate of war in the nation has continued to hurt the fledgling economy and sent traders and citizens fleeing. Only 525 twenty-foot equivalent units of cargo were cleared at the Mombasa port in July, compared with a monthly average of 4,000 TEUs in 2013, just before the fresh outbreak of political violence in the country. Landlocked South Sudan holds Africa’s third-biggest crude reserves and brings in most of its imports through Mombasa. It exports oil through its northern neighbor Sudan, from which it split in 2011 after decades of fighting. A civil war that began in December 2013 has left the nation with a soaring 661.3 per cent inflation rate in July pushing up consumer prices while falling crude prices have dried up a key source of foreign exchange. “The dollars are nowhere to be seen; in banks, in forex bureaus, anywhere,” said Ayuel Mathach Deng, the government’s representative at the Indian Ocean port city. “It is a matter of struggling if you need to import something,” he added. South Sudan remains dependent on commodity imports including wheat, oil, rice and sugar and according to Kenya Ports Authority report, it was the second-largest destination for transit goods through Mombasa after Uganda in 2015. The war between troops loyal to President Salva Kiir and his former deputy, Riek Machar, which has killed tens of thousands of people and forced more than two million to flee their homes, has prevented the young economy from developing a manufacturing or agricultural base. The two rivals agreed to end the conflict after more than a year of negotiations, but the peace was short-lived and bloodshed resumed in July. The unrest has forced many businesses in the capital Juba to close shop and flee the country. “If the owner is no longer in the country, there is no longer any effort to clear cargo,” Deng said.

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BRIEFS

Tanzania’s leading port to improve Cargo Handling

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AR ES SALAAM – The Tanzania Ports Authority (TPA) is establishing a new electronic system aimed at removing substandard operations by clearing and forwarding agents, and improving port operations. Deusdedit Kakoko, TPA director general, said the new port operating system (POS) will enable TPA, among other things, to communicate directly with importers as well as shippers in order to reduce the possibility of dishonest clearing and forwarding agents who overcharge unsuspecting traders. “The new system which we are building will enable us to know which cargo has been loaded for Dar es Salaam when the ship leaves a port, let’s say in Japan or elsewhere,” Kakoko told a news conference in the east African country’s commercial capital Dar es Salaam. He added: “With this new system, there will be no possibility that a clearing and forwarding agent might cheat about the manifest of the cargo.” Kakoko said the TPA expected an injection of US$690 million in the form of soft loans and grants from the World Bank, Trade Mark East Africa and the British Department for International Development (DFID), which will be used to implement at least 13 projects at the port. He said part of the money will be used to improve information and communication technology (ICT) systems in order to better in-cargo handling. “We are also going to introduce an e-payment system which will be inte-

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“We are also going to introduce an e-payment system which will be integrated with other modern ICT systems, greatly reducing cheating and corruption,” he stated.

grated with other modern ICT systems, greatly reducing cheating and corruption,” he stated. Kakoko said the loans and grants will also be used to construct a new berth and yard for the handling of vehicles at the port, and dredging at berths one to 11 thereby increasing depths to enable bigger ships to dock without problems. The Electronic Single Window System (eSWS) that was to start operation at the Dar es Salaam port last year but was delayed since it needed to be adjusted to comply with Tanzania Customs Integrated Systems (TANCIS) The system to fast track cargo clearance has been delayed to allow the port authorities complete migration from “Asycuda” to a new Customs ICT system. The migration to TANCIS has contributed to delays in the amount of time a container spends at the terminal, container dwell time (CDT) The decline in efficiency in clearing containers at the terminal was due to

the migration process, he said. General efficiency at the port operations had improved with ship turn-around time decreasing to 3.1 days in April this year from 4.8 days in May last year. The electronic single window system will enhance transparency and accountability which will boost both government revenue through Tanzania Revenue Authority and also Tanzania Ports Authority. The system is set to be the best in Sub Sahara Africa by reducing cargo clearance time from the current nine days to five days this will inturn reduce the burden on the importers and exporters of goods. A number of government regulatory agencies including the Tanzania Food and Drugs Authority, the Tanzania Bureau of Standards, and the Tanzania Atomic Energy Agency to electronically process import and export papers. The project is being undertaken by a Belgian-based Phaeros BVBA firm at a cost of $5.7 million.

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


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PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER 2016 Issue No.: 05/2016

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BRIEFS

German carmaker VW returns to Kenya

Tanzania Exports increase by 8.4%

T German carmaker, Volkswagen (VW) is set to resume car manufacturing in Kenya, joining other brands like Isuzu, Toyota, Nissan and Mitsubishi

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he government of Kenya, has announced it had reached an agreement with VW South Africa to establish an assembly plant at the Kenya Vehicle Manufacturers (KVM) limited in Thika. The automaker is making a return after a four decade pause in production as it looks to sell more vehicles across the East African region. “Volkswagen South Africa will establish an assembly plant to produce motor vehicles at the Kenya Vehicle Manufacturers limited in Thika,” Mr Kenyatta said after a meeting with Volkswagen South Africa executives. Kenya mostly assembles trucks, pick-ups and buses from kits supplied by foreign manufacturers, however vehicle manufacturing has been on a downward trend, statistics from the Kenya National Bureau of Statistics reveal. KVM attributed the slowdown to tough economic conditions for buyers including high interest rates and cuts in government spending, while VW said it saw opportunity in the market.

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Volkswagen South Africa’s chief executive, Thomas Schafer said Kenya has got the potential to develop a large and well equipped automotive industry. “We see the potential in the East African Community, and today is the first step in this direction that we want to take with our passenger cars,” Schafer said. VW is South Africa’s the secondbiggest auto maker by sales after Toyota. Its vehicles are sold domestically and are also exported to the rest of the continent. Mr Kenyatta said that VW’s assembly plant would begin with the Vivo and expand to a range of vehicles, with the first car expected to be rolled out before the end of the year. Emerging market production is familiar territory for VW, whose Beetle model was a favorite on the streets of Mexico. The auto giant operated in Kenya in the 1960s and 1970s, assembling among others; vans, mini-buses and the famous VW Kombi.

he Bank of Tanzania (BOT) Monthly Economic Review for July 2016 shows that the value of export of goods and services in the year ending June 2016, increased by +8.4%. Overall exports reached USD10,096.9m, compared to USD9,310.6m in the year ending June 2015. The improvement was mainly driven by an increase in travel (tourism) receipts, manufactured goods, and gold. Travel maintained the leading position among foreign currency earners, before manufactured goods, gold, and traditional exports, with USD2,274.7m worth of exports in the year ending June 2016, showing a year-on-year increase of +3.5%. Foreign exchange earnings from manufactured goods increased by 11% to USD1,462.6m in the year ending June 2016, with a notable improvement recorded in textile apparel and plastic items. Gold exports increased by +7.9% to USD1,334.6m as a result of increase in export volume. Among Tanzania’s traditional exports, increases were seen in coffee (USD151.5m, +1.8%), tea (USD49.9m, +11.1%), cloves (USD46.2m, +51%) and sisal (USD24.6m, +37.4%). There was also a notable rise in export value of oil seeds, raw hides and skins, cocoa, cereals, and re-exports of machinery, vehicles, wheat and tyres. World Commodities Prices In June 2016, prices of coffee and cotton went up, thanks to higher global demand, reaching USD1.89 per kg of Robusta Coffee, and USD3.64 of Arabica, and USD1.63 per kg of cotton. Prices of crude oil and white petroleum products also increased in June 2016, reaching USD47.70 per barrel, and USD566.50 per ton respectively, due to a decline in USA crude oil production. The price of gold rose to 1,276.40 in June 2016 due to the weakness of the US Dollar against some major currencies.

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


BRIEFS

Budget forecasting and procurement dynamics

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ecently, I read an article from Reynagh Jarrett, RN, Royal Nursing College, whom noted passing on a little knowledge daily gives us an awareness of achievement in life. As a procurement manager and analyst within the public sector for the last 30 years, I was told many times, a cost estimate has no value in determining the cost of a contract and possible cost overrun. Inconsistent use of cost estimate and cost overruns within the public sector’s procurement dynamics, i.e., budget forecasting is commonplace. The public sector uses a cost estimate to determine budget forecasting. How can understanding the association between cost estimate, service contract cost, and cost overrun help with budget forecasting? Procurement management need to understand the association between cost estimate, service contract cost and cost overrun, so they can provide a baseline for budget forecasting and stop cost overruns. Budget Forecasting is the process of developing a clear and concise monthly and/or annual possible financial expenditures for an organizations or business’ purpose or need. Procurement Dynamics is the process of obtaining services or

supplies to support an organization’s or business’ mission, in particular, the process of cost estimating.

Cost Estimate Does a cost estimate have value in budget forecasting? During my public service time, I coined the phrase “guestimation,” relating to a cost estimate. Using the term estimation or estimate, especially in the public sector contract processes has always provided uncertainty. A Cost Estimate is a unbiased estimate, which has a use for budget forecasting and comparing costs. The outcome of a cost estimate is the total estimated cost of a possible contract cost. Mr. William Kraus, PE, CCE, President of Cost Engineering Journal, labeled a cost estimate as “Voodoo.” Procurement workforce managers, precisely forecasting the scope, cost, and duration of the future forecast is vital to the survival of any project or business success. A cost estimate is typically developed by a project manager and a procurement manager to obtain a realistic price or cost for budgetary purposes.

Cost Overruns Should a cost overrun be the acceptable norm in budget control? Cost overrun is the superfluous of cost over

budget allotted. David Christensen, Ph.D., stated cost overruns have become the standard of acceptable norm in the public sector. With this in mind, procurement managers should constantly refine procurement dynamics to improve budgeting. As a procurement manager and analyst, we need to continue to develop better business buying practices to limit or stop a cost overrun to control budgets and develop a concise budget forecasts. Additionally, all stakeholders within procurement dynamics should refine practices to make sure cost estimate, service contract cost, and cost overrun have consideration in budget forecasting and control. Many public sector organizations have adequate tools in place for budget forecasting but are overlooked by procurement managers. Moreover, procurement managers need continuous training on the importance of budget forecasting and cost estimating.

By: Claude L. Cable, DBA, CFC

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER 2016 Issue No.: 05/2016

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LOGISTICS

Supply Chain Logistics has never been a stagnant activity

From steam ships and covered wagons, to trucks and rail, to air travel and digital logistics management systems, the logistics industry has transformed time and again over the last 100 years.

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he pace of change has always been rapid, and as supply chain logistics are impacted by trends such as crowdsourcing and cloud applications, these changes are gathering speed. So what are the trends we think are most important to watch in supply chain logistics? Here are four to consider.

4 Supply Chain Logistics Trends to Watch

1. Crowd-sourced Logistics Uber isn’t just for passenger trips anymore. Several companies are developing applications to enable the crowdsourcing model for supply chain logistics. Two such applications, Convoy and Cargomatic, have launched crowdsourcing applications that could be as disruptive to the trucking industry as Uber has been to the taxi industry. Consider this: fully 70% of the freight moved in the United States every year travels by truck. However, not every return trip of a freight load contains freight; the practice of “deadheading,” or sending empty trucks back from deliveries empty, negatively impacts the profitability of trucking cargo.

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Companies often offer their empty space to freight brokers to fill in order to cut down on “deadheading,” but freight brokerage is expensive. Freight crowdsourcing apps will allow trucking companies and owner-operators to connect directly with other companies whose products are going the same direction as the trucks. Logistics crowdsourcing apps charge a fee for each load delivered through the application, but this fee is much lower than the fees of up to 45% that might be charged by a freight broker. This trend could be quite disruptive to the supply chain logistics industry and over the long term could even disintermediate many freight brokers.

2. Warehouse Space Getting Tighter The rise of eCommerce, along with consumer demand for next day and same day shipping, is driving demand for warehouse space in an expanding number of locations. This is causing rents for warehouse space to skyrocket around the world. These rent increases are happening as a result of a sea change in how supply chain logistics are being handled. Once, shipments could be managed from a small number of distribution centers servicing a large section of the country. If an item needed to arrive in a week, it could be shipped to a one of a few distribution centers then trucked to customers over the course of several days. Now, eCommerce and the demand for next day or same day delivery requires that companies have a strategy to fulfill orders in a much faster timeframe. This means the regional model of distribution centers doesn’t work. Companies fulfilling large numbers of same day or next day orders might need to have a distribution center in each city they serve, or at least break

PROCUREMENT & LOGISTICS MANAGEMENT SEPTEMBER - OCTOBER, 2016 Issue No.: 05/2016


LOGISTICS

their service areas down into much smaller areas. The problem is that only so much warehouse space is available. ProLogis reports that rents for industrial and warehouse space jumped 9% in 2015 and are likely to continue rising in 2016. The rise of eCommerce and the recent economic recovery have led to rent increases of more than 25% over the last three years, with warehouse space currently 97% rented – leaving very little space available. This means higher rent for companies seeking to expand their distribution networks.

3. Supply Chain Logistics Moves to the Cloud The cloud is transforming many industries, and supply chain logistics is no different. Currently, about one quarter of all enterprise applications are operating within the cloud. By 2025, that number could be as high as 80%. This change is already rapidly happening in supply chain logistics – applications as diverse as transportation management systems and order management systems are already moving toward the cloud, where the cloud model is putting more sophisticated capabilities into the hands of small and medium businesses.

Why is supply chain logistics moving to the cloud? There are a number of reasons, but two of the most important include: 1. Easy setup makes it easy to put cloud applications into the hands of a distributed workforce exactly the sort of workforce that comprises the supply chain logistics industry. 2. Low startup costs reduce risk and allow logistics departments and companies to take advantage of new applications without the cost and IT footprint associated with on-premise solutions. Demand for logistics visibility and desire to collaborate more efficiently with customers and others in the supply chain should continue to provide an opportunity to put cloud applications to the test.

4. Sustainable Logistics Sustainability has been a watchword for years in many industries, particularly the food and beverage industry, as consumers increasingly take an interest in where their food comes from and how it was produced. It typically is not the first thing that springs to mind, however, when it comes to

supply chain logistics. That could change as consumers and businesses take a more holistic approach to managing their sustainability footprint. It isn’t enough to produce goods sustainably if getting your products to market is not environmentally friendly. One of the most important trends to watch in sustainable logistics is CO2 labeling. For customers that care about their carbon footprint, CO2 labeling on the products they buy will provide the transparency into the carbon produced in the production and distribution of those products and enable them to make more sustainable purchase decisions. This in turn could transform the supply chain logistics industry as carbon output could become another “cost” that manufacturers and distributors will need to consider and control in order to be competitive. From moving freight with Uberstyle applications to managing the carbon footprint of your logistics, the supply chain logistics industry continues to evolve. Keeping on top of the trends impacting the industry will help to ensure your organization won’t be left behind by the rapid pace of change.

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LOGISTICS

SUPPLYCHAIN LINK IN THE OIL AND GAS INDUSTRY

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he links shown above represent the major supply chain links in the oil and gas industry. The links represent the interface between companies and materials that flow through the supply-chain. As long as oil companies have needed a phalanx of vendors to keep their systems continuously resupplied, there has been a supply-chain. Within each stage there are many operations. For example, exploration includes seismic, geophysical and geological operations, while production operations include drilling, reservoir, production, and facilities engineering. Refining is a complex operation and its output is the input to marketing. Marketing includes the retail sale

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One of the weaknesses of a supply-chain is that each company is likely to act in its best interests to optimize its profit. The goal of satisfying the ultimate customer is easily lost and opportunities that could arise from some coordination of decisions across stages of the supply-chain could also be lost. If suppliers could be made more reliable, there would be less need for inventories of raw materials,quality inspection systems, rework, and other nonvalue adding activities, resulting in lean production. of gasoline, engine oil and other refined products. Each stage of the link can be a separate company or a unit of an integrated firm. The common issue along the links in the oil and gas industry supply-chain is economics; weighing benefits versus costs along the chain.

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LOGISTICS

Very few industries can benefit from maximizing supply-chain efficiencies more than the oil and gas companies. In this industry, the types of shipments made vary widely from gloves to pipes, valves, cranes, chemicals, cement, steel, and drilling rigs, just to mention a few. In addition, very few industries require this immense array of supplies to be moved daily and frequently in large quantities domestically, globally, onshore and offshore. In exploration and production, most of the work and activities are repetitive. The companies drill a lot of oil and gas wells every year. A drilling contractor is required and as many as 45 or more different services are required to drill and completeeach well. In the oil and gas industry, almost all significant and important operations are planned in advance. Thus, the whole process can be massaged and finetuned into a high performance money making machine. The goal of supply-chain management is to provide maximum customer service at the lowest possible cost. In the industry supply-chain link, exploration operations create value through seismic analysis and identifying prospects. Production operations become the customers that use the output of exploration. In like manner, refining is the customer of production while marketing is the customer of refining and the consumer of refined products such as gasoline is the ultimate customer. There is a need to ensure that each company or operator along the supplychain can respond quickly to the exact material needs of its customers, protect itself from problems with sup-

pliers and buffer its operations from the demand and supply uncertainty it faces. For oil and gas companies, the profit margin can be greatly enhanced if the companies manage their purchasing dollars throughout the entire supply-chain. One of the weaknesses of a supply-chain is that each company is likely to act in its best interests to optimize its profit. The goal of satisfying the ultimate customer is easily lost and opportunities that could arise from some coordination of decisions across stages of the supply-chain could also be lost. If suppliers could be made more reliable, there would be less need for inventories of raw materials,quality inspection systems, rework, and other nonvalue adding activities, resulting in lean production.Tubes and tubular goods are among the important goods supplied to the oil and gas industry on a daily basis. These goods are very crucial and form part of the supply-chain link. The supply-chain in tubular goods is the process through which oil field tubular goods such as pipes, tubing, and casing are ordered, manufactured, transported, stored, prepared, and then delivered to the website for installation into a well. Managing this part of the supply-chain can be both an operational and logistics nightmare for most oil and gas companies. Delays in the arrival of pipes, casing, tubing, and other accessories, can result in extensive rig downtime and consequently high operating costs. In the exploration and pro-

There is a need to ensure that each company or operator along the supplychain can respond quickly to the exact material needs of its customers, protect itself from problems with suppliers and buffer its operations from the demand and supply uncertainty it faces. For oil and gas companies, the profit margin can be greatly enhanced if the companies manage their purchasing dollars throughout the entire supply-chain.

duction sectors of the oil industry, the product is exactly the same for all competing firms: oil and gas with very narrow product differentiation. Consequently, many of these firms cannot differentiate themselves from one another by introducing an exciting new product. Thus, exploration and production companies can only differentiate themselves based on the ability to economically find and produce oil and gas more efficiently than their competitors. So even though exploration and production companies are unique in many respects, a differentiating factor can lie in the ability to adapt a sound supply-chain management program

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OUTSOURCING

Guidelines to Secure Outsourcing

The following are a list of guidelines to help you outsource securely. Today, customers are hesitant to outsource because of security issues. If some of the simple guidelines listed below are followed, you can outsource and stay worry-free.

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he following are a list of guidelines to help you outsource securely. Today, customers are hesitant to outsource because of security issues. If some of the simple guidelines listed below are followed, you can outsource and stay worry-free.

1. Having a good security policy The first step to be followed before outsourcing is to ensure that your organization is in order. You must also check your security policy. A good security policy will be sound

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and rational. Some of the important facets of your policy should include a data classification that can distinguish between sensitive and common data. The policy should also state clear standards and guidelines. These guidelines should be finalized by the stakeholders, managers and employees of your organization.

2. Selecting the right outsourcing vendor Selecting a right outsourcing vendor is one of the most crucial steps to be followed while outsourcing. Read our article which describes the ideal vendor selection process. Select a vendor who follows a strict security policy. You must also ensure if the selected vendor makes security a rule in his organization. Your vendor must also have secu-

rity rules that protect your data from being copied to portable devices.

3. A sound privacy and intellectual property policy Check if your vendor has sound intellectual property protection laws. Make sure that your vendor will go by your privacy and intellectual property policies. Make these clear with your vendor to avoid later misunderstandings.

4. Protecting your data Start employing the use of database monitoring gateways and application layer fire walls before outsourcing. These devices can help you enforce usage policies. Such devices can also prevent privilege abuse and vulnerability exploitation. Choose a vendor who employs both these functionalities. This will help in the total protection of your data.

5. Providing Education on handling data Check if your vendor is educating his/ her employees on how to handle and protect sensitive data. In case your vendor is not providing education, ensure

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INSIGHT BRIEFS that he/she provides education. This is very important, as this will help ensure the security of your data.

6. The rule of least privilege Before outsourcing, decide on a method to monitor material exceptions on your vendors and ensure the rule of least usage. Most of all, do not provide access to all your records during the same time. Ensure that this is also monitored.

7. Leak-Proof traffic Make sure that your vendor monitors outbound In ternet traffic and checks emails for potential information leaks. These checks would ensure leak-proof traffic.

8. Ensuring application and network security audits Conduct regular application/database security audits and network security audits. This will help in ensuring secure outsourcing. Audits can help identify issues and potential vulnerabilities with the applications, databases and devices on the network.

9. Ensuring that prevention technologies are employed? Check the prevention technologies that your vendor uses. Inquire if your vendor has a technology to control data flow. Also check if your vendor’s policies are followed by the employees. Make sure that your vendorhas technologies to protect sensitive data from being emailed or copied to removable types of media.

Outsourcing in Kenya Outsourcing and Kenya have never been synonymous. Rather, the term is better known in countries such as India, a place that is internationally known as a hub for technology and businesses. With countries like the U.S. and U.K. outsourcing to India and similar markets, they are utilizing its technological expertise and inexpensive labour for financial benefits. However, Kenya’s government has been pushing to make the country a major hub for outsourcing as of late. Recently, many Kenyan firms have capitalized on the outsourcing market and established themselves as a provider of call centres for various companies. There are a few main reasons Kenya has been able to benefit from the outsourcing market with the laying of undersea internet cables in 2009 connecting East Africa to the rest of the world. The past few years have proven to be exceedingly beneficial for Kenya in regards to technology and economic flourishment, to the level of successful of countries that are known for outsourcing like India, the Philippines and South Africa. Before these undersea cables, Kenya was not in a position to be a hub of outsourcing due to its lack of communication links with other countries, making the links too expensive for foreign firms. With the addition of these internet cables, Kenya has increasingly become a competitive market in the information and technology arena.

The professional Supply Chain practitioners Consulting Excellence The Consulting Excellence framework drives our behaviour and resonates throughout our values. The core of the framework sits within 3 pillars, or headings: ethical behaviour; client service and value; and professional development.

We specialize in: 1 Organizing training workshops for procurement, logistics, professionals and stake holders. 2 Team building of user departments. 3 Market Price Survey for procuring Agencies. 4 Formulation of tender documents and advertisements. 5 Organizing bid bonds and tender security for suppliers. 6 Developing training material for institutional development. 7 Supply Chain Performance Index Research Proc & Logistix Consult P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 0204404488/02044002479 projects@procurementandlogisticsonline.com www.procurementandlogisticsonline.com

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BRIEFS

CAA launches improvement of Entebe airport

Entebbe International Airport

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ganda has launched plans to revive national carrier Uganda Airlines after a 15 year absence from the industry following the liquidation of the airline in 2001. The 20-year civil aviation masterplan will involve the construction of a new cargo centre, a new passenger terminal, a domestic operations terminal, and multistoried parking. Other actions include the relocation of the fuel farm, and construction of an aircraft maintenance centre and facilities for handling Airbus 380 aircraft. The current passenger terminal building will be expanded to provide better facilities. The CAA has already acquired $200 million loan from China’s Exim Bank for the first phase of the expansion of passenger and cargo handling facilities at Entebbe International Airport. “The first phase of the upgrade and expansion will be done between 2016 and 2017 and will include

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construction of a new cargo terminal with cooling facilities, an aircraft parking apron, landslide and air side access road construction of a 20,000 square-metre extension of the passenger terminal building, expansion and building of the main apron, repair and strengthening of the main runway with a new asphalt overlay, strengthening and repair of taxiways A, B, C, D and E, and strengthening of Apron 4 at a cost $45 million,” CAA engineer Daniel Kiyimba said. Chinese firm Communications Construction Company is undertaking the works, according to CCA’s public relations manager Ignie Igundura. The aviation industry has over the years faced challenges like war, terrorism and intermittent fuel prices. However global air traffic continues to register positive growth In 2014, the average annual growth in traffic was 3.8 per cent. Passenger traffic hit 3.3 billion.

“Uganda Civil Aviation Authoority is determined to improve aviation indusrty with airport infrastructural improvements” Kenya’s Jomo Kenyatta International Airport is being expanded at a cost of $653 million for a new passenger terminal to handle 20 million passengers and a new cargo centre to handle up to 300,000 tonnes of cargo. The largest airline in Africa, Ethiopian Airlines has also begun the expansion of its cargo terminal in Addis Ababa. Built at a cost of $98 million, the new terminal and cargo centre will handle 600,000 tonnes of cargo and the next phase will increase capacity to 1.2 million tonnes of cargo making it one of the largest cargo centres in Africa. The fastest growing markets in Africa include the Central African Republic, Malawi, Rwanda, Tanzania, Uganda, Ethiopia and Sierra Leone.

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BRIEFS

Kenya to construct a modern railway training institute

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he government has announced plans to construct a modern railway training school as the country gears up for the launch of the Sh327 billion Standard Gauge Railway (SGR) project next year. KSh2 billion has been set aside for infrastructure upgrade and equipping workshops with modern training equipment that will be open to scholars by the next financial year. The current SGR contractor, China Road & Bridges Corporations (CRBC) and China Communications and Construction Company (CCCC) are set to contribute half of the cash for the project while the government will give the remaining half for the initiative . Half of the Sh2 billion will be used to refurbish the 60-year old Railway Training Institute (RTI) and to set up a new engineering school specialising in SGR technical operations. Transport Cabinet Secretary James Macharia has echoed the move saying it is in line with the Government’s desire to ensure CRBC transfers technology to the locals. “Skills transfer is a key component of the deal that we signed with the contractor. In collaboration with the CRBC we are keenly implementing the deal

“Skills transfer is a key component of the deal that we signed with the contractor. In collaboration with the CRBC we are keenly implementing the deal by equipping our

people for the task ahead.”

by equipping our people for the task ahead.” CRBC will undertake the operations of the new railway for a period of five years, and according to Kenya Railways Corporation Managing Director Atanas Maina, the contractor might be around for much longer. Macharia said state-of-the art railway training institute will be ready in the next two to three years. The CS also revealed that a skills audit by an Australian consultant was ongoing to inform the training gaps and plan for the sector. Coordinated by Kenya’s Ministry of education, the initiative is financed by the four partner states. The Railways Training Institute (RTI) is fast-tracking the process by developing a strategy for training locals in the various skills required for high technology. The institution has already developed a national competency based curricular for the railway as the Government moves to deepen skills on SGR.

GN Cargo to invest USD 4M in Cargo centre

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learing and Forwarding firm, GN Cargo Kenya has partnered with a Dubai-based firm to construct a new cargo handling centre at the Moi International Airport. The Sh400 million project began last week and is expected to raise export volumes channelled through the facility. The newly appointed executive director for GN Cargo, Abdishakur Jama said the company has been making preparations for the container freight station (CFS) including the mobilisation of financial resources. The station will be called GN Cargo Service Centre. “Everything has been in place since the beginning of this month and construction works has begun,” said Mr Jama. The centre will have capacity to store at least 760 tonnes of cargo per day at the beginning, and is expected to be increased later. The facility will built at a cost of Sh400 million according to Mr Jama. It is supposed to be a cold storage facility with a capacity to handle both imports and exports. “We plan to upgrade the facility later at an estimated cost of Sh1 billion to create space for more cargo,” he said.

The Kenya Airports Authority gave GN Cargo Kenya the greenlight to construct the centre which targets fish and meat exports to the Middle East and Asian countries. Apart from exports, the facility will aid in bringing in imports of dry cargo including mobile phones, electronics and shoes. Mr Jama said the cargo centre is being built to take advantage of the increased business between Kenya and foreign countries. “There is demand for Kenyan exports out there, but we lack enough cold storage facilities. That is the reason why we are doing this project. We are also looking to increase exports volumes which have traditionally been much lower than imports.” A recent survey indicates that Kenya exported Sh580 billion in 2015, compared to a hefty Sh1.6 trillion imports, a clear sign that business was in favour of foreigners. GN Cargo has established its name as clearing and forwarding firm, giving them the supply and demand connections needed to keep the container freight handling facility running. On completion, the new facility will be handling large amount of imports from the Dubai-based partners for cold storage before they are sold in the local market.

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BRIEFS

Air Tanzania begins purchase of new aircrafts

Air Tanzania expands fleet in revival strategy

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anzania’s national carrier Air Tanzania is set to acquire two 76-seater Bombardier -D8 Q400 aircraft next month as it steps up efforts to remain afloat in the competitive industry. Tanzania recently signed an agreement with the Canadian manufacturer to purchase two commercial aircraft – D8 Q400 which are expected to arrive in the third or fourth week of September this year. The two aircraft, to be paid for from part of the $250 million recently allocated by the government, are among the four aircraft ordered from Bombardier and will increase to three the fleet deployed by the airline. Air Tanzania chief executive Patrick Itule said the aircraft will be deployed on domestic routes. “We are looking forward to more competitive business with the arrival of the new aircraft. We are expecting a smooth run after the planes’ arrival and overcome our long time biggest challenge which is the shortage of planes would be solved. The planes are currently undergoing final touches by the Canadian Bombardier Company, he said. Some of the destinations the company is targeting include Dodoma, Pemba Island and Mpanda in western Tanzania. The airline will fly Dar es Salaam to Moroni in the Comoros as a new, regional destination, Mr Itule said. Air Tanzania will face stiff competition from regional carriers, PrecisionAir and FastJet which currently dominate the Tanzania airspace. PrecisionAir flies to Kilimanjaro, Mwanza, Tabora,

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Musoma, Kigoma, Bukoba, Zanzibar and Mtwara with Nairobi as its most profitable route. Budget carrier FastJet operates daily flights connecting Dar es Salaam to Kilimanjaro, Mwanza, Mbeya, Zanzibar, Nairobi and Entebbe. Air Tanzania lost its glory on international routes to regional and global air carriers when it grounded its carrier in March 2011. Since then, Tanzania has been relying on Middle East-registered airlines to connect to global airports while regional airlines including South African Airways, Ethiopian Airline, Kenya Airways and RwandAir have captured regional routes connecting Tanzania to other African airports.

“We are looking forward to more competitive business with the arrival of the new aircraft. We are expecting a smooth run after the planes’ arrival and overcome our long time biggest challenge which is the shortage of planes would be solved.

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BRIEFS

“About 35 African heads of state and government as well as their spouses attended the summit including members of the African Union Commission and 10,000 delegates.

Kenya hosts TICAD VI Summit in Nairobi

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he sixth Tokyo International Conference on African Development (TICAD VI) Summit held from 27th -28th August ended with the adoption of a three year plan dubbed the Nairobi Declaration, laying out goals to be achieved by the next TICAD in 2019. The Nairobi Declaration seeks to promote structural economic transformation, resilient healthcare systems and social stability for shared prosperity. During the closing ceremony, the leaders acknowledged achievements and affirmed the Nairobi Declaration opens up TICAD process new chapter. They also assessed and identified existing challenges and emerging opportunities that are crucial to the continued success of the TICAD agenda. President Uhuru Kenyatta said if implemented, the Nairobi Declaration will transform Africa’s economy. “All the outcomes agreed upon during the summit, through discussion debates, negotiations and dialogue will ultimately bring the transformative change that we all want for our continent,” he said. Africa and Japan will work together to promote economic diversification and industrialization as outlined in the declaration with

a special focus on agriculture, quality infrastructure and public private partnerships. The three year plan will also see a boost in health systems through cash injections in the industry while promoting education, training and development for quality health services. Japan also agreed to work with Africa in combating terrorism, illegal trafficking, countering illicit trade, and corruption through strengthening capacity for cross border surveillance, exchange of information and cooperation at regional, continental and international levels. TICAD VI was co-organized by the Government of Japan, the African Union Commission (AUC), the UNDP, the World Bank Group and the United Nations. The conference attracted about 10,000 delegates and has seen about 22 companies from Japan and Africa sign 73 Memoranda of Understanding. Japan pledged Sh3 trillion to Africa for development purposes. The Tokyo International Conference of African Development (TICAD) External link was launched in 1993 by the Government of Japan, to promote Africa’s development, peace and security, through the strengthening of relations in multilateral cooperation and partnership, particularly with the country. Coming at a time when aid fatigue had become apparent, the launch of TICAD was catalytic for refocusing international attention on Africa’s development needs. In the course of the past 20 years, TICAD has evolved into a major global and open and multilateral forum for mobilizing and sustaining international support for Africa’s development under the principles of African “ownership” and international “partnership.

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CORPORATE PROFILE

Seco’s engineering prowess By Anthony Kiganda With years of experience in marine and civil engineering Alpha Group flagship firm Southern Engineering Company (Seco) continues to deliver high quality solutions to supplement its robust reputation

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or decades,diversified firm Alpha Group has continued to position itself as a force to reckon with when it comes to unrivalled logistical and marine engineering solutions. The group has also amassed a wealth of experience in the food industry. Its engineering arm Southern Engineering Company Limited (SECO) was formed in the 1950’s to support the Group’s logistical needs. Since its formation,Seco, the marine engineering arm of Alpha Grouphas over the years morphed growing from strength to strength to its current status. It boasts of With a

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CORPORATE PROFILE client base ranging from engineering companies to oil and gas companies and government agencies across the East Africanregion.

Longest barge in East Africa The firm recently grabbed global attention when it successfully unveiled the longest barge in East Africa. With a capacity of 2,500 dead weight tonnage equivalent to 150 truckloads the vessel will be deployed for transportation of heavy machinery and marine cargo along the East African coast. OmriCohem who is the general manager of Seco reveals that the vessel will be deployed for use in construction of Lamu Port and other offshore projects along the West of Indian Ocean and inland water bodies like Lake Turkana. With marine transport firms positioning themselves for major projects such as the Lamu Port which is underway, Seco believes that the launch of its longest barge in East Africa will give them an upper hand when sourcing for jobs. “The barge is the first to be designed and built in Kenya under internationally recognized classification standards. It meets the Indian Register

of Shipping or IRCLASS,” says Cohen. According to Cohen construction of the vessel is a major step forward in Kenya’s quest to attain its long held aspiration to be shipbuilding and marine service hub. Built in a record six months by 80 Kenyan skilled manpower and inspected by qualified inspectors from outside the country the vessel cost Sh180 million. But this is not the first ship that Seco has constructed. In October last year, the firm unveiled Albert Nile 1, one of the four

passage ferries it built for Uganda which currently operates at Lake Albert. In a move that shows the growing influence of Seco, Rwandan Energy Development Corporation Limited EDCL commissioned the firm to build a 14m research vessel. The vessel will be deployed to support research activities currently being conducted under the Lake Kivu Monitoring Program. With a vast experience in particularly marine engineering field, Seco has mastered its art and can now build anything from passenger ships, barges, tugs and bunker ships.

Civil Engineering Apart from marine services Seco also has unmatched experience in civil and mechanical engineering, heavy lifts, inspection and certification. The company’s fully equipped fabrication workshop for specialized steel fabrication and structural engineering works with Lloyd’s British welders. “We have the ability of fabricating requirements for energy, oil and gas operations. We understand that each customer has unique requirement so we bank on our technical staff to deliver bespoke projects,” Cohen explains. Apart from its highly skilled technical staff, innovation and technology continue to play a pivotal role for Seco. The company has a world class laboratory equipped to test their products before being released to the market. The overall goal is to maintain international standards in their entire product offering. The tests in their laboratory includes OCTG inspection, ultrasonic magnatic particles and testing, material positive identification, hardness, Load hydrostatic and pressure test for offshore and onshore inspection. “Seco is the first company in Kenya to offer OCTG inspection for oil clients. The inspection service is of great importance to oil drilling firms. We have the equipment and technology to make this exercise possible says Cohen,” adding that the firm plans to introduce its new level of inspection known as above ground storage tank inspection.

Lift operations Within its heavy lift department Seco maintains cranes that have been certified to international standards for instance Lloyds British. For the past five years the firm has been carrying out lifting operations with leading companies

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CORPORATE PROFILE

for instance Tullow Oil. Due to its exemplary work, Seco will be involved in the drilling of four wells in Turkana once operations kick off. Seco was also contracted to hoist wind turbines for Lake Turkana Wind Power project. “We were the first contractor on the ground in Lake Turkana. We were involved in lifting operations for Lake Turkana wind power project,” shares Cohen Southern Engineering Company Limited also hires out specialized land based equipment for construction needs across East Africa. In recent years,Seco has invested heavily in buying top notch equipment aimed at making their engineering work as efficient as ever. For example, the company has purchasedKobelco 250 tonne crane and other specialized equipment to enhance their lift operation services. Aware of the power of partnership, Seco works with international firms such as Marriot Drilling Group, S.M.P, Halliburton, Baker Hughes, Schlumberger, GreenArava among others.

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“We are learning from the best. We have also managed to rally specialists around our projects to ensure that all jobs are done according to international standards,” says Cohen. Camps and catering A forward looking firm, Seco has introduced its new subsidiary, Summit that deals in camps and catering. Its camp management division is specialized in fully mobile containerized units. The container units cater for the services of firms such as oil and gas, mining and Energy. The company has already provided such containerized units for Tullow Oil, and Lake Turkana Wind Power, National Oil and Hurlibuton. Seco specializes in recreation, offices, kitchens and workshops units. The camps are managed by Seco. “Alpha Group has substantial wealth of experience in the food industry. We believe that we are best suited to run and manage the camps on location,” offers Cohen. Seco also maintains a healthy and safety department to cater for its staff. The firm offers protective gear to employees as well as medical care. The firm recently received an accolade from Lake Turkana Wind Power for its exemplary health and safety standards during their work for the project. Seco’s core business is backed by Corporate Social responsibility initia-

“Alpha Group has substantial wealth of experience in the food industry. We believe that we are best suited to run and manage the camps on location,” offers Cohen. tives aimed at involving the communities in all that the company does. The firm takes pride in employing and training the local community in various capacities. The firm is also about to complete the construction of a primary school in Turkana. “We don’t want to be a profit only minded firm. We also seek to positively impact communities,” says Cohen.

Road ahead Looking ahead, Cohen is confident that the firm is now as well positioned and focused as ever to participate in most projects that East Africa has to offer. Although the firm boasts of 600 dedicated staff of diverse qualifications, it aims to employ at least 2000 people in the near future. “We know what we are good at. We understand that we are the leaders in what we do and we will be keen to maintain this position. We will be aggressive in bidding for jobs competitively and it’s our hope that the government will deliberately move to support us because we are a Kenyan company,”

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INSIGHT

Managing a fleet Contribute to your company’s success by developing a profitable network fleet plan and an effective fleet schedule. Improve your planning and management skills and understand scheduling process and tactics. 4 ways to help fleet managers improve efficiency of their fleet

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leet management includes commercial motor vehicles such as cars, aircraft (planes, helicopters etc.), ships, vans and trucks, as well as rail cars. Fleet (vehicle) management can include a range of functions, such as vehicle financing, vehicle maintenance, vehicle telematics (tracking and diagnostics), driver management, speed management, fuel management and health and safety management. Fleet Management is a function which allows companies which rely on transportation in business to remove or minimize the risks associated with vehicle investment, improving efficiency, productivity and reducing their overall transportation and staff costs, Fleet managers don’t need to be reminded of the importance of increasing fleet efficiency as they are constantly under pressure to bring down costs, even as their operations grow. Because fleet efficiency is the product of countless tweaks to all aspects of the operation, it is a good time to add this to the collection of cost-saving methods.

The following are sure ways to improve fleet efficiency: Exception reporting Information technology and telematics have revolutionised fleet efficiency, resulting in a wealth of information that becomes available. Without filtering, millions of bytes of data can flow by the fleet manager’s desk unused, simply because it will take too much time to go through it all, and the technology ends up to a large degree wasted.

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Some of the most productive hours that a fleet manager can spend are on thinking how to structure reports so that they flag the exceptions rather than merely listing all the events and sometimes it requires getting to know the systems of service providers better. For example, a GPS tracking service could allow you to draw a virtual border around a region and capture alerts when your vehicles cross the line, or could automatically create a report that lists stops longer than a certain period. Set up in this way, a clear pattern emerges from the ocean of information produced by a GPS tracking system. Following the same principle, even something as basic as a vehicle log book can be structured in a way that it requires staff to highlight exceptions.

Route optimisation software Procedures that figure out the shortest route between a series of stops or delivery points are now available to any fleet through various websites that provide the service. The effectiveness of a route optimisation service can be proven when comparing the estimated distance and time that the procedure comes up with, and the real distance travelled and time taken by your driver using your usual route-planning methods. The difference between the two would tell you whether the monthly subscription to the route optimisation service is worthwhile.

Transaction authorisation Essentially, an automated system reports every transaction done with a fleet card to fleet managers,

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even on their mobile phones if they prefer. But rather than swamp the fleet manager with a list of transactions, it reports intelligently. Working in the background, the system assesses each transaction against a set of rules, some of which can be determined upfront by the fleet manager. For example, use of the card may be limited to specific time frames. If the driver tries to use it more frequently, the transaction is declined automatically and the fleet manager notified. The fleet manager can then decide whether to approve the transaction due to special circumstances. Transaction authorisation, which can decline a transaction automatically based on as many as thirty different rules, has saved millions of Rands for fleet managers by helping to cut down on fuel card fraud.

Preventative vehicle maintenance For fleet operators whose vehicles are used exclusively to generate revenue for their business, any vehicle downtime means that no money is coming into

A GPS tracking service could allow you to draw a virtual border around a region and capture alerts when your vehicles cross the line, or could automatically create a report that lists stops longer than a certain period. the business. The fleet operator may be tempted to skip vehicle services or to postpone repairs on a vehicle. This could prove more expensive over time as mechanical breakdowns and

even accidents may occur as a result. Vehicles must, therefore, be kept in good running condition at all times and services and even repairs can be planned for quiet times. Always understand the running costs of your vehicle fleet. This includes the cost of fuel, oil, tolls, services and repairs, tyres and accident repairs. In tough economic times, this becomes even more important, but it must become a habit to monitor these costs on a daily basis. Find a service provider that can supply a means to pay for these expenses, but more importantly offers an easily accessible reporting system that shows you as and when expenses occur. In addition, make use of expert services supplied by such service providers that will help you to minimise maintenance expenses.

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Global Port Outlook:

Investment Robust Despite Economic Headwinds BMI View: Greenfield port projects will proliferate in emerging markets, with those on strategic trade routes or close to growing consumer hubs attracting the attention of international investors. Developed markets are currently undertaking major port upgrades to accommodate larger vessels, as well as adapt to changing trade dynamics and a drive for efficiency.

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here will be significant activity in the global port infrastructure construction market over our 10-year forecast period, even at a time when major trading nations such as China are experiencing economic slowdowns and metrics such as the Baltic Dry Index are at historic lows. We are forecasting a continued increase in the value of global trade volumes, which will support demand for increased port capacity. This will spur investment in both greenfield projects, primarily in emerging markets, and the expansion and modernisation of existing port assets - both of which will be targeted by infrastructure investors in fast-growing and strategically important markets. Poor existing infrastructure in emerging markets and the chance to boost profitability at major developed

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market ports by modernising and adapting them to new logistics trends will lead to continued investment into infrastructure. Major port operators such as DP World, APM Terminals, PSA International and Hutchinson Port Holdings will lead the investment in new strategic projects; however, there are an increasing number of non-traditional investors - such as pension funds - which will continue to increase their presence in the sector.

Projects Reflect Need A key factor that will support the development of greenfield projects is a substantial port infrastructure deficit in many emerging markets, which is impacting upon economic growth potential. Governments around the world are targeting port infrastructure as a means of unlocking economic activity and fa-

cilitating the development of strategic trade routes. Many markets currently have cargo queuing to get access to ports due to limited capacity and slow cargo processing. This is a pertinent issue for ports acting as export hubs for landlocked countries, as we have seen in Sub-Saharan Africa (SSA) where a few ports such as Mombasa, Kenya and Dar Es Salaam, Tanzania are responsible for the import/export needs of many other countries as well as their own. In tandem with a lack of capacity, the changing nature of goods being imported and exported to and from emerging markets will also drive demand for port investment. We expect continued growth in demand for consumer goods across all emerging markets and thus more demand for container terminals, in addition to the bulk commodity terminals, which

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have been the focus of investment in recent years. Containerisation of trade is a trend we expect to continue globally, and the development of container terminals will be a major focus of the key international shipping lines with investments being made near to growing consumer hubs or strategic locations in order to capitalise on transhipment opportunities.

Major Plans Yielding Projects in Asia Asia currently leads the world in terms of port opportunities (excluding Australia), with 171 significant port projects (valued at USD50mn+) logged in our Infrastructure Key Projects Database. The vast majority of these projects are unsurprisingly in India and China, but across South East Asia we see continued traction in opening up and developing port infrastructure. In India and Indonesia, governments are prioritising the development of port infrastructure as a means of boosting economic growth and relieving bottlenecks at existing ports through the Sagar Mala project and MP3EI blueprint, respectively ( see Sagar Mala: Port Potential Faces Structural Challenges’, 9 December 2015 and ‘Maritime Axis Drive To Provide Opportunities’, 11 March 2015). Furthermore, China’s One Belt One Road initiative, as well as benefitting ports across Europe, Middle East and Africa, will see those countries on the maritime route benefit from port investment, boosting ports infrastructure in countries such as Sri Lanka, Bangladesh and Vietnam.

Latin America Has LongTerm Need Second in terms of number of projects, Latin America is undertaking significant port infrastructure development - both in major economies such as Brazil and Mexico, as well as smaller strategic markets like Colombia, Peru and Panama. Panama is particularly notable given the port opportunities within the market that stem from the upgrades to the Panama Canal, but also due to the investment it is driving in other ports in the Americas in order to accommodate larger vessels. We note many of the projects in Latin America are in Brazil and remain on the drawing board as the market suffers in the wake of a major fall in commodity prices and a liquidity crunch within the construction sector following the ‘Lavo Jato’ scandal. However, Brazil’s ports suffer significant bottlenecks and as a major exporter of bulk commodities such as iron ore and soybean, over the long-term, we expect Brazil’s significant port project pipeline to move forward leading to significant construction and investment opportunities. Forty percent of the projects logged in our database for Brazil are being developed on a private basis. While Latin America and Asia lead in terms of number of port opportunities, greenfield projects are proliferating across emerging markets, which will support growth opportunities throughout and beyond our forecast period (see chart below). In MENA, there is intense competition between the likes of the UAE and Qatar - both of which

have significant port projects and are looking to capture transhipment opportunities - as well as the similar goals in North Africa with Morocco recently signing a deal to expand the port of Tangiers. In Egypt plans are afoot to develop both Alexandria and Port Said, capitalising on the recent expansion of the Suez Canal. There are other emerging markets which we highlight as having great potential for port infrastructure, but as of yet do not match up in terms of project opportunities compared to some larger markets. It should be noted that opportunities will be diverse, widespread and often subject to the prevailing business environment in a market (see BMI’s Infrastructure Risk/Reward Index). Nevertheless, we believe that certain markets will see greater activity in light of pressing demand for port infrastructure. The chart above highlights markets which are coastal and will see significant increases in trade over our ten-year forecast period - all markets featured will need port infrastructure investment to cope with increased demand. Within these markets it is possible to see where this need for port investment is most acute. Firstly, a growth index - a function of the absolute value increase of imports and exports at constant USD prices over our ten-year forecast period and average annual growth in trade volumes - ranks these markets so as to highlight those which will enjoy both large and fast increases in trade. Secondly, we have liner connectivity, which highlights how well connected a country is to global sea trade routes. Countries within the highlighted area such as Bangladesh, Vietnam, Philippines, Tanzania, Peru and Ghana are all markets which score well for trade growth and poorly for liner connectivity, and we have noted growing port activity in these markets. While the majority of greenfield port opportunities will be in emerging markets, we note that there are often systemic pitfalls in the manner in which ambitious port projects are developed, which leads to delays, cost overruns and stranded assets. We have followed numerous instances of ports being poorly planned in terms of their geographic location and built without connecting infrastructure, meaning that traffic volumes are low and profitability and investment attractiveness is poor. Land rights in emerging markets are often unclear, leading to prolonged

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legal battles to secure port sites and projects are also often too ambitious in their scale, requiring significant private investment without proven revenue streams.

Developed Market Investment Targeting Expansions and Upgrades The second driver of investment into ports, after increasing demand for port capacity, is modernisation and improvements to port efficiency, as well as adapting to new demand dynamics. Developed markets are more prevalent in the ports development space, but are by no means exclusively engaged in port upgrades, with Australia in particular holding a number of greenfield project opportunities. In terms of upgrades to existing ports, we note the growing interest from institutional investors looking to buy assets, improve efficiency and then sell at a profit will be key in creating port infrastructure opportunities. The AUD8.92bn joint offer from Brookfield Infrastructure (Canada) and Qube Holdings (Australia) for the Australian logistics firm Asciano - over eight times the firms’ 2015 EBITDA - represents this trend, with the investors betting on steady and increasing returns. The Port of Melbourne will be the next high-value asset on investors’ radars in Australia. With its privatisation being recently given the green light by the Australian

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government, we expect its sale to attract strong interest and a hefty price. Within the EU, planned projects largely revolve around upgrades to existing ports to increase intermodal capacity. A number of strategic corridors - TEN-T projects - are under development to reduce bottlenecks in European logistics and take freight traffic off roads and transfer it onto rail and water. The Motorways of the Sea projects number 29 in total and while many have already begun, the current EU financing period runs up to 2020 and we expect continued investment across Europe into port upgrades. Nowhere is the upgrading of existing ports more prevalent than in the US, which is undergoing major port investment to allow for post-panamax ships. US east coast ports will continue to invest in infrastructure upgrades as we move closer to the Panama Canal Expansion Project coming online in 2016 (currently scheduled for June), and continue to do so over the next five to 10 years. Aside from the waterside expansion that includes dredging and berth expansion, port authorities will need to further improve rail and road networks that lead to and from the ports. According to our Infrastructure Key Projects Database, there are currently projects valued at a total of USD8.2bn underway with regards to east coast port improvements. We believe investment will continue past 2016, as increases in traffic will neces-

sitate additional capacity and more maintenance will be required to sustain higher standards.

LNG Projects: Hit And Miss As logged in our LNG Projects Database, many waterside infrastructure projects in the US, Australia and in Europe are based on LNG export and import. Many export facilities are already under construction, with 85% of the LNG liquefaction capacity additions set to be made in Australia and the US over the next five years. However, this will mean global LNG liquefaction capacity increases by over 145 million tonnes per annum (mntpa) or nearly 200bn cubic metres (bcm) by 2020. Over the next five years this represents a near 50% increase on the 302mntpa of liquefaction capacity that is currently installed globally (see chart above). This will lead to a number of planned export facilities having FID decisions delayed, due to our expectation that this increased capacity will depress LNG prices. New projects in Canada, the US and Australia will be at greatest risk of long-term delays.

This article is tagged to: Related sectors of this article: Infrastructure, Ports Geography: Global, Argentina, Colombia, United States

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SHIPPING

5 great ways to score free shipping simply pick up the item the next time you shop at the store.

Pay a little for your free shipping

Sometimes, the best way to get free shipping is simply to ask for it. Shipping charges are the number one reason online shopping carts are abandoned.

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very year, more and more consumers do their shopping online. This has prompted online shopping sites like Amazon to come up with systems that make it easier for shoppers to find the best prices in minutes. However, one of the biggest challenges to shopping online are the shipping fees. Fortunately, you can avoid such costs with a little ingenuity. Here are the five great ways to get free shipping on your online purchases:

Check out Freshipping.org Freeshipping.org alerts you to free and reduced shipping policies as they become available. If a code is required to land the deal, you will also find that here. This is a great site to check before you make a purchase at your favorite online store. For instance, a recent search for “Target” turned up 29 offers of discounts and free shipping.

Yes, this sounds like a contradiction — paying to get free shipping. But if you shop online a lot, it may make sense to pony up for a one-time fee that will get you free shipping the rest of the year. The most famous shopping site for this service is Amazon Prime. Sign up for Prime — $99 for one year — and you will get free two-day shipping on most items. You’ll also get access to free videos music and e-books. ShopRunner is another similar service. The site partners with hundreds of major retailers to offer free two-day shipping. It costs $79 for one year, but you can also sign up for a free 30-day trial.

Shop around holidays A little patience goes a long way toward getting free shipping. Many retailers offer free shipping around holidays. For instance Christmas holidays and Valentine’s Day.

Ask for free shipping Sometimes, the best way to get free shipping is simply to ask for it. Shipping charges are the number one reason online shopping carts are abandoned.

Freeshipping.org alerts you to free and reduced shipping policies as they become available. If a code is required to land the deal, you will also find that here

Use the “ship to store” option This is one of the best ways to cut your shipping costs. If the item you require costs far less than the minimum fee required to get free shipping, just ask the store you are shopping at to ship the item to one of its nearby stores. There is no cost to you, and you can

Retailers know this, and if you get all the way to checkout and hesitate before clicking “Buy,” they’re sometimes willing to throw in a discount in order to make the sale.

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TPP Procurement Chapter Will Open up Substantial Opportunities

BMI view: The government procurement chapter of the TPP, by providing for non-discriminatory, competitive bidding processes for public contracts in signatory countries, will create significant opportunities for firms across the Pacific. We expect technically sophisticated firms from more developed countries to expand their market share, and through this process, less developed countries may see a boost in infrastructure development.

Leaders of TPP member states The Trans-Pacific Partnership (TPP), through its procurement chapter, will significantly open up the infrastructure markets of the 12 participants, and thus provide new and considerable opportunities for the expansion of technically sophisticated international construction firms and suppliers. While the TPP was signed on October 5, it will still need to be ratified in the legislatures of all twelve parties after, but we maintain our view that the trade deal will eventually be realized ( see ‘TPP Moving Towards Resolution in 2015, 28 Feb 2015). As such, we expect wide ranging implications for public works procurement in participating governments and their construction industries. The TPP signatories will have access to the largest procurement market globally (although threshold limits and exclusions will apply), with countries accounting for 40% of world GDP combined and government procurement accounting for 10-15% of an economy on average,

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according to the WTO. We expect firms from the US, Canada, and Japan to be the major winners from this agreement, as they have the size, technical expertise, and experience to quickly expand into newly opened markets. Additionally, governments will benefit from greater competition and cost-effectiveness in their procurement, placing upside potential to our construction industry forecasts across the TPP region. Expected Key Outcomes Of TPP Government Procurement Chapter: • Rules on non-discrimination and impartiality in the procurement process aimed at ensuring procedural fairness for all contractors and suppliers. • Extension of market access at the subnational and sub-central level. Especially

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important for countries which have already extended access through FTAs and the GPA. Strong transparency and accountability rules, including provisions entitling unsuccessful bidders the right to an explanation and the ability to challenge the results of the procurement process. Harmonization of procurement provisions in the North American Free Trade Agreement (NAFTA) with those of the TPP, including the extension of market access.

Increased Access Will See Benefits All Around By outlining strong accountability, non-discrimination, transparency rules, and extending government procurement agreements into new areas, the TPP will greatly expand access for contractors and suppliers across the region. Only five of the twelve signatories - Canada, Japan, New Zealand, Singapore, and the USA - were party to the WTO’s Government Procurement Agreement (GPA), which has provided for a certain degree of procurement market access since 1994. Also, to varying extents, countries in the TPP had explicit rules preventing foreign participation. Malaysia, under its “bumiputera” program, currently gives preference to domestic suppliers

in all procurement. Thus, the TPP will significantly open up new markets to member countries. Contractors and suppliers from the US, Canada, Japan, and Australia will be the major beneficiaries of the provisions regarding government procurement in the TPP. We expect firms from these countries that have the capacity and technical expertise to win openly tendered bids to compete and be successful. Firms from Japan and Australia especially are well positioned to enter the procurement markets of their neighbours in Asia. We also expect increased participation from firms from developed countries into their peers’ large markets, with Canadian and Australian firms eying US contracts and vice versa. Less developed countries - Malaysia, Vietnam, and Peru - are poised to see a boost in their infrastructure and construction industries as more efficient procurement processes cut costs and provide for technology transfers. By opening their procurement markets, governments in these countries can benefit from the technical expertise of large, or highly specialised international firms, who will often be able to deliver a project more cheaply than domestic suppliers. Although the details are yet to be provided, TPP will very likely include safeguards to protect economic development by allowing for a delayed implementation of government procurement provisions.

We expect domestic firms and workers will benefit from technology transfer, increasing their capacity to carry out large and sophisticated projects.

Extension to Sub-National will Further open Markets The TPP’s inclusion of sub-national level procurement - a large and growing sector - will greatly expand the size of markets open to international participation. While the TPP does notably exclude state governments in the USA from the agreement, it will open up the procurement process of major regional power authorities, including the Tennessee Valley Authority, the Bonnevile Power Authority, and the Southeastern Power Administration. Provisions providing for non-discrimination at the sub-national level will have a major impact in countries where decentralization at the regional level is part of a strategy aimed at better prioritization and efficiency in infrastructure development. Peru, for example, is currently engaged in a program with the World Bank enhance regional infrastructure development and poverty alleviation through a decentralized strategy.

This article is tagged to: Related sectors of this article: Infrastructure Geography: Global

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A mega project rises in East Africa

A distinctive, glass-panelled multi-storey building with tall stone arches stands out in the bushes of Magogoni in Kenya’s historic coastal town of Lamu.

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he far-reaching project involves a railway, a highway, a crude oil pipeline and a fibre-optic cable connecting the four countries. The project will also include several airports, resort cities, an oil refinery, a 32-berth port in Lamu and other supporting infrastructure mini projects. Once completed, the LAPSSET railway will connect to West Africa’s Douala–Lagos–Cotonou–Abidjan Corridor, running through Cameroon, Nigeria, Benin, Togo, Ghana and Côte d’Ivoire respectively. Experts view the LAPSSET project as a major contribution to the African Union’s regional integration vision of a peaceful, prosperous and fully integrated continent by 2063. In fact, during the 2015 AU General Assembly, African leaders endorsed the project under the AU’s Presidential Infrastructure Championship Initiative (PICI). Admission into PICI signals that a project is critical to the continent’s regional integration aspiration. The project will also include construction of Kenya’s second seaport in Lamu, which is expected to be bigger than the currently overstretched Mombasa port. Both ports will help boost Kenya’s status as a transport and

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logistics hub for the East Africa and Horn of Africa regions. Although the project seems a promising idea, it had to be shelved for years after its conceptualisation in 1972, nine years after Kenya achieved independence, because the young republic could not afford the exorbitant projected costs. In 2008, then President Mwai Kibaki revived the project with the hope that part of its $16bn budget would be financed in subsequent national budgets. Amid the pomp and colour of welcome celebrations, in March 2012 President Salva Kiir of South Sudan, then prime minister of Ethiopia Meles Zenawi and President Kibaki travelled to Lamu to lay the foundation stone for the port, signalling their determination to kick-start the project. At the onset, Kenya received financial assurances from foreign private investors. However, Brazil, China, the European Union, India, Japan, Qatar and South Korea, though they promised to fund the project, failed to fulfil their commitments. This forced Ethiopia, Kenya and South Sudan to agree to use domestic resources to finance their respective parts of the project. Kenya was frustrated by a lack of interest from foreign investors, even as it faced pressure from South Sudan, which on a number of occasions openly complained about the slow pace of the project. Oil-rich South Sudan pays high transit charges on its oil exports to its neighbour, Sudan. South Sudan is therefore keen to use the poten-

“In the next five years the port will be completed just like other components of the project,” said Silvester Kasuku, director general of the LAPSSET Corridor Development Authority tially cheaper LAPSSET corridor for oil exports to India and the Far East, although the civil conflict in the newly independent country is creating concerns among major oil producers. The Kenyan government decided to pick up the tab for the project, which had risen to $24.7bn from the initial estimate of $16bn, and allocated 16% of its 2016/2017 budget to LAPSSET. Kenya can afford to pay the total $24bn project cost only in phases. This will allow it to construct 32 berths for the Lamu port, the starting point of the LAPSSET project. A similar financ-

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ing scheme has been adopted for the roads, railway, oil pipeline, resort cities and three airports. In 2013 the China Communications Construction Company was awarded a contract worth $478.9m to construct the first three berths, to be ready by 2019. Then contracts for another set of berths will be awarded. “In the next five years the port will be completed just like other components of the project,” said Silvester Kasuku, director general of the LAPSSET Corridor Development Authority. “A lot has been achieved in making this dream a reality. We have a fully-fledged state corporation to ensure the project is achieved.” In addition, according to Kasuku, over 5,000 jobs have been created since construction started in 2012. But there are questions as to who benefited from these employment opportunities. The immediate first-level jobs available in LAPSSET require literacy and education, which are limited among community members and other nationals in the region. Second-level opportunities, such as local informal trade and business, may not immediately benefit local pastoral community members, who lack capital and access to credit — meaning they will be late to market. Besides financing the megaproject, the government has had to deal with concerns about the environment and with compensation for owners of the land the roads and railway will pass through. In 2008, when the project was revived, environmental activists warned that Lamu’s fragile coastal ecosystem could be destroyed through clearance of mangrove forests, oil pollution and degradation of the famed Old Town area of Lamu. Lack of compensation for land owners and lack of community

participation in the planning process also generated hostility towards the project. Lamu residents coalesced under the Save Lamu lobby in 2012 and took the Kenyan government to court. “Lamu has been our home for generations and we were concerned that a project of this magnitude could be undertaken without our participation,” said Mohamed Ali Baddi, who leads Lamu Environmental Protection and Conservation. Lamu Old Town, which dates back to the 14th century, was designated a UNESCO World Heritage Site in 2001. It is, according to UNESCO, “the oldest and best-preserved Swahili settlement in East Africa,” having been continuously inhabited for over 700 years. A decade later, the UN agency urged the Kenyan government to consider the cultural and natural heritage of the island even as it executed the LAPSSET project. Nevertheless, initial scepticism has given way to hope that the project will boost local and regional economies. “Our lives have changed. We used to hear about the proposed port. We never expected to experience it in our lifetimes,” says Jaffar Athumani, a Lamu resident. He adds, “Initially people were afraid that the government would confiscate their land without compensation and this led to our opposing the construction of the port. The situation is different now.” Athumani’s excitement is echoed by many other residents, but that is only after the government disbursed about $8.8m to compensate 154 families whose lands were affected by the construction. Kenya’s National Land Commission initiated a compensation scheme in 2014 under which dozens of landowners and fishermen received an

average of $50,000 for their land and expected loss of fishing grounds. Also, about 5,000 fishermen are to receive mechanised fishing boats and fishing gear, while fish-processing industries will be established in Lamu. Fortunes may finally be changing for Lamu since donors in May 2016 formed an African hub to mobilise $20bn for cross-border infrastructure projects. The regional hub was made public by the Sustainable Development Investment Partnership (SDIP) on the first day of the World Economic Forum (WEF). The SDIP Africa Hub will mobilise blended finance, a combination of funding from private investors and lenders, governments and philanthropic funds. SDIP members include the Bill & Melinda Gates Foundation, Citi, Denmark, the Netherlands, Norwary, Sweden, UK and US. Others are the Development Bank of Southern Africa, Deutsche Bank, East Capital, the European Bank for Reconstruction and Development and the European Investment Bank. Other contributors are HSBC, the Industrial Development Corporation of South Africa Limited, Inter-American Development Bank, International Finance Corporation, Investeringsfonden for Udviklingslande, Meridiam Infrastructure, Multilateral Investment Guarantee Agency, Sumitomo Mitsui Banking Corporation and Standard Chartered. With renewed government commitment and positive signals from the international funding community, LAPSSET is set to become a reality.

Article published courtesy of Africa Renewal.

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Warehouse Management disconnect Systems essential to delivering online promises

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he online race for capturing the biggest share of the customer’s wallet has left many a traditional retailer trailing behind, not through technology but through the offline movement of ordered goods. This is still largely managed by processes that were put in place, when physical stores were the only option available to customers. It is during this offline chain of events that buyers can either be impressed into becoming loyal customers, or put off to such an extent that they lose all faith in a supplier. Much effort can be spent on developing a slick online shop that makes browsing virtual products easy on a device that fits comfortably in the palm of our hand However, the promises made on the online platform need to be kept by those working offline with physical products stored in and distributed from huge warehouses. Irrespective of how advanced the ordering technology used by customers is, a warehouse still runs on basic principles of receiving, sorting, and storing goods until it is time to pick a certain amount of goods from a shelf, pack it as per the customer’s order, and direct it to the correct delivery vehicle.

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How does paper stock Management Sytem compare to Online stock Management System?

To keep up with the orders flowing in from multiple platforms that are never closed for business, warehouses need some form of system driving it. The technology can be as complex as an entire warehouse run entirely by automated machines, or as simple as a system telling the people in the warehouse where items must be stored.

Paper systems still favoured Many of these systems are however still paper based, which is not reflective of the advances made in technologies allowing customers to easily place orders. The main reason that many warehouses keep their operations paper based is to avoid the problems that have been reported with implementing a warehouse management system (WMS). The biggest challenge to implementing any warehouse management systems is the realtime nature of a warehouse; if a system is not running properly, it has a realtime, real life

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impact. If the system cannot tell where the goods need to move, everything stands still. We have seen WMS implementations so disconnected from the way the business is actually operated, that staff members refuse to use the system and revert to their paper based ways of getting things done. This is not only a significant waste of a substantial investment by the company, but does nothing to decrease the risk or increase the competitiveness that the WMS implementation was intended to address.

WMS fundamentals To avoid this type of disconnect, a few fundamentals should be considered before making a decision on which type of WMS would be most suitable to deliver on the promises made by a supplier. • Understand more than just your area of responsibility - warehousing is part of a larger chain of events and the more you understand the larger supply chain, the better recommendations you can make to others on how the whole chain can work together to meet changing customer demands. • Understand the difference between exciting features and real business purpose – It is very easy to be side tracked by a large list of features once you start investigating WMS, but be warned. A WMS should be built

around processes that already work optimally. Processes should not be changed or created just to accommodate a system feature that is often not as robust as marketing material may make it seem. The decision on a WMS should be made based on an understanding of the business purpose; the true value the business wants to deliver to its customers. • Understand that it is about slow and steady, not rushed and ready – the realtime nature of warehouse operations demand that a new WMS disrupts normal business as little as possible. This is only possible if all stakeholders in the WMS project team understands that rushing the initial planning process and skimping on dry-

run tests, usually guarantees a problematic or even catastrophic implementation. Make sure time and budget is made available for running tests throughout the project, based on one version of the truth, which is established and maintained on a live, cloudbased, collaborative, platform. Testing at the end of a WMS implementation project based on static documents that were created at the beginning of a project causes problems based on a disconnect between the greater business processes, what the business is doing, and what the system is supposed to do.

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Experts call for urgent action to boost aviation safety

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egional governments have been urged to expedite efforts to establish a satellite air navigation based system to boost aviation safety and efficiency on the continent. Experts say the states should increase support to the EGNOS-Africa joint project, a pan-African entity and part of the Africa-European Union (EU) long-term strategic partnership to enhance safety in air transport.

Adrian Pingstone via Wikimedia Commons According to aviation experts, the project is expected to benefit regional airports by enabling safer landings, increased efficiency, reliable services for passengers and better access to remote regions with less well-equipped airports. The experts are currently meeting in Rwanda to deliberate on how to expedite the project and make the continent’s aviation more safe and competitive. Ladislaus Matinda, the director for EGNOS in Africa, said there is a need for more political support for the EU based system to be able to extend it to the whole of Africa. “It has become a global initiative to move away from the grand based aviation to a more digitized satellite technology to enhance safety and efficiency of the airline business,” Matinda said, adding that the three-year project is funded by the European Union and financed from the 10th EDF Intra ACP envelope worth 3.7 million Euros.

Satellite-based augmentation services Building a satellite-based augmentation service in Eastern Africa will enhance navigation safety, efficiency, airspace capacity and environmental sustainability, he added. The project seeks to bring more than twelve States under the East Africa module including Rwanda, Ethiopia, Eritrea, Djibouti, Sudan, South Sudan, Somalia, Kenya, Uganda, Tanzania, Burundi as well as the Democratic Republic of Congo into the system. The objective is to create more

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awareness among member states to support and adopt internal decisions to participate in the creation of the satellite-based technology. This technology already exists in Nigeria but does not cover the whole of Africa, he said. Dr. Alexis Nzahabwanimana, Rwanda’s State Minister for Transport, said the implementation of the Africa and EU cooperation on satellite navigation has been going on since the adoption of the Second Action Plan (2011-2013) of the Joint Africa-EU Strategy by Heads of State and Governments of Africa and Europe in 2010.

Capacity and efficiency needs to be re-visited “The AU Space Policy and Strategy also recognises, in a particular way, satellite navigation systems and their applications to a wide range of

Dr. Alexis Nzahabwanimana, Rwanda’s State Minister for Transport, said the implementation of the Africa and EU cooperation on satellite navigation has been going on since the adoption of the Second Action Plan (2011-2013) of the Joint Africa-EU Strategy by Heads of State and Governments of Africa and Europe in 2010.

economic sectors, especially in the field of transport,” Nzahabwanimana said, adding that it is evident the current capacity and efficiency of the air navigation system in Africa can be considered as one of the bottlenecks in the implementation of these policies and strategic decisions. Africa’s current air navigation system’s capacity and efficiency need to be re-visited if Africa is to benefit from the agreed establishment of a single African air transport market, he advised.

Aviation growth outlook for the next five years Africa’s aviation is expected to post positive growth in the next five years with passenger numbers projected to increase by 4.8 percent. The number of freights will also grow by 3.5 percent in the next five years according to the International Air Transport Association (IATA) statistics. Equally, the number of airline passengers in Africa is expected to increase by 4.2 percent and the number of freights by 4.4 per cent. The growth in the number of freights will be far better than that of Europe, which will grow by 3 percent, while passengers will inch up 2.6 percent. The highest growth in passenger numbers will be in the Asia-Pacific region at 6.3 percent, and 3.8 percent increase in the number of freights.

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MANAGEMENT

Beyond the crumbs: why big agencies need to invest in empowerment now By: Dharmesh Nagar

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here’s a big pie at stake, and most of that pie is being gobbled up by big agencies with international holdings. The small players must resort to picking pie crumbs off the floor to survive. Government efforts to enforce transformation are frequently ignored for as long as possible, or are met with grudging token gestures that have as little impact as possible on actual operations. In the eyes of many small, black-owned agencies, the old school tie still rules in South African marketing and advertising, and anyone from outside the circle of trust is going to face an uphill battle to crack the nod for a meeting; let alone a large contract. The township born and bred youth who speaks in township slang and doesn’t yet wear the right brands is unlikely to get further than the boardroom door. The small businessman still building a resource pool will be eliminated from the bidding process because of doubts about his ability to deliver. Everyone in the industry appears to have to conform to Eurocentric trends and mannerisms to be taken seriously in client meetings. Beyond the crumbs: why big agencies need to invest in empowerment now ©ammentorp via 123RF Another perspective, presented by advertising industry veteran Chris Brewer, is that the world of advertising has always been a tough one to break into; but that once you’re in, the industry doesn’t care about your skin colour, background or even any quirky habits you may have

While the MAC B-BBEE codes have been gazetted and the PR and advertising industry does a lot of empowerment talk, small black-owned marketing and advertising agencies feel they are still not getting a fair shot at opportunities in South Africa. – it just wants you to deliver inspired, amazing advertising. He believes that of all industry sectors, the advertising industry has always been the most liberal and open to transformation, and that forcing quotas now will be met with reluctance. But Brewer does concede that only around 32% of client-facing staff in advertising agencies are black, and that only around 16% of client service directors are black. These figures do not reflect South Africa’s true demographics. Somewhere along the way, black players are leaving or being edged out of the equation. According to the new MAC Codes, by 2018, agencies must have 75% black middle management, 88% black junior management, and 80% of all spending has to go to empowerment suppliers. For genuine transformation that reflects the demographic realities of South Africa today and aligns agencies with the new MAC Codes, black executives must be empowered and given decision-making power in local agencies. Clients and large agencies need to become more open to assessing partnerships with smaller agencies based on actual ability to deliver – not perceived ability to deliver. This change is not only needed to

meet the new Code requirements: hidden within the rising tide of black-owned agencies and up and coming black creatives lies the key to talking to the South African consumer of tomorrow. The big spend is emerging out of consumers who are not old school tie-wearing members of the circle of trust. It’s coming from a new middle class; new money with roots in the same places the small black-owned agencies are rooted. Transformative change has become a must, and the onus is on large agencies to find approaches to change that go beyond window dressing. They must strive to empower up-andcoming black-owned agencies by partnering with them on large contracts. Brewer notes that there must be ways to attract more black talent into the industry, possibly by way of bursaries to advertising schools. He believes the pool of talent simply MUST be expanded before quotas are imposed, or the industry could face the risk of falling standards. Indeed, if there is a lack of suitably skilled black advertising talent, then every effort must be made to address this shortfall as soon as possible. It is in the interests of large agencies to invest in a skills pipeline and offer more upskilling opportunities to young black creatives and business leaders. And they must move away from US and European norms and focus on becoming truly African businesses that speak effectively to the South African consumer’s sense of self.

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MANAGEMENT

Cloud l d Inventory Management in Supply Chain

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he Inventory Control module is tied very closely to the Sales Order Processing, Bill of Materials, Shop Floor Control, and Purchase Order modules. The Inventory Control module is designed to record all inventory transactions from these other modules, as well as adjustments, issues, receipts, and physical inventory processing. You should understand how the other modules work to obtain a complete picture of how inventory transactions are processed. If you are using these other modules, refer to their documentation as necessary. Inventory management is a vital component of supply chain management. It supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale. Inventory management in supply chain is about knowing what products to have on hand and when to have them. It’s about understanding what you have in your warehouse and where your stock is located while maintaining optimal invento-

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ry levels that avoid unnecessary capital expenditures. It ensures you can meet demand and not run out of goods. For one to determine the right inventory management system, they need to assess their daily needs and their plans for future growth.

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MANAGEMENT INSIGHT

As your company grows, can your inventory management system scale along with it? As your company grows, can your inventory management system scale along with it? Does the system offer flexibility to facilitate change? Will it give you the visibility you need to manage inventory requirements? Conventional methods such as onpremise enterprise resource planning systems (ERP) and less sophisticated systems like QuickBooks lack the realtime visibility required to effectively manage inventory in today’s modern distributors. Many companies resort to spreadsheets to manage inventory, potentially costing thousands of dollars in emergency replenishment or lost revenue from stock-outs. Cloud-based inventory management offers a compelling alternative to manual approaches to inventory management or costly on-premise ERP. The best cloud system provides real-time visibility into inventory, with anywhere, anytime access to critical information. It can function at the core of an ERP system, integrating seamlessly with demand planning, financials and logistics. Automated capabilities eliminate manual inputs while maximizing efficiency throughout the inventory lifecycle. This inventory management approach comprises of three key elements namely scalability, flexibility and visibility.

Scalability An upcoming business may need Spreadsheets or QuickBooks to start it off but growth will quickly outpace their capabilities for inventory management. In order to ensure your inventory management solution scales with your business as you increase your market share, a cloud system will be inevitable. The right cloud inventory management system will scale as your business grows, from a small single-warehouse operation to an international distributor spanning multiple markets. The cloud system is advantageous as makes it easy to add users, functionality, warehouses and suppliers without the large-scale cost and effort required to implement a new on-premise system, or install it in new offices. A cloud system lets you select the right level of inventory management sophistication for your business or industry. It lets you use only the functionality you need with less complexity. As your business grows, cloud inventory management grows with you by offering more sophisticated features and virtually unlimited capacity for more users and information.

Flexibility With growth comes change in how your company operates. The business processes you had in place five years ago will likely differ substantially from the way you operate five years from now. These changes could involve simply a modification in reporting to improve inventory management speed and precision. Or they could be changes to how you see information, or deliver data to select managers based

on their job function or location. Change could mean adding a new shipper or bar-code system, or introducing capabilities for quantity-based pricing, lot and bin management or landed cost calculations. A cloud-based inventory management system is flexible and allows you to define your business processes into the system. It offers flexibility for you to implement customizations and business rules that support your unique requirements. The optimal cloud architecture preserves these customizations for you, so that they remain intact even as the cloud provider periodically upgrades your system to the latest release.

Visibility Visibility factor in inventory management is critical for planning replenishment to meet customer expectations and unexpected changes in demand. Taking this visibility further is managing inventory across multiple warehouse locations. Cloud takes care of all this and makes everything visible from one location or from multiple locations. In the cloud, you can have realtime visibility into your warehouses and other inventory locations, either domestically or internationally. If you have an international presence, the right multi-subsidiary management system gives you both global visibility and localized control, so that inventory can be managed centrally or managed by location. This type of visibility will help influence purchasing requirements versus transfer requirements. Unlike spreadsheets or desktop applications, the cloud doesn’t tether you to a desk. Web-based inventory

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MANAGEMENT

The cloud solution scales inventory management in supply chain to a whole new level. Without much complexity, cloud gives you the ability to easily grow with your business by allowing you to tailor the system to your business requirements management gives your personnel anywhere, anytime access to realtime data, whether on the road with a mobile device or receiving alerts on the warehouse floor. Metrics-driven dashboards let your managers continuously monitor and improve performance. The cloud solution scales inventory management in supply chain to a whole new level. Without much complexity, cloud gives you the ability to easily grow with your business by allowing you to tailor the system to your business requirements.

Inventory management system help in the following aspects: Purchasing Intelligent purchasing decisions allow you to stay competitive and profitable. Your entire supplier purchasing history is recorded along with correct cost allowing you to create the right pricing strategy for your products.

Manufacturing

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Sophisticated manufacturing module helps you to track the cost of raw materials and labour in production of finished goods. Easily create multilevel Bill of Materials/Subassemblies as well as kits and auto-assembled inventory.

business truly global.

Inventory Reports

With inventory being your main asset it is important to know what is in stock, on order or running low. Conveniently set automatic stock reorder points, perform adjustments and stay on top of all stock movements in your business.

Each inventory report can be printed on demand. How often you print these reports depends on your individual needs as well as how up to date you keep your inventory. Not all reports may be meaningful for your firm. You should, however, print each one once to review the format and contents. In addition to the information on the reports, the size and organization of your inventory will affect the way you use them.

Selling

Price List

Inventory Control

Comprehensive sales functionality will ensure you never lose another sale. Track customer orders from quote, to pick, pack and shipment. Split orders for partial shipment or create a backorder and complete shipment when stock arrives.

Accounting Leave the days of manual double entry accounting in the past. Have a seamless integrated system with accounting software market leaders like Xero and Intuit for real time inventory management. See who owes you money and how profitable you are with a click of a button.

Sales channels Managing multiple sales channels has never been easier with a software that provides integrations with the most popular e-commerce platforms and becomes the centre piece of all inventory management, making your

Creates a list of inventory items in item number sequence indicating prior and current list prices, list price codes, and profit margin information. The report can be printed for a specific product code or for all product codes.

Inventory Vendor Listing Creates a list of inventory items purchased from a specific vendor, or from all vendors, in vendor number sequence. Vendor part numbers, purchase information, and usage information is shown for each item.

Inventory Requirements Report This report is a list of all primary inventory items for vendors and includes information necessary to make purchasing decisions. The report may be created for a single vendor or for all vendors, and displays in vendor number sequence.

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MANAGEMENT INSIGHT Inventory Analysis Report This report is a listing showing the analysis of selected inventory items. Items are ranked by percentage of total sales or by usage within a selected period. You can display the information by item, which gives you item information for all warehouses, or by a single warehouse location.

Inventory Stock Status Report This is a list of inventory items and information regarding location, unit cost, quantity on hand, quantity committed, quantity available, quantity on order, and total value. All or selected items may be created in warehouse and item number sequence. The report may be run for a specific warehouse and product code, if desired.

Inventory Activity Report This report shows the activity of inventory items within a selected period. You can display the information by item, which gives you item information for all warehouses, or by a single warehouse location.

Stock Movement Report This is a list of all inventory items showing a summary of transaction activity and estimated annual usage. The report displays in item number sequence and can be selected by warehouse and product code. It is helpful in analyzing issues for an item over different time periods.

Inventory Reorder & Shortage Report This report is a list of all or selected items whose available quantity has fallen below the reorder point or safety stock level. The report should be created frequently to keep current with reorder needs and desired count. You may select items to review within a specific warehouse or product category.

Inventory Turns Report Use this report to create a listing showing the turnover of your inventory items for a specified period and year. You can also request that only items above or below your turns limit are displayed. Information can be displayed by item, which gives you item information for all warehouses, or by a single warehouse location.

Inventory Zero Balance Report Potential inventory shortages or

computer errors can be averted with Inventory Zero Balance Report. All out of stock inventory items may be shown, or only those that became zero balance since a given date. Physical verification of the out of stock items that appear on this report can be used to complement inventory cycle counting.

Inventory Transaction History Listing Historical inventory transactions may be listed for all or selected items. Inventory transactions include those from manual inventory processes such as physical counts, period-end processing, or transactions, as well as those from other modules. A date range, warehouse code, and specific transaction code may be specified.

LIFO/FIFO Tier Report The FIFO or LIFO inventory costing method parameter must be used in order to create this report. The report displays a listing of LIFO/FIFO tiers showing on-hand quantities and costs for each inventory item within a specified date range. Subtotals for items, products, and warehouses are displayed, together with an overall total.

Synonyms Listing This reports is a listing of the synonyms assigned to your inventory items. You can produce this report by

item with synonym or by synonym with item. Use this report to verify the different synonyms you have used to group your items.

Alternate/Superseded Items Listing This report is a listing showing alternate or superseded items by item number within a selected product code. Use it to determine which items can be, or have been, replaced by others.

Inventory Description Listing This report shows all items and their respective descriptions. Use it for verifying like items.

Item Detail Listing This report shows the item master information for a selected item or a range of items. Details such as warehouse location, stocking level, cost information, and so forth, is displayed along with any comments associated with the item(s).

Inventory Item Labels Use this report to create labels for any or all of your inventory items. The labels can display your company name, the item number, the item description and product type, the cycle code, and the location.

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COVER STORY

MAKING DELIVERY FOR ITS CUSTOMERS Global logistics firm DHL makes customers top priority By Anthony Kiganda

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ince its entrance into the Kenyan market in 1978, logistics firm DHL Kenya has grown from strength to strength offering unrivalled solution on international express mail. The firm is part of leading international postal and logistics company Deutsche Post DHL Group that has distinct footprint in over 220 countries around the world.

Unmatched global presence

in Africa and beyond.

DHL goes beyond the simple fact that it has an unmatched global presence. The firm extends beyond its unique ability to offer a wide range of logistics solutions, encompassing everything from international express deliveries, to warehousing, to customs brokerage, to freight forwarding.

DHL in Kenya employs over 300 top notch staff to enable it offer excellent logistics solution to clients. The firm has curved a niche by concentrating on global logistics offering it an opportunity to serve high end clientele.

DHL Africa headquarter is in South Africa and closely coordinates with the Kenyan office on a daily basis. The firm sees Kenya as a strategic market because Kenya is a gateway to several African countries. For instance, Mombasa Port offers the logistics company an opportunity to move goods and services easily across several countries

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Employers Africa 2015 award and the Top Employers Kenya 2015 certification. It also received the Top Employers Global 2015 award. Best-in-breed IT solutions

Andrew Mutuma is the country manager for DHL Kenya and says that their ability to offer solutions of international standards has continued to give them an edge in the industry.

DHL deploys best-in-breed IT solutions and world class security measures to ensure safe transportation of products. For instance, the company uses TC55 scanners that operate on an Android platform. The scanners have built-in location services and GPS navigation capability.

The company has recently been recognized as a leading employer, with DHL Worldwide Express Kenya being awarded the Top

This technology boosts the speed at which DHL can process shipments at both customer locations and its facilities and also

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COVER STORY enable its employees to access real-time shipment information which is crucial to workload management. For DHL customers the TC55 scanners offer real-time shipment visibility, enhanced electronic proof of delivery and on-time billing. “Customers are able to track their shipment in real-time. They can have visibility right from when a request is put to delivery,” offers Mutuma. “Our relentless focus on new capabilities ensures that we are well positioned to support our customers’ business.” Shipments are imaged for authenticity as part of security measures put in place by DHL. DHL aims to simplify the lives of customers and ensure that it remains the provider of choice for international express. It maintains a close relationship with contractors. In any given time, DHL Express has over 15 vehicles that service the over 1,200 customers. “We have a good relationship with our contractors. Most of them have been with us for more than ten years and we strive to enhance our relationship.”

To back these efforts, the company has opened several offices in Kenya namely: Nairobi Central District, Nakuru, Mombasa and Kisumu. Additionally, DHL has a big warehouse strategically located at Jomo Kenyatta International Airport with equipment that is highly mechanized to perform

“We have a good relationship with our contractors. Most of them have been with us for more than ten years and we strive to enhance our relationship.” high caliber logistics work. Trends of customer needs keep on evolving so is the market. DHL is aware of that and has set aside huge resources for research and innovation. The firm is also awake to cutthroat competition that has gripped the logistics field. For example, today online shopping is taking centre stage. To counter this challenge, DHL has advanced its online

platform where customers can put orders online. Underdeveloped infrastructure especially in African continues to be a major challenge that logistics firms face. But in Kenya, DHL is confident that the ongoing massive infrastructure development will work to their advantage. Government policies have also been cited as a key factor in logistics. Yet DHL has continued to not only positively impact the economy through paying tax, but also in the Social responsibility front. The company is engaged in supporting children homes in the country as a way of giving back to the society. “We don’t want to be a company that only focuses on financial gain. DHL aims to positively impact the society and CSR is part of it,” shares Mr Mutuma Asked about the future of DHL Kenya Mr Mutuma responds, “having been in the country for 38 years we are well positioned to further develop our presence. We will continue to work closely with our customers to get more and more acquainted with their needs. We will also continue to deploy modern technology to adapt to the changing market.”

In a bid to get a seamless execution of services, DHL Kenya has used a great deal of resources to train and mentor its staff. The firm also has a talent development programme where they spot and nurture talent all geared towards enhancing their product offering. DHL is household name Riding on a brand that is already a household name, Mr Mutuma is confident that DHL can only grow exponentially. The firm also boasts of state-of-the art logistics equipment and excellent personnel. “We have unrivalled staff that has unmatched experience. We have also deliberately invested in world-class equipment to ensure that we are prepared at all times for future eventualities. We understand that the Standard Gauge Railway project is nearing completion and we intend to leverage on that development to boost our service delivery.”

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BIDDING

International Bidding Process is the most appropriate method of procurement for organisations with international financing needs. It provides an executing agency with a wide choice in selecting the best bid from competing suppliers and contractors globally. It gives prospective bidders from eligible source countries equal opportunity to bid on goods and works. By Michael Masinde

INTERNATIONAL BIDDING continues to be an enigma for most entrepreneurs in Kenya. The factors surrounding this phenomena remain unfamiliar to many especially in understanding. Information on international bidding remains scarce as most businesses respond to the local “invitation to Bid” advertisements by various organizations and government entities.

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nderstanding such crucial information could be a company’s next revenue stream and taking full advantage of it, is but a company’s next best option. With the onset of the internet, companies have chosen to globalize and operate without borders. Taking their business and setting up shop, not just in their countries, but abroad. For these companies learning how to bid, internationally and effectively, is core to their business success and strategy How an international bid Is conducted is not very different with how a local bid is conducted. The process is normally kicked of by an advertisement called an (ITB Invitation to Bid) which outlines numerous instructions, specifications, vendor criterion for eligibility, terms and conditions to be followed by the vendor during the bidding. Potential bidders and vendors would then aquire the bid documents (these could be bought or acquired for free).After careful scrutiny of the bid documents,the vendor would decide

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whether to contest in the bid or not. If they do decide to participate, they would prepare their bid as required in the bid document. The next step would be to drop it in the tender box. Which would be closed after the request for bid deadline has elapsed. It would be opened in a carefully set out manner(mostly industry practice is used to govern the opening of the tender box) and in a transparent methodology after a particular period of time which is usually prescribed by law or governing policy. The bids would then undergo rigorous preliminary, technical and financial evaluation before the best bid is selected and notified to the succesful vendor that they have won the bid. After a set period of time,this is also prescribed in law, the procuring entity would notify the winner of the bid in writing and proceed to contract signing.

Similar to local bidding, international bids play the same role in the economies of various countries, they also facilitate acquisition of the best price by the procuring company and organization and allows potential bidders to access timely and adequate information of a buying company’s request for required goods, works and/or services. How does international bidding however differ from local bidding? What factors are at play? Putting together the best bid is much more than providing your service at the lowest price. In an interview Geoffery* a procurement professional and entrepreneur, majority of the factors that are considered in local bidding are similar as those that would go into internationally bidding, but would vary in size, scale and depth. International bidding, is bidding for works beyond your host countries borders. Even before the bidding starts it worthwhile to note that it’s takes much effort for companies, business and vendors to access information on international Invitation to bids. While local bidders can access this information via the

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BIDDING

local media and newspapers or even ‘walk in’ the buyer premises to enquire. Geoffry advices that this is different for intermational bids whereby vendors would acquire such information from their previous international business with the procuring entity, through international conferences and trade fairs which provide networking opportunities, accessing the buyers organizational online activity,subscribe to their ITB (Invitation to Bid) among many other various ways. Vendors have to literally scout the net for such opportunities and have a very ‘rich’network of persons International Bids have to not only comply with local standards and regulations but also meet international ones. Geoffrey reckons that for bidders and buyers involved in international bidding, a major factor to consider with great detail is the Legislation, Laws, guidelines, terms and conditions that govern the Bid. For a potential Bidder, there is a high likely hood that they will be required to meet the criteria and standards as set out by the international buyer and also meet the industry required legislations of the buyers country. Geoffrey gives a example of bidding for international works that involve safety and health regulations. More developed countries would have “stricter” regulations governing such a Bid as their norm. Underdeveloped countries might not even be aware of any safety and health regulations. For a buyer, international bidders have to

prove their ability to meet this international criterion. Bidder therefore have to be keen on such criteria as their journey to achieve the same may compromise their financial standing or quoted price hence making them not to be the best competitors if bidding against the buyers country local firms Another factor to consider, that colors the playing field in international Bidding is the currency used. Due to economic blocs, recession and the performance of different international markets and their stock exchange some currencies are much stronger than others. For example the dollar and the euro in most cases is stronger than the Kenyan Shilling. In International bidding both the vendor and the buyer would want to transact In a currency that would bring favor to them. I.e. they will not lose any monetary value due to the foreign exchange rate. As opposed to the local bidding where the currency is, in most cases, assumed to be the local currency of the host country, both international bidders and buyers have to assess their capability to avail and transact in a currency as stated in the bid document. One of the Key steps in local bidding is the analysis of whether the bidder has the technical capacity to undertake the bid. This is similar in international bidding; however a slight difference comes in. While in Local bids, emphasis is on the bidder to have the technical capacity. Procuring entities in international Bids not only assess the bidder’s technical capacity but also their own.

Why would they do this? Well this recent development according to Florence emanates from the understanding and school of thought that views procurement and supply chain as a tool and catalyst for economic and social development. Procuring entities especially in less developed and developing countries use procurement to champion this agenda and hence would require that any man power be provided by them first before an international bidder brings on board their resources. Additional requirements may, for example requite the potential bidder to be willing to procure raw materials, man power and any other resources required in their service delivery from the host country. This thee fore requires potential international bidders to have an over arching understanding not only about bidding and procurement but also on how the host country and the buyer view procurement and business and what role business plays in their society. Vendors bids should therefore position them within this paradigm. While bidding remains one of the core duties of vendors in securing business and relationship, it is evident that vendors keen on securing international business through international bidding should think of the international dynamics that affect the bidding process and their bid,lest they fail even to be successful past the prequalification stage.

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BRIEFS

Tanzania moves closer to LNG plant construction Tanzania’s natural gas reserves are estimated at more than 55 trillion cubic feet (tcf) and the central bank believes 2 percentage points would be added to annual economic growth of 7 percent simply by starting work on the huge plant that would draw in billions of dollars of investment. Tanzania has launched preparations for the construction of a multi-trillion Liquefied Natural Gas (LNG) plant in the country’s Southern region of Lindi. President Dr. John Magufuli issued a directive to the ministry of energy and minerals to facilitate the process by acquiring the necessary permits to allow construction works on the $30 billion project to commence. “There have been a lot of delays so far, I want to see the project begin as soon as possible. Just take care of the necessary paper works so that our investors can begin the work with immediate effect,” he said. The president made the directive after receiving a progress report on the grand project. Norwegian company, Statoil- a leading energy company in oil and gas production is undertaking the implementation of the project. Statoil Country Representative, Mr Oystein Michelsen said the envisaged gas plant, on completion will have a production lifespan of up to 40 years.The President

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assured the Statoil country representative that the Tanzanian government was committed to making sure that the project was successful. The project is considered viable to bring multiple opportunities including employment as well as enabling the government to collect revenue that will help in strengthening the provision of social services including education, health, water and infrastructure, among others. Tanzania has more than 55 trillion cubic feet of natural gas reserves, and the site identified by the government is at Likong’o Village in Lindi region. Moreover, the country recently discovered additional 2.17 trillion cubic feet (tcf) of natural gas deposits raising the country’s total estimated natural gas reserves to more than 57 tcf. Most of the gas discoveries in Tanzania were made in deep-sea offshore blocks south of the country near the site of a planned liquefied natural gas (LNG) plant. Minister for Energy and Minerals, Prof. Sospeter Muhongo has told Tanzania residents to brace themselves for an economic revolution in a few years to come as the government gears up for the grand plan. “I want to assure everyone that our economy will grow at a fast pace. We are going to invest at least $30 billion for the construction of the gas processing plant,” he said. Apart from Statoil, other companies that will invest in this project include Shell, Exxon, Mobil, Pavillion and Ophir, according to a statement from the Presidential Communications Unit.

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TECHNOLOGY

Where is my Transport launches transit API following £1.165 seed funding

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new transport data platform from Cape Town-born tech company WhereIsMyTransport launches today following £1.165 million seed funding in the first closing of a £2 million seed round. The funding has come from investors including Goodwell Investments, Omidyar Network and Horizon Ventures. The platform, a transit API, attempts to address the challenges of unreliable, inefficient and expensive transport across the country. Launching in cities including Johannesburg, Tshwane, Cape Town, Durban, Port Elizabeth, George, and East London, the company predicts that by reducing uncertainty related to transport arrival times alone, the new platform could save the South African economy up to R1.4 trillion.

Saving time and money The company believes that the new API, which collates scheduled and real-time transit data from public and private transport operators in the cities, has the power to improve the journeys of millions of commuters, saving up to eight million days worth of time that is usually wasted waiting for public transport. There are projects using the platform already underway in Johannesburg, Cape Town and Port Elizabeth. Research indicates 68% of commuters travel to work via private taxis, which commuters often describe as cramped, slow and dangerous. By revealing the number of public transport options available to passengers, WhereIsMyTransport also suggests it could help the South African Government address the R59.4 billion currently lost on traffic congestion each year - according to the company’s calculations. The platform works by integrating transit data from formal and informal transport providers - such as city buses, metro systems or privately-owned buses and minibus taxis - through one single open platform. This will allow city officials and developers to create journey-planners, insight tools, website widgets and messaging systems to reduce the uncertainty associated with

transportation in South Africa (such as unreliable and missed services, identifying and notifying travellers of significant delays), better understand city infrastructure needs (e.g. if a city district is particularly poorly serviced by existing transit options) and reduce journey times (by providing real-time travel information and recommending more direct and faster routes). The company hopes that this combination of analytics, communications and journey planning tools will reveal insights, opportunities and advantages to address the disparity between the transport options available for those on the highest and lowest incomes across the country.

African expansion At launch, alongside seven South African cities, the platform also contains the data for the new Dar es Salaam BRT system and the Cairo Metro. Informal transit modes are being added to the platform, starting with the matatu system in Nairobi, Kenya, with this capability to be extended to other cities and agencies, in Africa and globally, over the coming months. Devin de Vries, co-founder of WhereIsMyTransport, commented: “The platform that we are launching is the first open platform for integrated transit data in the emerging world. It

Devin de Vries, co-founder of WhereIsMyTransport, commented: “The platform that we are launching is the first open platform for integrated transit data in the emerging world. It creates a foundation for cities to bring much needed access and information about mobility to millions of people which could, in turn, result in huge savings for governments and transport providers.” creates a foundation for cities to bring much needed access and information about mobility to millions of people which could, in turn, result in huge savings for governments and transport providers.” Developers looking to utilise the transit API platform can sign-up and access full documentation and tutorials on the WhereIsMyTransport Developer Portal. The portal also contains the latest information on which services and cities are currently in the platform.

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MANAGEMENT

More SA visitors are choosing to ride with Uber - here’s why

Uber is starting to play a significant role in global tourism with their technology in place in more than 475 cities across 75 countries. In just two and a half years, Uber established a strong presence in South Africa’s five major cities, creating over 4,000 economic opportunities and moving more than 5000,000 people to their destinations in an affordable and convenient way.

More SA visitors are choosing to ride with Uber - here’s why According to Yolisa Mashilwane, Head of Public Policy for Uber South Africa, who spoke at the Tourism Policy Symposium in Johannesburg, a significant portion of these Uber riders have been national and international visitors to these five cities, and Uber is enjoying steadily growing popularity as a preferred way for tourists to move around our cities. “While we do not measure the percentage of rides requested by tourists across all regions in the country,” Mashilwane explains, “our recent research into tourist usage of our services found that, in 2015, international riders made up almost 29% of total bookings in South Africa.”

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Familiarity Mashilwane points out that the popularity of Uber is a natural consequence of the familiarity that many visitors have with the Uber app. “For global tourists to South Africa - particularly those on a first visit - the experience of arriving in the country can be somewhat intimidating,” she explains, “so the familiarity of Uber, combined with the convenience of being able to input your destination without any language barrier challenges, makes for a very appealing proposition.”

Standardised payment option She also points to the standardised payment option as a further compelling reason why Uber is fast becoming the first choice option for many visitors to the country. “One of the biggest challenges facing a tourist in a strange country is getting to grips with the currency difference,” she explains, “and here, too, Uber provides a sense of security thanks to its standard electronic payment option that affords international users the peace of mind that they are paying a fair and fully transparent price for a comfortable and hasslefree ride.”

Safety Safety is another key factor driving the increase in numbers of tourists requesting Uber to get them to their destinations. While driver error and road accidents can never be entirely eradicated, the technol-

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EVENTS ogy on which the Uber offering is built makes it one of the more secure solutions for riders and drivers alike. “Uber gets people into quality approved vehicles, driven by screened and qualified drivers, quickly and efficiently,” Mashilwane explains, “it also removes the need to carry cash (unless preferred) and there is no standing in the street to hail a cab or struggling to find the nearest bus stop late at night.” She also points to the trackable, GPS-based technology of Uber as a further safety measure that gives comfort to tourists who may otherwise have been nervous about getting lost in a strange city. “Riders can not only share their full details and estimated arrival times with others,” she points out, “but they also receive detailed information about their driver, vehicle, and route before they ever have to step inside the vehicle.”

“While we do not measure the percentage of rides requested by tourists across all regions in the country,” Mashilwane explains, “our recent research into tourist usage of our services found that, in 2015, international riders made up almost 29% of total bookings in South Africa.” Strong relationships and partnerships with tourism boards Mashilwane explains that, while Uber isn’t specifically building a tourism component into its operating model, it is being proactive in terms of growing its involvement in this immensely valuable market, particularly through partnerships with established tourist boards and organisations. “Uber has strong relationships and partnerships with tourism boards across the country.” she says, “so we are always looking for new ways to market to local and international travellers to deliver safe, affordable and reliable rides that enhance their experience of our beautiful country.”

16th Intermodal Africa 2016

Sarova Whitesands Beach Resort & Spa, Mombasa, Kenya Thursday 17 to Friday 18 November 2016

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ntermodal Africa continues to be the biggest annual Container Ports and Terminal Operations Exhibition and Conference in Africa - now in its 16th successful year! The 16th Intermodal Africa 2016 Exhibition and Conference will take place at Sarova Whitesands Beach Resort & Spa, Mombasa, Kenya from Wednesday 16 to Friday 18 November. The event is proud to be hosted by Kenya Ports Authority. Covering Eastern and Southern Africa, a two days Conference Programme will feature 30 world-class conference speakers addressing topical issues and challenges on global transportation and logistics attended by a gathering of 500 senior executive harbour masters, harbour engineers, port engineers, maintenance supervisors and procurement decision makers together with the region’s leading shippers, cargo owners, importers / exporters, shipping lines, freight forwarders,

logistics companies, ports, terminal operating companies, railway operators, port equipment and services suppliers from countries throughout Eastern and Southern Africa. There will be the commercial opportunity for 80 exhibitors and sponsors to network directly with the delegates at this major annual international maritime transport Exhibition and Conference event for Eastern and Southern Africa. We look forward to your participation at the biggest annual Container Ports and Terminal Operations Exhibition and Conference for Eastern and Southern Africa taking place at Sarova Whitesands Beach Resort & Spa, Mombasa, Kenya from Wednesday 16 to Friday 18 November - now in its 16th successful year! For further details please contact +60 87 426 022 or visit www.transportevents.com

EABL wins global supply chain award in London

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ast African Breweries Limited (EABL) has won three awards in the international energy efficiency, water conservation and operational excellence in supply chain award in the just concluded Diageo Excellence in Supply Chain Competition in London for Brewery of the Year, Marketer of the Year and Operational Excellence. The awards also recognized Kenya Breweries Limited’s (KBL) efforts in energy efficiency and water conservation as well as in; the Kenyan franchise, Kenya Breweries Limited, set ambitious production targets, including

the reduction of water use by nearly 50 per cent by 2020 and reduction of greenhouse carbon emissions. KBL supply chain director Patrick Kamugi said the company is also moving towards 100 per cent replenishment of water used in final product in water stressed areas and sustainable local raw material sourcing. The Group managing director Andrew Cowan congratulated the team for hard work saying it was a true demonstration of leadership in the supply chain department.

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LOGISTICS & TRANSPORT

Mercedes-Benz reveals drone-equipped delivery van concept Mercedes-Benz Vans has unveiled its strategic future initiative adVANce for the transport industry, which the company says caters to customers’ evolving requirements. The transformation of the industry is the result of various economic and social trends, among them urbanisation, the growth in e-commerce, the intelligent networking of a wide range of technologies in the Internet of Things (IoT), and the proliferation of platform-based business models.

Mercedes-Benz reveals droneequipped delivery van concept The company is making use of present-day and future technological opportunities presented

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by digitalisation, automation and robotics. The business division is developing from a vehicle manufacturer into a provider of system solutions and will offer integrated and intelligent systems in addition to its basic vehicles in the future.

All electric, connected van

Customer requirements are changing at a rapid pace. Examples include the burgeoning business in food and everyday necessities ordered online. Here, demand for same-day delivery or delivery within an hour is increasing. At the same time, more and more people are living in cities - by 2030 urban areas will be home to more than two thirds of the world’s population. The rising transportation requirements will need to be met faster and more efficiently in future and in an environmentally friendly way. Mercedes-Benz Vans has thus revealed the ‘Vision Van’ van study, presented in Stuttgart and evolved as part of the adVANce initiative. This all-electric vehicle combines various innovations for last-mile delivery in urban and suburban environments. It is the first van worldwide to fully digitally connect all people and processes involved, from the distribution centre to

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LOGISTICS & TRANSPORT the consignee. It is also the first van to feature a fully automated cargo space and integrated delivery drones. For example, if a parcel service provider stops his vehicle in a residential area, it will be possible to deliver multiple packages to nearby consignees autonomously by air - even if they are not at home - in addition to manual delivery. This makes the deliverer’s job easier, reduces the delivery time and offers end customers new opportunities such as same-day delivery at an agreed time. Mercedes-Benz Vans envisages deployment of the Vision Van boosting efficiency by up to 50% on the last mile. The vehicle is equipped with a 75 kW electric drive and - depending on the intended application - has a range of 80 km to approximately 270 km. Deliveries are emission-free and the van moves almost silently, meaning that it can be operated in cities even during times when there are traffic restrictions or for late-night deliveries in residential areas.

Mercedes-Benz reveals drone-equipped delivery van concept Three key fields of innovation As part of the strategic future initiative, Mercedes-Benz Vans will be focusing on three fields of innovation: the first involves incorporating the van into the Internet of Things. For this purpose, smart technologies are integrated into the van, increasing its efficiency and making it a central component of the digital value chain. The focus here is on relevant applications and connectivity solutions. One example is developing a telematics unit for vans which collects and processes data concerning the

As part of the strategic future initiative, Mercedes-Benz Vans will be focusing on three fields of innovation: the first involves incorporating the van into the Internet of Things. status of the delivery tour, the present location and the load, and sends this information to the distribution manager. In this way it is possible to monitor and manage last-minute changes within the fleet efficiently from a central point. Another application concentrates on the efficient part and tool management for service vehicles, for example tradespersons’ mobile workshops. In future new holistic system solutions will enable parts to be ordered in a fully automated way by means of an intelligent inventory management within the vehicle, as well as for the relevant parts to be placed overnight directly into the van. Intermediate steps such as inventory evaluation, ordering parts manually and the tradesperson having to equip the vehicle are no longer necessary. The second focal point is on innovative hardware-based solutions for the transportation industry. Here Mercedes-Benz Vans is working on automated cargo space systems for

delivery vehicles for parcel services, for example. Until now, deliverers need to rearrange their packages (on average around 180 per load) ten times while making deliveries within a residential area and schedule approximately three to four minutes per stop. New, interconnected cargo space systems make loading and unloading much faster, thereby increasing process efficiency. One-shot loading (loading the vehicle with all pre-picked parcels in one go) cuts loading times considerably and reduces the amount of vehicle downtime at distribution centres. When the deliverer is unloading, the system will show him the exact load configuration and make the right package available at the right time for delivery depending on the delivery destination. The team at Mercedes-Benz Vans also has the integration of autonomous delivery systems such as drones or selfdriving robots in mind. The third field of interest is new mobility concepts for the on-demand transportation of goods and people. In future these intelligent mobility concepts could supplement public transit by making fast, efficient and individual transport of passengers possible during peak and off-peak hours via ridesharing concepts. In the future, the intelligent networking of technologies can also make the transportation of goods more efficient and considerably improve transport on the last mile. The company is also working on leasing, rental and sharing models, which are tailored to the needs of van customers.

Mercedes-Benz reveals drone-equipped delivery van concept New organisational unit within start-up sector In order to fully exploit the numerous opportunities of evolving the van and vehicle-related business systems, Mercedes-Benz Vans has created a new organisational unit called Future Transportation Systems. The project teams are based within the start-up scene in Stuttgart, Berlin and Silicon Valley. They work closely with customers and partners from business, technology, logistics, research and the public sector. The objective of working with young companies, the company says, is to combine the knowledge of the vehicle sector accumulated over decades with new perspectives, agile working methods and innovative ideas.

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LOGISTICS & TRANSPORT

Kenyan President, Uhuru, Commissions Container Terminal II

Kenya’s Port of Mombasa completed phase 1 of its Mombasa Port Development Project, increasing capacity at the large and oftencongested East African port by 550,000 twenty-foot-equivalent units.

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he $217 million Japan-funded project to build the Kipevu container terminal took four years to complete. It includes three new berths adding an additional 900 meters (2,952 feet) in quay length to the existing 840 meters, with an alongside depth of 15 meters and a 35-hectare (86 acres) container yard. Two ship-to-shore cranes and four rubber tire gantry cranes are operating at the site. MPDP includes two additional phases that are planned for completion in 2017 and 2020. “Once the entire project is completed it will make the Port of Mombasa the largest port in the region with about 2.5 million TEUs in capacity annually,” said a Kenya Ports Authority statement. The construction of phase II of the second container terminal is expected to kick off soon following Parliament’s approval of a Sh27.3 billion loan set to fund for the mega project.The 40 year loan from Japanese government will be disbursed through the Japan International Cooperation Agency (JICA). President Uhuru Kenyatta announced that the government has signed an agreement with the Japanese government for construction of

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the second phase at a cost of $300 Million with an aim of improving efficiency at the Port of Mombasa , by investing in infrastructure and modernization of the port facilities to spur growth both in the country and entire East African region. In addition to the development of container terminals, MPDP includes the building of access roads, weighbridges and capacity building for customs clearance processes. A new port access road will have capacity of 750,000 TEUs per year and a railway station with four rail mounted gantry cranes is being constructed. Mombasa is the second-largest port in Africa by cargo tonnage and container throughput and the port is preparing for an upsurge in competition from the giant Chinese-invested Bagamoyo Port in Tanzania. Container throughput increased 6.3 percent to 1.1 million TEUs in 2015, while total cargo throughput in tonnage terms expanded 7.5 percent to 26,732 million tons. According to KPA, the new facility is expected to support growth to 1.32 million TEUs in 2016. Kenya recently approved the development of a special economic zone in the DongoKundu region of Mombasa, which is expected to help boost volumes and efficiency at the port. Scheduled for completion by 2018, the SEZ will eventually cover up to 500 acres and include commercial wholesale and retail operations, breakbulk facilities, and logistics services such as goods repackaging, warehousing and storage. It will offer streamlined customs procedures to the countries of the Common Market for Eastern and Southern Africa. COMESA currently has 19 member countries with a combined population of more than 470 million. Mombasa is one of three areas in Africa that currently receives Japanese funding and other assistance for development. A further $500 million has been allocated by Japan for investment in the port, with close to half of that already made available as a loan for development of the MPDP second phase. “The emphasis is put on infrastructure develop-

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LOGISTICS & TRANSPORT ment, which promotes logistics with neighboring landlocked nations, considering the importance of Kenya as a hub for logistics in Africa. Japan will assist not only hard infrastructure development, but also technical aspects such as support for smooth customs clearance and the entire maintenance and management of developed infrastructure,” said the Japan International Cooperation Agency, the agency that coordinates overseas development assistance for the government of Japan. To further ease congestion, the President said the construction of an alternative route from Mombasa Port to Burundi through Voi, TaitaTaveta, Holili border, Singida-Kobero border and finally to Bujumbura, is ongoing. The government also plans to relocate Kipevu Oil Terminal in Mombasa County will be to a more suitable location to allow for expansion which will involve the construction of an off-shore jetty near DongoKundu, ensuring the new terminal will have the capacity to berth four ships of up to 100,000 tons at once compared to the current maximum of one vessel of no more than 80,000 tons, at a time. He said the project, together with the expansion of the pipeline capacity between Mombasa and Eldoret, will enhance efficiency in the oil sector and reduce costs both locally and in the region, with plans to develop small ports along the coastline into commercially viable entities including Shimoni, Malindi and Kiunga.

How to Clear a Container in Mombasa Kenya. Procedures & Costs Explained

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enya Ports Authority (KPA) and Kenya Revenue Authority (KRA) procedures of clearing a container in Mombasa Explained. 4 days of hectic clearing procedures. The daunting costly task demystified The task of clearing a container in Mombasa, Kenya takes about 4 days. The procedures involved can be confusing and the paperwork required is technical. It is not based on common street language. Clearing and forwarding agents in Kenya tend not to reveal this information to the public, primarily because it takes the business away from them into your own hands. In this article, we will learn more about • Clearing and forwarding best practices. • Kenya SimbaTradex System functions • Kenya Ports Authority KWATOS system • Paperwork Involved • Clearing a container Duty free • Costs and fees involved to clear a container

Kenya Customs Declaration: SimbaTradex& KWATOS Before your container gets to Mombasa, your shipping line lodges your container information and manifest into KWATOS. This means if you have access to these systems, you can be able to see your container Estimated time of arrival (ETA) so you can be there ahead of time. The keyword here is…. the manifest lodged to these systems explaining what is contained in your container. A manifest number given to you by your cargo forwarder or shipping line is what you need when you go to KWATOS systems. It tells you all what you need to know before you head down to

Mombasa including container freight station, type of goods contained etc.

Obtaining Container Clearance Forms Declaring it is Your Container The manifest uploaded by your shipping line is crosschecked with your duly endorsed Bill of Lading (BOL) by the consignee. Once verified, your shipping line issued a release order, meaning, you are the right person and this is the right container and it contains the right items as described in the manifest and BOL The release order is NOT sent to you, you will get the release order once you pay all charges, fees and taxes due. It is your container at this point but it is in the hands of KPA & KRA until all dues are paid.

Clearing a Container Duty Free in Kenya: Not all that Free Returning Kenyan Residents who have been abroad for over 2 years, missionary groups, foreign workers with valid work permit, Non-Governmental Organizations (NGO), non-profit & missionary related products can be shipped into Kenya and cleared duty free. Certain categories of products like construction and agricultural equipments, medical equipment and those

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MANAGEMENT LOGISTICS & TRANSPORT

products in high demand in Kenya can be imported duty free but NOT TAX FREE. Value Added Tax (VAT) must be paid.

Duty free does not mean TAX FREE Container Verification Process in Mombasa – Kenya A set of documents is prepared and sent to the so called “Long Room” in the port. In the long-room, the verification process begins. The contents of the container must be verified and must match the manifest lodged by your shipping line to Kwatos systems. Any discrepancies will result to delay, penalties and in some cases, legal suit. If your cargo seems obvious in the long room, your container will be sent through scanning and to the final point without a problem. This happens if only a few obvious items are in the container…. say a motor grader, 4 units of generators, etc. In a situation where your container is carrying multiple items of all assortments, your container is likely to be sent for manual verification. Here, your container is opened, stripped and each item scrutinized. Small items are STOLEN here a lot. A person well known to me lost 24 laptop computers and 10 new iPads during verification process and had multiple damaged items. This is a loss of nearly KES 450,000. This will not hap-

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pen when using a clearing agent. Corruption in Kenya and Africa in general makes this process a nightmare.

Pickup Order & Release Order Issued Now that you have gone through the toughest part of the clearing process, you are almost done. Remember we mentioned earlier than the release order issued by shipping line is not given to you until all dues have been paid. Now you have paid. Your container content have been verified. You have paid duty and taxes and you have been issued with receipts. Customs will issue you with Customs Release Order (CRO). This information is sent to KWATOS and a pickup order is issued.

You’re ready to go pick-up your container and head on to the KPA gate. Before you head on to the gate, you should have a set of 3 documents and all receipts of payments made. 1. The delivery order 2. Passed customs entry 3. Customs Release Order. 4. BOL (Bill of Lading) 5. Customs duty and Tax receipts These documents are presented to Customs Documentation Office (CDO) at Port. Once verified, the CDO office will issue you with a gate pass. With this gate pass, you can head on to load your container into a truck or train and ship it where-ever you want. You must keep all documents with you and present them at any point you’re asked to.

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, Nairobi - Kenya

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