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PROCUREMENT & LOGISTICS

Africa’s Leading Supply Chain Journal

April, 2017 Issue No.: 09/2017

KSHS. 400.00 TSHS. 8,000.00 USHS. 12,000.00 RFR. 4,000.00 USD. 5.00

Management

Extending port services closer to hinterland customers, KPA upgrades Nairobi ICD

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Mitchell Cotts Freight (K) Limited Providing Modern Warehousing facilities in the region

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SGR Policy to drive road transporters out of business

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Siginon Aviation Stronger Foot Prints in Cargo Handling


Editor’s note PUBLISHER Proc & Logistix Consult Limited

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Procurement & Logistics Magazine @ LogisticsProc CHIEF EDITOR Okumu S. Biko SUB EDITOR Malachi Motano PRODUCTION GRAPHIC DESIGN Nicholas Amanya WRITER/CONTENT DEVELOPER Sandra Dinga, Maureen W. Njeri WRITER Antony Kanja DISTRIBUTION Valentine R. Magai EDITORIAL OFFICES Proc & Logistix Consult Ltd P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 0204404488/0204402479 info@procurementandlogisticsonline.com www.procurementandlogisticsonline.com ADVERTISING For information on advertising in future Issues of the magazine, please contact: OKUMU STEVE BIKO +254 721 986284 SANDRA DINGA E-MAIL: adverts@procurementandlogisticsonline.com SUBSCRIBER CUSTOMER SERVICE

Procurement & Logistics Management Magazine is a monthly publication 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.

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elcome to another edition Procurement and Logistics Magazine, where we bring to you the most credible news, views and stories of and from Africa about the continent’s vibrant and evolving supply chain industries. The magazine endeavors to bring to its readers in depth research analysis and extensive industry viewpoints to keep you up to speed with one of world’s most promising continent of opportunities for trade and commerce. In our April edition,our main story is about how Kenya Ports Authority is extending port services closer to hinterland customers by improving ICD’s , also how Siginon Aviation is connecting Africa to the rest of the with innovative cargo handling solutions and fleet management. We aim at putting together information that will let you know the untapped potential of Africa’s economy and the importance of trade that the rest of the world should have with this continent of many nations. Procurement and Logistics Magazine brings to you more data on how increased business activities along the East Africa coast are challenging maritime port capacity not forgetting challenges that face public procurement processes. We believe that African economies have tremendous potential to build on their demographic dynamism, rapid urbanization and naturalresources assets. The challenge for is to ensure that greater insertion into global value chains is achieved and has a positive impact on people’s lives amongst these economies. In this edition we have also looked at the supply chain distribution in Kenya, Tech business trends, Standard Gauge Railway and how World Trade Organization (WTO) is facilitating trade agreements to ease trade across Africa. Procurement and Logistics Magazine believes that it is the transport and logistics sector that plays the all important role in facilitating trade and commerce. We will make every effort to bring to our readers; global best practices in transport and logistics and empower you with knowledge that is relevant, fresh and profitable. More than 2000 copies are distributed at the high end supermarkets, exclusive media channel partnership transport and logistics events within Africa and outside. Digital copies of the magazine (http://procurementandlogisticsonline.com) reach more than 500,000 supply chain and business professional worldwide.

Keep reading Okumu S BIKO Chief Editor


CONTENTS COVER STORY 28 Extending port services closer to hinterland customers, KPA upgrades Nairobi ICD

BRIEFS 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

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Car & General sign joint venture agreement with US engine maker Cummins Inc. Bolloré Africa fined USD 2 million for cargo delays CMC Motors boosts Butali Sugar’s haulage capacity with 40 New Holland Tractors Mount Kenya University rolls out maritime and transport logistics courses Oil leak in Kibwezi finally earns residents Shs13.8 million compensation Enhancing cargo security in East Africa, Damco partners with Safetrac Magufuli unveils mega plan to upgrade transport infrastructure in Tanzania Tanzania’s central corridor road project receives $48.7m funding World Bank President tests Rwanda’s drone technology International Ships Decry Delayed Ratification of Maritime Laws in Tanzania Qatar Airways Cargo takes delivery of its twelfth Boeing 777 freighter Nigeria’s Aero Contractors cuts workforce

BUSINESS 20. Demand Segregation in Purchasing Decisions 22. Expense reconciliation: tips to improve your process 23. Data integration enhancing efficiency in Supply Chain 24. DHL Express rolls out entrepreneurial programme for SMEs in subSaharan Africa 25. Addressing last mile delivery challenges, South African e-courier startup raises $1.2 million 33. Kenya to benefit from newly agreed TFTA

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PORTS 16. Increasing business activities along Africa’s east coast challenge maritime services Investors

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FLEET MANAGEMENT 39. Riding on technology, a company delivers efficient accurate and robust tracking solutions 41. Kenyan firm finds fleet management solution to manage expenditure 42. Launch of Regional electronic cargo tracking system a plus for East African Truckers 43. Fleet Management Solutions Market to reach $9 billion with 22.88% CAGR Forecast to 2020 44. Goodyear introduces new smart tyre for future urban fleets

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WAREHOUSING

26. Mitchell Cotts Freight Limited is one of the leading logistics companies within the region

PROCUREMENT

32. Self-motivation is key in driving change in Procurement and Supply chain 33. Challenges affecting public procurement in Kenya

AVIATION ROUNDUP

REPORTS

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34. The world’s most valuable logistics brands for 2017 35. South Africa’s reefer market booming as fresh fruit demand soars

51. Nigeria’s aviation industry is in turmoil, but how deep is it?

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Car & General sign joint venture agreement with US engine maker Cummins Inc.

Car & General has signed a joint venture deal with the world’s largest engine maker and distributor –Cummins Inc in a bid to strengthen their brand presence and business relationships in East Africa.

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he deal will see the two firms merge their name to Cummins C&G Limited in April 2017. The new partnership is part of efforts the two firms are undertaking to grow their market share in the region through additional joint investments. It includes a full takeover of Cummins’ Distributorship from C&G −Cummins’ current distributor in East Africa covering 11 countries namely Kenya, Tanzania, Uganda, Ethiopia, Djibouti, Seychelles, South Sudan, Rwanda, Somalia, Eritrea and Burundi. Gino Butera, Managing Director and Vice President of Cummins Africa and Middle East said East Africa is one of the fastest growing regions in the world with an expected GDP growth rate of 6% over the next five years. The new deal therefore presents a strategic growth opportunity for Cummins in Africa.

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“We are excited to partner with C&G. Over the past 10 years, they have grown the Cummins distribution business in East Africa and we see untapped growth opportunities which if utilized, will expand Cummins’ customer support in the region”, said Butera. Car & General was first appointed as an approved Cummins distributor of Power Generation products in 2006. The company leveraged its existing network and established a strong presence in Kenya, Tanzania and Uganda, gaining over 15% market share. As a result, Car & General was awarded distribution rights for Cummins’ full range of products and services. Car & General has continued to develop strong local market knowledge, experience and capabilities, and the partnership brings the business to a whole new level with Cummins’ unmatched brand strength, technical expertise and proven policies and processes. “We view this partnership as a unique opportunity to solidify market leadership in our existing territories and capture market share where we are still building our presence. This new partnership is truly a win-win proposition – for Cummins, for us and for our customers” said Vijay Gidoomal, Managing Director of Car & General. Cummins is an American based power leader that designs, manufactures, sells and services diesel and alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled electrical generator sets from 2.5 to 3,500 kW, as well as related components and technology.

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Bolloré Africa fined USD 2 million for cargo delays Logistics firm, Bolloré Africa, formerly known as SDV Transami, has been ordered by a Kenyan court to pay Indian firm Pankaj Transport PVT Limited over USD 2 million for losses suffered from the delayed delivery of a 32.2 tonne consignment of sugar to Uganda in 2012.

“The torrential rains, their effects and whatever else could have happened took place before the containers were discharged. The defendant does not explain why road transport was used simultaneously with rail transport. The defendant does not explain why rail transport was not used from the first day so as to perform the contract fully.” “This court finds that Pankaj has proved its case on a balance of probability and that Bolloré breached the said transportation agreement,” Justice Ogola held.

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n their defence; the logistics giant had blamed natural causes for the delay by Justice Eric Ogola ruled that the logistics conglomerate had failed to prove that torrential rains and power outages were to blame for delays that saw it exceed the agreed 12-day delivery period for Pankaj’s consignment. In the landmark ruling, the judge added that Bolloré failed to explain why it simultaneously used road and rail transport, which led to delays in delivering the sugar consignment to Uganda. Provided evidence indicated that torrential rains were in October 2011, which was before Pankaj’s sugar consignment left India. The first batch of sugar left India in November 2011. Bolloré claimed that torrential rains washed away sections of the road, forcing it to switch to rail transport. It added that the rains also caused power outages and interfered with Kenya Revenue Authority’s clearance system. The firm also blamed Pankaj for piling on the crisis by delaying its consent for switching to rail transportation as recommended by the Kenya Ports Authority.

Bolloré claimed that torrential rains washed away sections of the road, forcing it to switch to rail transport. It added that the rains also caused power outages and interfered with Kenya Revenue Authority’s clearance system.

The consignment had been ordered by four Ugandan firms that were looking to reap on a tax waiver following a shortage of the commodity. The waiver expired on February 28, 2012, days before Bollore could deliver the entire sugar consignment. Justice Grace Nzioka who read the judgment on behalf of Judge Ogola has issued a temporary stay on the judgment to allow Bolloré to file its appeal against the decision. Kakira Sugar, Felistar Uganda, VGR World and World Point Uganda purchased the sugar from India’s Rika Global Services. Rika hired Indian freighter Pankaj which in turn subcontracted the delivery to Bolloré. Pankaj claimed that Rika withheld payment owing to the delayed delivery, forcing it to in turn sue Bollore for compensation. Justice Ogola’s award will accumulate a 12 per cent interest from the day Pankaj filed the suit in 2014 until payment in full.

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CMC Motors boosts Butali Sugar’s haulage capacity with 40 New Holland Tractors

CMC Motors has delivered a fleet of 40 New Holland Tractors to Butali Sugar Company in Kakamega County in a bid to boost the sugar miller’s cane development and haulage capacity.

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he Sh208 million tractors are part of efforts Butali Sugar is undertaking to optimize its field and production operations in line with the government Food Security programme. Butali Sugar Company Managing Director, Sanjay Patel said the delivery of an additional 40 units now pushes the firm’s transport fleet to 400 operational tractors, raising the miller’s capacity to serve more than 30,000 contracted out growers (through Butali Sugar Out Growers Ltd (BSOL) in the West Kenya sugar belt.) With a raw cane crushing capacity of over 8,000 Tonnes of cane per day, Butali Sugar is currently rated as the single largest New Holland TS6 Series tractors customer in Africa and the Middle East with a fleet of 360 operational units. The miller is also reputed for its ability to pay farmers on a weekly basis for the cane collected. The new fleet of 2-Wheel Drive New Holland tractors featuring purpose built wagons will be primarily used for the firm’s growing cane haulage needs from the members of BSOL to reduce wastage. “At Butali Sugar, we are actively investing in such efficient and versatile transport options as part of our commitment to pass the benefits of an efficient production process to our customers and farmers,” Patel Said. He said their association with CMC Motors and New Holland Agriculture is founded on the delivery of proven performance tractors as well as reliable field and workshop service to meet growing market demand for quality Butali Sugar products.

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Sold and serviced by CMC Motors Group in Kenya, New Holland tractors are manufactured by New Holland Agriculture, a brand of CNH Industrial N.V. (NYSE: CNHI /MI: CNHI) a global leader in the capital goods sector with established industrial experience, a wide range of products and a worldwide presence. New Holland Agriculture’s reputation is built on the success of their customers, cash crop producers, livestock farmers, contractors, vineyards, or grounds care professionals. Their innovative products and equipment ranges from tractors to harvesting and material handling equipment. A highly professional global dealer network and New Holland’s commitment to excellence guarantees the ultimate customer experience for every customer. CMC Motors Divisional Manager, Alexander Makaa noted that New Holland Agriculture’s formula for outstanding performance in agricultural and related accessories involves mixing raw power and superior control with the ultimate in customer flexibility. The TS 6 Series tractors, he said, are a natural choice for livestock, arable or related agricultural contracting applications. The locally available New Holland Agriculture tractor models feature a wide selection of transmissions and front axle options allowing customers to enhance their field productivity.

“At Butali Sugar, we are actively investing in such efficient and versatile transport options as part of our commitment to pass the benefits of an efficient production process to our customers and farmers,” Patel Said.

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Mount Kenya University rolls out maritime and transport logistics courses Mount Kenya University (MKU) will begin offering certificate and diploma courses in maritime and transport logistics at its Mombasa campus.

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he university has successfully met the requirements based on the curriculum developed by the Kenya Maritime Authority. “The audit report revealed that most of the requirements are in place plus all the physical infrastructure for conducive learning,” read part of KMA’s letter to the university. However since the institution will be rolling out the curricula for the first time, a number of concerns were raised, particularly lack of learning materials and inadequate maritime lecturers. “It is the first time for the university and the accreditation process will continue. The implementation of the audit teams’ recommendation will be reviewed by the authority in subsequent monitoring and evaluation audits,” the letter noted.

In December last year, the institution applied to KMA for accreditation to offer the courses at its Mombasa campus. KMA has since advised the university to procure adequate learning resource materials such as current books and journals used in the shipping and logistics industry. The University should also subscribe to online portal as a platform for students to access international maritime, shipping and logistic learning materials. MKU will also be expected to have partnership and collaboration with local and international universities and colleges offering maritime related courses. “It is important for the university to join membership with professional bodies in the maritime, shipping, logistics and oil and gas sectors to keep abreast with the current trend in the sector,” said the authority.

Chinese company supports engineering Training in Kenya

China Roads and Bridges Corporation (CRBC) offers Kenya Shs 1 billion to develop an engineering school. The Engineering school will be established at the railway training institute in Nairobi.

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t the moment, Kenyan students are also being offered scholarship to pursue various railway and train related engineering courses in Chinese universities. The number of students who have received Scholarship now reach 60 Meanwhile, 300 technicians trained by CRBC at the Railway Training Institute are currently attached to the SGR project.

The New development came when CRBC President Lu Shan his colleague Chen Yun who is the Vice President for the China Communications Construction Company which is behind the construction of standard gauge railways in the company of Kenya’s Transport Cabinet Secretary James Macharia, met at the state house to brief President Uhuru Kenyatta on the progress of phase one of SGR The meeting discussed phase 1B of the SGR project, which will run from Nairobi through Naivasha to Narok where mobilization has started with land acquisition and construction set to begin in April. Also present at the meeting were Transport Principal Secretary IrunguNyakera, Kenya Railways Managing Director Atanas Maina and Chinese Ambassador to Kenya Liu Xianfa. President Kenyatta commended the progress made so far and underscored the importance of the project in transforming the country’s transport sector. Some Kshs 84 billion has been used under local contented with people living along the railway getting direct employment while others have benefitted through the delivery of goods and services to the project.

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Oil leak in Kibwezi finally earns residents Shs13.8 million compensation Kenya Pipeline Company (KPC) has started compensating residents of Kibwezi East Constituency in relation to a 2015 oil leak on its aging 25-year-old pipeline.

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he first batch of compensation vouchers valued at over Sh13.8 million is in relation to Livestock losses with at least at least 147 residents of Thange Valley compensated. Residents had made claims in four major categories namely; Livestock losses, Crop losses, Medical expenses and Water expenses. The compensation began in earnest after KPC’s insurer CIC insurance finalized assessments on the first batch of claims made by 278 residents. “CIC’s investigators and assessors finalized assessment on Livestock losses and are still undertaking assessments on the other three categories as well as additional claims on livestock losses,” KPC said on Friday. KPC’s insurer CIC insurance began on ground assessments on crop losses on the 14th of March

to establish the compensation cost per acre after which the affected resident will be issued with compensation vouchers. “The 147 residents who received the first batch of compensation vouchers will begin redeeming their vouchers after five days. This means that of the 278 claims lodged by residents only 131 claims are yet to be evaluated for payment,” the company said. The 14-inch Mombasa-Nairobi pipeline was constructed in 1978 and has been in operation for 39 years, way beyond its 25 year useful life. KPC says the only pipeline that feeds the country and its neighbours has to be kept in operational state through constant repairs and inspection. “But a new 450km Mombasa – Nairobi pipeline is currently being replaced to meet the region’s future petroleum needs,” the company says. The project is well underway and will be ready for commissioning this year. The new pipeline will improve the safety, reliability and efficient delivery of product to KPC’s customers and reduce the losses and damages caused by spillage on the current 14,” Mombasa -Nairobi pipeline.

Italian automaker Iveco returns to Kenya

Italian vehicle manufacturer Iveco is making a comeback in Kenya with a Sh2.3 billion assembly plant in Mombasa.

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veco’s appointed dealer in Kenya‒Global Motors Centre, is in charge of constructing the new assembly plant in Mombasa, which upon completion will produce the Italian automaker’s range of commercial vehicle brands. “We are the exclusive franchise holder for Iveco in Kenya. We are about to complete an assembly plant in Mombasa at a cost of Sh2.3 billion,” Global Motors chief executive Hussein Abadi said. The factory, to be commissioned in June this year is expected to create some 500 jobs. Global Motors will deal in a wide range of Iveco

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brands, including pick-ups, vans, buses, trucks and prime movers. Iveco’s prime movers were last sold by CMC Holdings, with the Italian brand missing from the Kenyan market for years. The return of the automaker signals increased competition among formal dealers who are increasingly focusing on the commercial vehicles segment that has emerged as the fastest-selling and most lucrative. Pick-ups, vans, buses and trucks accounted for more than 75 per cent of total annual new vehicle sales, according to data from Kenya Motor Industry Association (KMI). More dealers have been attracted to the commercial vehicle market, challenging General Motors East Africa (GMEA), which has dominated this segment for years. Toyota Kenya, for instance, introduced the Hino brand of buses in early 2013 to reduce its reliance on passenger cars, pick-ups and utility models. The new assembly plant for Iveco marks increased interest by global automakers in the Kenyan market. French automaker Peugeot S.A. is set to start local assembly of its brands later this year in a venture that is being spearheaded by its local partner Urysia. German manufacturer Volkswagen also started local assembly of its passenger car —the Polo Vivo — last year under its local franchise holder DT Dobie.

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Enhancing cargo security in East Africa, Damco partners with Safetrac

Astral Aerial Solutions wins 2017 IATA Air Cargo Innovation Award

Damco, one of the global providers of freight forwarding and supply chain management services is partnering with Safetrac, a fleet information, tracking and Management Company toprovide security to cargo in the region

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he International Air Transport Association (IATA) has awarded Kenya-based Astral Aerial Solutions the IATA Air Cargo Innovation Award for 2017 in recognition of its Unmanned Aircraft System (UAS) Traffic Management (UTM) Concept for Africa. Astral Aerial’s project seeks to lay the foundation for safe, secure and effective UAS operations and integration into existing airspace to ultimately allow the expansion of air cargo in Africa. “We are delighted to be recognized for our innovative UTM Concept for Africa project. Drone technology has strong potential to boost the continent’s air connectivity and deliver goods and services to remote regions and more critical lifesaving products to those in need,” said SanjeevGadhia, CEO Astral Aviation. Astral won $20,000 for the system. “It is great to see a developing nation company helping to drive the innovation that is needed throughout the global air cargo industry,” said Glyn Hughes, IATA’s global head of Cargo. According to Geoffrey Kinyua the project’s manager, the aviation company aims to develop a pathway that will encourage regulators, operators and manufacturers to come together and pave the way forward for safe and efficient UAS use in the continent. To choose the winning entry, an independent jury of industry experts, academics and CEOs of leading logistics companies evaluated 46 entries from across the industry. Projects were evaluated based upon the idea, its potential to create value, and the likelihood of it achieving success.

n the partnership, Safetrac provides Damco with a standard vehicle tracking solution, IMT 54 which enhances cargo security for vehicles through tracking within East Africa. The solution also has an electronic seal making it hard for cargo to be tampered with and ensures drivers are route compliant. The partnership between the two companies is a big boost to the logistics sector in Kenya, which accounts for about 8-9 per cent of GDP and it is likely to remain a major driver of economic growth in the country. Damco which is part of the A.P. MøllerMærsk Group, has been providing its customers with transportation and logistics solutions across the world for more than 100 years. With Safetrac’s Cargo Tracking solution, Damco will be able to enhance efficiency, profitability and reliability for its customers. Benard Limo, Head of Technical Support at Safetrac says, the container tracking solution comes incorporated as an advanced technology, with impeccable design, which provides great performance and delivery of efficient and reliable delivery of container and cargo security. Limo notes that the superior European Technology also enhances the robust fleet telematics solution by aiding in route management and compliance through geo-fencing and route mapping which tracks and reports corridor deviations and violations in system highlighted geo-fences and geo-zones. Solutions offered by Safetrac Limited include Trailer Truck, panic button, immobilization, temperature control and monitoring systems, tipper/bucket lifting control systems, and On-Board Diagnostics (OBD) Socket Integrated Vehicle Tracking System. Safetrac Limited solutions enable fleet owners to save time by giving them timely reports and notifications by minimizing the phone call traffic with the drivers on the field. They also help companies easily screen excess mileage and out of business trips and improve their fuel economy. The solutions give fleet owners full control of their vehicles through uninterrupted tracking and detailed reporting. “The partnership with Damco is a strong strategic fit, leveraging the two leading companies’ respective strengths, across the region,” Limo Safetrac’s technology is powered by Arvento, the fifth biggest company in the world in the field of fleet telematics and M2M solutions with more than 45,000 clients and more than 650,000 mobile devices.

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Magufuli unveils mega plan to upgrade transport infrastructure in Tanzania

Tanzania’s president John Magufuli has unveiled a new infrastructure upgrade package to spur economic development in the country.

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he ambitious package, whose execution is expected to start effectively this year, involves upgrading ports, railway and existing road networks. It will also shake up residents whose structures are sitting within the protected areas. Tanga, Dar es Salaam and Mtwara ports will undergo major facelift in the new plan which also includes implementation of the second phase of Dar es Salaam Rapid Transit (DART) project. Also part of the package is the construction of the standard gauge railway. Tanzania is in the last stages of preparations for the start of the mega railway project whose

ground breaking is expected later this month. “We have secured 870 billion shillings for the road project that will link Dar es Salaam central business district with Mbagala,” said Magufuli during CCM party briefing. He said the construction works on the first flyover at Tazara and an Intersection at Ubungo, costing 100 billion shillings have already started and will open up access to the city centre. Dr Magufuli said the plan under his administration was to upgrade all major roads and railway. On ports, the Head of State said that the government was determined to renovate all the ports in the country in order to speed-up marine transport services and boost regional trade. The new developments, according to Dr Magufuli, are a product of improved revenue collection that now averages at 1.2 trillion monthly. But, the government strives to increase collection by 60 per cent to 1.8 trillion monthly by 2020. He called on the general public to pay tax, maintaining that all the collected revenues would be appropriately spent to improve service delivery. President Magufuli also said his administration is determined to assure superb, reliable and affordable power supply to all citizens.

“We have secured 870 billion shillings for the road project that will link Dar es Salaam central business district with Mbagala,” said Magufuli during CCM party briefing. 10

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Tanzania’s central corridor road project receives $48.7m funding

Tanzania has received a $48.7 million (Sh109 billion) loan from the government of Kuwait to finance road construction in Dar es Salaam, a move that is expected to ease traffic flow and boost economic development through the central corridor.

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he government of Kuwait, through the Kuwait Fund for Arab Economic Development, will finance the 85-kilometre section that starts in Dar es Salaam city, passing through Kigoma to link Tanzania with other landlocked countries. Minister for Finance and Planning, Dr Philip Mpango, expressed gratitude to the Kuwait government, and said the road is important from trade as it links Tanzania and other countries. “Upgrading of the section will increase traffic movement and capacity between Dar es Salaam port and Kigoma as well as Burundi and Eastern DRC,” the minister said. The project also aims to increase multimodal transport options in the region and reduce transport time and cost along the entire central corridor. The loan agreement signed consists of three parts, including civil works, consultancy services and technical assistance. DrMpango said the fund is another commitment of the management of the Kuwait fund for Arab Economic Development to continue supporting the Tanzanian government in achieving its economic developments.

Deputy Director General of the Kuwait Fund for Arab Economic Development, Hamad Al-Omar said the new development was in line with the commitment of the Amir of the State of Kuwait, Sheikh Sabah AlAhmed Al-Jaber Al-Sabah made during the 3rd AfricaArab Summit to grant concessionary loans to African countries to finance development projects. Mr Al-Omar was optimistic that the new project will link Tanzanian products and markets in other countries. “The project is designed to contribute to the increased demand for transport of passengers and goods on the central corridor, thereby, promoting trade activities with the neighbouring countries, and therefore contributing to the economic and social development,” he said.

“The project is designed to contribute to the increased demand for transport of passengers and goods on the central corridor, thereby, promoting trade activities with the neighbouring countries, and therefore contributing to the economic and social development,” he said.

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World Bank President tests Rwanda’s drone technology

The drone port project in Rwanda has attracted the World Bank President Dr. Jim Yong Kim who visited the facility yesterday and launched one of the world’s first drone to deliver medical supplies.

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r. Jim, who is in the country for a twoday official visit‒toured the project in Muhanga district in Southern Rwanda. He was accompanied to the facility by Ministers of health, Youth and ICT where he toured the project run by American start-up Zipline Inc. He later launched a drone to witness how it delivers blood. Rwanda is using unmanned drones to deliver blood, vaccines, and other medical supplies to those in need in the most remote areas of the country, which are often inaccessible by vehicle. About 30,000 people in Rwanda receive blood transfusions every year for postpartum hemorrhaging, severe anemia due to malaria infections, and other life-threatening conditions. Dr. Jim was given a guided tour around the facility and fifteen minutes of explanation of an entire process of launching into the sky drones loaded with supplies up to delivery points far away.

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Under the strategic financial year 20142018, the Bank allocated $802.40 million to support 10 projects in the country. The projects fall in the sectors of Agriculture (35%), Energy (30%); governance (13%), urban planning (12%) and transport (6%).

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“Using drones to deliver blood is truly a life-saving innovation and a credit to Rwanda’s leadership. It’ll greatly improve health outcomes,” Dr. Jim said. The World Bank President also held private talks with government officials at the site, before heading to Special Economic Zone in the capital Kigali. World Bank President is today expected to visit K-Lab, Rwanda’s ICT innovation Park. He will later on hold a public lecture dubbed: “Addressing today’s challenges for a prosperous future”. During the lecture scheduled to take place at Radisson Blu and Convention Centre in the capital Kigali, Dr. Jim will engage in discussions with university students, government officials and members of Private sector. This is Dr.Jim’s second visit to Rwanda since his appointment in July 2012 as the Bank’s 12th President. Under the strategic financial year 20142018, the Bank allocated $802.40 million to support 10 projects in the country. The projects fall in the sectors of Agriculture (35%), Energy (30%); governance (13%), urban planning (12%) and transport (6%). Rwanda is also a beneficiary of the Bank’s $204 million funding to region


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International Ships Decry Delayed Ratification of Maritime Laws in Tanzania

Tanzania’s delayed ratification of the International Maritime Organisation (IMO) laws has affected shipping business of international vessels flying the country’s flag.

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irector General of Zanzibar Maritime Authority (ZMA) Abdalla Hussein Kombo told the ‘Daily News’ here yesterday that Tanzania has not ratified several international sea transport legislations as per IMO guidelines. “We have complaints from ship operators whom we have licensed… it takes too long to approve the laws due to bureaucracy, a problem that hampers maritime operations, including entry to seaports around the globe as Tanzania’s flag flying vessels are not free,” Mr Kombo said. ZMA is the only Tanzanian institute that registers and issues operational licences for international ships. It has issued licences to over 400 domestic and international sea vessels flying the Tanzanian flag. But, a legislator, Mr Hamza Hassan Juma, charged in the Zanzibar House of Representatives last week that many shipping businesses have been affected due to the delays in ratifying the

laws and that some international ships have threatened to deregister should the problem persist. Mr Juma further attributed the employment contract termination for 1,800 Tanzanian seamen, mainly from Zanzibar, who were working with different ships to the delays in the IMO law signing. But, Mr Kombo dismissed the claims, saying the seamen’s retrenchment had nothing to do with the delayed ratification. IMO requires its member states, including Tanzania to ratify conventions and laws, important in the safety of navigation, co-operation in promotion of the adoption and development of international rules and standards on pollution from ships within the framework of IMO; liability and compensation; and technical cooperation and assistance for developing countries. ZMA boss said his office has been working with authorities in the union government responsible for foreign affairs to solve the problems as soon as possible for efficiency and end inconveniences facing ships flying Tanzania flags.

ZMA is the only Tanzanian institute that registers and issues operational licences for international ships. It has issued licences to over 400 domestic and international sea vessels flying the Tanzanian flag

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Qatar Airways Cargo takes delivery of its twelfth Boeing 777 freighter

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orld’s third largest international cargo carrier, Qatar Airways Cargo has received its latest Boeing 777 freighter, taking the Doha-based carrier’s total freighter fleet count to 21. The additional freighter marks the carrier’s unwavering commitment to building its modern cargo fleet to strengthen its growth trajectory. Qatar Airways chief officer cargo Ulrich Ogiermann said: “The arrival of our newest Boeing 777 freighter comes at a time when we are consciously strategising our freighter network expansion this year, above and beyond the unprecedented demand and growth in our charter services. With a payload capacity of 102 metric tonnes, the B777F is capable of flying 9,070 kilometres. The airplane’s range capability translates into significant savings for cargo operators: fewer stops and associated landing fees, less congestion at transfer hubs, lower cargo handling costs and shorter cargo delivery times. The capacity of the Boeing freighters is unrivalled, and the plane’s economics make it an attractive addition to the fleet. “Through our expanding fleet of 21 freighters, we offer increased capacity and flexibility to our customers, providing them access to any major air trade markets across the world.” Qatar Airways Cargo operates its B777 freighters on longhaul routes to the Americas, Europe, the Far East, Asia and some destinations in Africa.

World’s third largest international cargo carrier, Qatar Airways Cargo has received its latest Boeing 777 freighter, taking the Doha-based carrier’s total freighter fleet count to 21. The cargo carrier offers QR Charter, utilizing its most modern fleet of Boeing B777s, Airbus A 3330s and Boeing 747 freighters. Its portfolio of distinctive products currently includes QR Pharma, QR Fresh, QR Live and QR Express offering efficiency and compliance in the handling of temperature−sensitive pharmaceutical and perishable cargo, transportation of live animals as well as time‒critical shipments. The airline will receive another Boeing 777 freighter later this year, increasing its freighter fleet to a total of 22 aircraft by the end of 2017. Qatar Airways was recently awarded the Global Cargo Airline of the Year Award at one of the leading air freight industry exhibitions, Air Cargo Africa in Johannesburg.

Malawian Airlines makes history with first all-female operated flight Malawian Airlines has made history in the country by sending the first allfemale flight deck crew flying from Blantyre to Dar es Salaam in Tanzania.

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alawian Airlines has made history in the country by sending the first all-female flight deck crew flying from Blantyre to Dar es Salaam in Tanzania. The two-hour flight by a Bombardier Q400 aircraft that took off from Chileka International Airport was the first of its kind in Malawi’s aviation history. The flight from Blantyre to Dar-es-Salaam had women in charge of every single aspect of the flight operation, from cockpit to cabin, check-in to customer care, and air traffic control to ground handling. The airport staff, including police, ground control officers and immigration officials were also all female. The venture by the national carrier is intended to inspire young girls, and women to pursue a career in the aviation sector. Joseph Josiah, spokesman for Malawian Airlines, said: “people tend to think maybe aviation is only for boys or it’s only for men because it is too technical. So we are trying to show to them that women too are as capable to succeed in these fields.”

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Approximately 36 percent of the employees at Malawi Airlines were female, according to Josiah. However, only two of the company’s 12 pilots are women, a situation the country’s authorities plan to change by taking deliberate measures to narrow the gender disparity gap. Malawi Airlines Chief Executive Officer AhaduSimachew said the ‘special flight’ was organized to showcase that women were as capable of handling challenging endeavours, such as flying, which are mostly dominated by men. “We decided to organize this historic event with the aim to encourage young girls who aspire to pursue careers in aviation but somehow think it is hard and too technical or that it is a no-go zone for women. “This is a symbol that women too can thrive in maledominated fields; all they need is for us to level the playing field,” said Simachew. First Lady of Malawi Dr. Gertrude Mutharika was the guest of honour at the special reception and she said the allwomen flight was a symbol that Malawi was on the right track towards women empowerment . Malawian Airlines is owned by the government Malawi (51%) and the Ethiopian Airlines (49%). Ethiopian Airlines operate Malawian Airlines under a management contract. In a historic achievement in 2015, two female Air Zimbabwe pilots were the first all female flight deck crew on the airline’s Boeing 737 from Harare to Victoria Falls. The airline’s maiden all-women operated and supported flight is being celebrated across the continent via various social media platforms.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


BRIEFS

Nigeria’s Aero Contractors cuts workforce

The aviation industry in Nigeria is in turmoil and Arik is not the only airline struggling. Nigeria’s second largest airline Aero Contractors has announced it will be sending home two-thirds of its workforce to save costs and prevent it from plunging deeper into losses.

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he company said in a letter to employees that it was “constrained to place them under redundancy because of operational challenges” that had hit its finances. More than 1,000 of the 1,500-strong workforce will lose their jobs according to Jude Mwauzor, a spokesman for the Asset Management Corporation of Nigeria (AMCON). AMCON acquired Aero Contractors in 2011 because of mounting debts and a lack of aircraft to service its routes. Last month, the government agency stepped in taking over Arik Air, a heavily indebted company to prevent it from going bust because of spiralling debts. “Aero management had to rationalise to save the airline because there were too many workers doing nothing,” Mwauzor said. “The airline does not have the funds to be paying redundant staff. Our position is that the management has to stabilise Aero and return it to efficiency and profitability,” he said.

In the letter, the management said it hoped that by reducing operational costs it would be able to beef up its fleet for passenger flights and helicopter services for the oil industry. It used to have seven planes but currently only operates two while the others are undergoing servicing and maintenance checks. The layoffs are also expected to enable Aero to have a more manageable and committed workforce in line with international best practices of 50 to 60 personnel to one. Huge monthly salaries “will eventually kill the airline” if nothing was done, it added. Last year Aero suspended flights for four months because of funding problems linked to the lack of foreign currency caused by recession. That has left airlines unable to pay fuel suppliers and in some cases landing charges at airports outside the country. Arik−the biggest airline in West Africa with 60% share of domestic flights in Nigeria, was taken over because it was unable to repay loans totalling 135 billion naira ($429 million, 400 million euros) by the end of 2016. Foreign creditors had also seized several of its aircraft. Aviation analysts have previously criticized the running of Nigerian airlines for trying to minimize operating costs in order to boost profits. Last year two other Nigerian airlines stopped operating and United Airlines and Iberia also pulled out of Nigeria over the currency crisis in which international airlines lost millions of dollars while the government blocked their remittances in foreign currency and the naira tumbled.

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PORTS

Increasing business activities along Africa’s east coast challenge maritime services Investors

Increased business in the East African Community is calling for new ports along Africa’s east coast to enhance maritime business

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ccording to Investors in the region, the booming business within the East African community is creating increasing pressure on the existing ports of Mombasa and Dar es Salaam. “Currently, Mombasa which is the largest port in the region is averaging 14mn tonnes of cargo a year. More than 17 shipping lines call on the port providing connectivity to more than 80 ports globally, Dar es Salaam handles 4.1mn tonnes of dry cargo and six million tonnes of bulk liquid cargo,” says Ali Mufuruku, executive chairman of Tanzanian firm InfoTech Investment Group Available Statistics on Africa’s east coast indicate that Mombasa port serves the Kenyan market, Uganda, Rwanda, Burundi, eastern DR Congo, northern Tanzania, South Sudan and Ethiopia whereas Dar es Salaam handles 4.1mn tonnes of dry cargo and six million tonnes of bulk liquid cargo and serves the landlocked countries of Malawi, Zambia, DR Congo, Burundi, Rwanda and Uganda, which pushes the two ports to the limit. “The closer a port is the cheaper it becomes to do import and export business. We need more ports on the East African coast as the existing ones are not enough. Compared to the stretch from Durban to Cape Town, where there are 12 ports to facilitate cargo business, the East African coast is doing badly,” says Ali Mufuruku In 2014 Kenya Ports Authority and China Communications Construction Company signed US$23bn Lamu port deal expected to be completed in three years (2017). In recent years

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however, building has been underway for new ports, including the Mwambani in Tanga and Malindi in Zanzibar, of which are all situated along the Indian Ocean. Other New ports in Musoma in Tanzania situated on Lake Victoria, an important route for business in the Great Lakes region, and the New Kampala Port at Bukasa have also been planned for construction. Expected to open up business in northern Kenya, Ethiopia and South Sudan, Lamu Port will be the biggest of the region’s new ports. Upon completion of the port, Lamu Port will have 32 berths along a six sq km coastline. According to officials, the first three berths are expected to be built by 2016 and the rest by 2030. “The three berths are designed to handle 30,000 Dead Weight Tonnage (DWT) and 100,000 DWT for general bulk and container cargo respectively. The development is crucial for the importation of building material and other project components.” Mugo Kebati, director general of Kenya’s Vision 2030 delivery secretariat. He says Lamu’s Manda Bay is well sheltered and has deep water of around 18 metres along the main channel and 50-60 metres in the bay, able to accommodate Panama-size vessels. “The port will be expected to become a trans-shipment hub to handle crude oil and refine oil from South Sudan. It will also be a shipment point for exports and imports from Ethiopia,” Mugo In Tanzania, there was US$2.7bn joint venture to develop a new railway line and ports from Tanga at the Indian Ocean to Musoma on Lake Victoria. Of this funding, US$996mn was meant for development of Mwambani port near Tanga, while US$72.6mn went to the development of Musoma dock. Located on the southern end of Lake Victoria, Musoma is an important business hub that connects port Jinja and port Bell in Uganda and Kisumu in Kenya. “It is expected that the Tanga-Musoma rail line, will allow freight offloaded from ships on the Indian Ocean to reach Lake Victoria for onward movement to Uganda via steamers. The main advantage of Mwambani port, which needs to be developed, is that the cost of transport will come down dramatically as shipping lines will be able to deploy the largest possible vessels to minimise the cost per unit,” says Emmanuel Mallya, the chairman of Tanzania Shipping Agents Association (TASAA).

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


PORTS

US$1.1 million Maintenance Dredging Campaign Underway at Port of Cape Town Cape Town, South Africa-Transnet National Ports Authority (TNPA)’s Dredging Services division has embarked on a R15 million (US$1.1m) maintenance dredging campaign at the Port of Cape Town to restore the design depths inside Duncan dock.

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he maintenance campaign, which began on 8 March 2017, is scheduled for completion by the end April 2017. The main objective of the dredging campaign is to ensure the Port of Cape Town provides safe navigational channels and berthing facilities for shipping by restoring the original design depths. Two dredging vessels, the Isandlwana, a Trailing Suction Hopper Dredger and the Italeni Grab Hopper Dredger have been mobilised by TNPA Dredging Services for this purpose. Multi-beam bathymetric surveys are conducted at regular intervals throughout the campaign that will ensure all areas within Duncan Dock are restored to their original design depths. Dredging is specialised underwater excavation that helps to keep ports and harbours safe and navigable and is a critical aspect of port maintenance. The Isandlwana, which has a 4200 m³ hopper capacity, will remove approximately 70 000 m³ of material from the sea bed before the end of April. Spoil is pumped into the hopper and can be offloaded by discharging through 10 conical bottom valves. Pumping

With the most modern equipment available in the specialised service industry, Dredging Services is able to not only meet the needs of the South African port system, but the needs of Southern Africa, helping other African countries grow their economies.

ashore is also possible by means of either a floating pipeline, a side discharge mechanism or by ‘rainbowing’, where the dredging vessel discharges material that has been claimed from the ocean floor in a high arc to build a land mass elsewhere, such as during nourishment of beaches, to prevent erosion along the coasts or to reclaim land. TNPA’s fleet renewal programme has boosted the dredging division’s capacity to aid the removal of approximately four million cubic meters of excess material from the seabed every year at South Africa’s ports. With the most modern equipment available in the specialised service industry, Dredging Services is able to not only meet the needs of the South African port system, but the needs of Southern Africa, helping other African countries grow their economies.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL 2017 Issue No.: 09/2017

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PORTS

Nigerian terminal operators, NPA collaborate for competitive operations

The Seaport Terminal Operators Association of Nigeria (STOAN), is collaborating with the Nigerian Ports Authority (NPA), to make the nation’s ports more competitive.

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TOAN’s chairperson, Princess Vicky Hastrrup, said that it supports NPA’s planned review of the concession agreement and other initiatives that aim to address factors slowing down efficient port operations. She stated: “As the MD of NPA has stated several times, the concession agreement is subject to intermittent reviews. This has also been the position of STOAN. The review will address unforeseen developments and challenges encountered in the system. We support it. We also support all the steps she has taken so far. “We are on the same page as far as our ports are concerned. The abiding interest, which should as a matter of fact be the interest of every Nigerian, is making Nigerian ports the best in Africa and among the best in the world,” STOAN said in a statement. The association also said that it was working with NPA management and other relevant agencies in the sector to address certain government policies, which are diverting cargo away from Nigerian ports. “We must commend the Managing Director of NPA, Ms. Hadiza Bala Usman, for taking time to tour and assess the ports upon assumption of office in order to appreciate the issues at hand. We are aware also that she has accessed the state of the port’s access roads and have promised to ensure that government fixes those roads as soon as possible.

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“This is certainly highly commendable and it shows that the present government is a listening government. We are also aware of the meeting between her and the comptroller-ceneral of Customs to refine and simplify the cargo clearing system at the port. These are genuine efforts that must not pass unappreciated,” Hastrrup said. The association appealed to the federal government to address the issue of high import duty on imported vehicles and the restriction of 41 items from the official foreign exchange window of the Central Bank of Nigeria (CBN), as part of measures to attract cargo to the port. “The ban on importation of vehicles through the land borders will be more effective with a corresponding slash in the tariff of vehicles. The sure way to check smuggling is to accompany the ban with a slash in Customs duty to bring it to par with what obtains in the ports of Cotonou and other ports in the sub-region.” STOAN said since the ports were concessioned in 2006, significant progress has been made in ensuring prompt service delivery, quick turnaround time of vessels and improved welfare of dockworkers, among others. “We assure the NPA MD and the Federal Government of our full support always in implementing the change agenda and bringing about the dividends of democracy to Nigerians,” the association added.

“We assure the NPA MD and the Federal Government of our full support always in implementing the change agenda and bringing about the dividends of democracy to Nigerians,” the association added.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


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May 2016


BUSINESS NEWS

Demand Segregation in Purchasing Decisions by HariharanLaxminarayan

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emand segregation is critical in a purchaser’s day to day role, it ensures one is fair and deals with his/her categories well, one needs to have power of analysing and segregating required materials. The categories requires and based on that, purchasing officer can then put his strategy of how to source and manage.

Broadly, four categories to be are:

Highly Critical, Low Availability [Strategic]:These are the areas that will stop production or service to customers and are also the hardest products or services to secure and source. To guarantee supply, you will likely need to establish long-term contracts and high quality standards. Due to the criticality, ideally, you would have an alternate supplier pre-qualified for failover or shortages with your preferred supplier. If the market is extremely scarce, you may even need to supplement your supply with multiple long-term suppliers to meet the demand you require. Depending on the products or service, companies can examine the make vs. buy decision and consider vertically integrating the supply into your own company demands. Take iron ore for a steel company as an example. If quantities and quality are not met, it can severely impact or even halt production; there are very few suppliers in the market and high barriers to entry. Many steel companies have long term contracts and their own mining divisions to lower the supply risk. Highly Critical, High Availability [Leverage]:These categories of spend are still very important to the business, but the products/services are much easier to secure. Due to criticality, you will typically need to establish quality standards, but you can make changes in suppliers more easily and the market should be able to absorb increases in demand. This is one category where other market conditions will likely play a major role in determining sourcing strat-

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If the market is extremely scarce, you may even need to supplement your supply with multiple long-term suppliers to meet the demand you require. Depending on the products or service, companies can examine the make vs. buy decision and consider vertically integrating the supply into your own company demands. egy, i.e. how is the market evolving and how are vendors differentiating themselves? Because there is high availability of supply, Procurement should look to leverage spend and focus on cost and quality. IT products and services are a prime example of this. They are highly available in the market and these can be critical to keep core processes or systems running. For many software and hardware products, there are multiple options to get the same end product by going direct to an OEM, utilizing a reseller, leveraging a VAR relationship, or even one-off buys from local or online suppliers if necessary. Less Critical, High Availability [Non-critical]:These products and services are still necessary to run the business, but do not have a significant impact on the end product and results should not be drastic if there is a lapse in supply or an alternate product or service is used in its place. This is where you may cherry pick among suppliers to achieve the lowest cost, introduce alternates/replacements, and use regular RFx efforts to drive down cost. Procurement should look to streamline purchasing and not invest their time heavily on non-critical items. Office supplies could fall under this category. While office supplies are needed, there are certainly options and alternatives if they are not available, e.g. if pens aren’t available, pencils can be used. Essentially, you can continue to push production without office supplies and the supply base for these items is rather abundant. Less Critical, Low Availability [Bottleneck]:Similar to the items above, these categories of products and services are less crucial to

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


BUSINESS NEWS

running the business and do not add much value to the end product, but because the supply is limited, there is increased risk of scarcity. Procurement will need to secure supply by fostering the supplier relationship to ensure supply, while simultaneously qualifying additional suppliers, considering alternatives, and creating a cushion of inventory where able. For example: electricity – the market is limited and electricity doesn’t add value as an input into an end product. For

many companies, electricity is a utility and necessary to continuing day to day business, so it is crucial to ensure there is a supplier in place. The strategy for something like electricity may lean towards assurance of supply as opposed to finding alternates, but that strategy could adjust depending on presence in deregulated vs regulated energy markets. These classifications are a starting point that Procurement should use to begin looking at categories and sourcing strategies in a more deliberate manner (or validate the strategies in place today). Determining where a category or even a specific product fits on the scales of criticality and availability will take heavy partnership with business stakeholders. By partnering with end users, Procurement can transform itself from a “buying” department to a “businessenablement” partner and gain inherent knowledge of the business you are supporting each day. The onus is on Procurement to understand how categories being sourced affect and fit into the core business to ensure alignment to overall company goals and business plans. By understanding and tracking the changes in criticality and availability of different inputs to your business, Procurement can ensure the sourcing strategy, category management, and vendor management are aligned to both the supply market and the company goals.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL 2017 Issue No.: 09/2017

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BUSINESS NEWS

Expense reconciliation: tips to improve your process Is the financial year-end getting the better of you? Are suppliers uncooperative? Are you late with their payments? Are you over budget and struggling to balance the books?

turing and managing of supplier data. Software metrics designed to measure the tracking of payments and to notify the procurement manager of pending deliveries, looming deadlines or the urgent reconciliation of expenses, will allow the procurement staff to focus on adopting a more strategic approach to reconciliations and vendor selection. Other potential benefits include software packages that introduce a best-practice account reconciliation process that includes real-time dashboards and automated notifications to users.

Centralise and Prioritise

A centralised procurement function enables a more structured, holistic approach to procurement. Efficiencies and economies of scale from a centralised structure can mitigate risks and avoid human error. The likelihood of misspending and the duplication of purchases would be greatly reduced. Also, a more streamlined, centralised procurement function could assist with strategic supplier relationship management.

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f any of the above scenarios apply to you, take heart in knowing that you’re not alone. Balancing inconsistent supply chain management practices with increasing costs and pressures to reduce those costs, as well as heightened compliance around invoicing are just some of the headaches procurement managers face daily. One of the popular solutions offered in the market today is an outsourced procurement function. This enables the business to focus on its core functions by outsourcing to a third party the sourcing and managing of suppliers. Selecting vendors can be an arduous exercise – the amount of work that goes into due diligence, compiling the related evaluative reports and submitting them to the chief procurement office or procurement manager is often underestimated. The key benefits of an outsourced procurement function include: • Enabling businesses to benefit immediately from the expertise of procurement professionals without having to structure an internal team from scratch. • Having experienced procurement specialists who understand how to fast-track solutions. • Benefiting from efficiencies in stock and vendor selection. • Using outsourced service providers who can be incentivised against a percentage of the savings attained.

But is outsourcing the only way to achieve efficiencies? Certainly not. The use of technology in procurement today can greatly benefit a procurement manager through the faster cap-

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But what is the correct approach?

Confused? Should you bolster your internal procurement team? Should you provide them with the best software to streamline the procurement process? Is there a way to better manage your supplier relationships? One crucial tip that you should take from this article is the importance of creating and sticking to predetermined budgets; it is critical and will save you many grey hairs. In addition, the value of a strong reconciliations department cannot be understated – regular reconciliation can mitigate balance sheet errors, which could cause financial losses, and prevent fraud. Furthermore, take an analogy from your personal life: account reconciliation in terms of credit card accounts, cheque books and statements is critical. Retaining and evaluating receipts against the statements in a business is just as important. For a procurement manager, who deals with high (and probably costly) stock volumes, this process should be an absolute priority. Where mistakes are identified by the reconciliation adjustments, corrective steps should be undertaken for the account balances to match the printed receipts. This is why it is advantageous to employ the best accounting software to ensure the reliability of your data. The danger of unreliable data is that it may lead to taking incorrect decisions – both practically and strategically – based on incorrect data. The point is: accurate reconciliations and good, clean data are possibly just as relevant as supplier/ vendor selection and management.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


BUSINESS NEWS

Data integration enhancing efficiency in Supply Chain

Companies invest in many systems to power the supply chain: warehouse management systems, transportation management systems, enterprise resource planning (ERP) platforms and a myriad of other solutions. However, sharing data and automating processes between systems, instead of keeping them in isolated silos, allows cross-departmental supply chain processes to be optimised, increasing operational efficiencies and providing a superior customer experience. Data integration can be the differentiator that enables companies to disrupt processes to increase efficiencies. For example, imagine an ERP system receiving sales orders electronically from the customer relationship management (CRM) system, processing orders and scheduling deliveries automatically, and sending updated stock and delivery information back to the CRM system. With automation and integration between the different systems, there can be faster order fulfilment, reduced costs and increased customer satisfaction.

Integrating new efficiencies into the supply chain

Here are seven more examples of how integrated data can introduce new efficiencies into the supply chain: 1. Comprehensive real-time reporting: Integrated data enables the supply chain professionals to make decisions based on a comprehensive and accurate picture of supply chain related activities across the organisation (e.g. sales, marketing, product lifecycle management, manufacturing, warehousing, procurement, finance, and transportation). For example, a distribution centre can aim to have a high fill rate but if the cost of fulfilling orders is too high, it will sabotage profit margin goals. A comprehensive view of all activities ensures that orders are fulfilled in the most economic and effective way. 2. More accurate demand forecasting: Pulling in up-

to-date sales data into your ERP can result in more accurate orders for raw materials, leading to more efficient deliveries, improved customer satisfaction and improved margins due to reduced transportation and inventory costs. 3. Customise supply chains: Companies may inadvertently over-service some customers, exceeding expectations, while, providing less than satisfactory service to strategic or high-volume customers. Integrating data between your CRM and ERP systems can enable you to create dedicated supply chains according to a customer’s service level agreement (SLA), providing maximum value at the lowest possible cost. 4. Close the speed vs accuracy gap: All supply chain costs need to be analysed together for a unified picture so that operational goals can meet corporate values and brand image. For example, the company can choose to move inventory at the lowest possible cost, move goods the fastest way possible regardless of costs, or have the highest possible quality of order fulfilment with zero errors. Having cost data and variables together in one system enables easy trade-off analysis. 5. Earn preferential carrier treatment: A company that integrates its ERP with warehouse management and yard management software to enable short dwell times and long tender lead times, can earn a ‘preferred shipper’ status and have an easier time finding capacity because carriers like working with companies that boost their efficiency. 6. Gain full control over financial commitments: Control and visibility over the entire life-cycle of a transaction – from purchase approval to final invoice payment, provides full insight into cash-flow and financial commitments. Integrating procure to pay functionality enables ERP systems to extend to the final documents to confirm that goods were received and signed for, before invoices are paid. 7. Improve production management: Because PLM is intended to manage the development of a product and ERP is intended to manage the resource planning for production, it makes sense to ensure that the systems are fully integrated. Once the design has developed to a point where resources need to be managed to produce the product, an ERP system should have the ability to import the most up-to-date product data and share with the necessary departments to ensure accurate financial planning. Businesses that integrate data and processes across various business systems can optimise their supply chains and provide customers with the best possible service from order to delivery. Data integration and data integrity throughout the organisation are requisites for effectiveness and efficiently managed resources. A highly adaptable underlying IT infrastructure that enables data and processes to be shared between a company’s IT systems can keep the supply chain working at an ultimate level of performance.

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BUSINESS NEWS

DHL Express rolls out entrepreneurial programme for SMEs in sub-Saharan Africa

DHL Express is bringing entrepreneurship to yet another level in sub-Saharan Africa (SSA) through its recently launched ‘Growing Beyond Borders’ – a program designed to help small and medium enterprises (SMEs) understand the economic potential of international trade and the subsequent benefits to their businesses.

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he new programme has been rolled out in Botswana, Zimbabwe, Ethiopia, Madagascar and Nigeria since its launch, with the first official session set for Johannesburg, South Africa. Several other markets in SSA will be launching the programme before the end of March, including Uganda, Mauritius, Kenya and Ghana. SMEs continue to play a major role in African business and are considered the engines of growth in the SSA region. “If we can empower SMEs to seize international opportunities, this will further stimulate much-needed economic growth. SMEs can have an advantage over larger, more established companies, as they are more agile and flexible to adapt to changing circumstances,” said John Lucas, managing director for DHL Express South Africa. “Sustainable SME growth and performance also aid job creation, which is critical for regional development.” Usually, SMEs start developing

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“If we can empower SMEs to seize international opportunities, this will further stimulate much-needed economic growth. SMEs can have an advantage over larger, more established companies, as they are more agile and flexible to adapt to changing circumstances,” said John Lucas, managing director for DHL Express South Africa.

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their businesses with the domestic market in mind, and often, they miss the opportunities that international trade represents. It is easier than one thinks to trade internationally and our ‘Growing Beyond Borders’ programme is aimed at dispelling the myths about international trade. Ultimately, we want to enable, encourage and empower SMEs to grow.” The free-of-charge workshop explores areas around importing and exporting in new markets, provides guidance on how to find key geographical opportunities for specific products and services, as well as how to identify different marketing avenues and ways to build successful long-term relationships with their target customers. Lucas explains that the programme is unique in that it was borne out of the same vein as the DHL Express Certified International Specialist (CIS) program – an internal cultural change programme which has seen nearly 4,000 DHL employees in 51 countries in SSA and 90,000 employees globally, receive comprehensive training on the fundamentals of international shipping.


BUSINESS NEWS

Addressing last mile delivery challenges, South African e-courier startup raises $1.2 million

South African e-courier startup Pargo has closed a $1.2 million funding round led by SAAD Investment Holdings, with the funds to be used as working capital as the startup expands its services.

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argo is addressing last mile delivery challenges in South Africa by allowing users to send and receive parcels at dedicated pick-up points throughout the country. Users can find a convenient Pargo point using the online postcode search engine, and can send and receive parcels at a time that suits them. Customers can track parcels online; while the service also caters for returns. For pick-up points, the Pargo app enables streamlined stock management. The startup announced it has secured equity investment topping R15 million ($1.2 million). The round was led by Cape Town-based SAAD Investment Holdings, with chief executive officer (CEO) of the firm Johan du Preez to join Pargo’s board of directors. Beijing-based venture capital firm, Tsing Capital, and Pay-U co-founder, Johan Dekker, also participated in the round. Pargo said the funds will be used for growing working capital needs arising from its rapid expansion of sales, for aggressive new marketing plans, as well as to develop and widen its logistics and fulfillment services offering. “We are very pleased with the quality and endorsement of our new shareholders, and the possibilities of accelerating our expansion, as well as adding new services that these new funds

open up for us,” said Pargo’s co-founders, Lars Veul and DerkHoekert. “Pargo has clearly hit a vein of consumer need with its logistics-oriented fulfillment services. In combination with its proprietary technology and first-mover advantage, this latest investment – coupled with the collective guidance from the investor consortium – should serve to solidify the business’ lead position in this market,” said SAAD Investment’s du Preez. The past year has seen Pargo go from strength-tostrength, with revenues increasing 629% year-on-year, while the startup’s client base grew by 463%. Its collection point network stands at over 1,000 pick-up points across the country.

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WAREHOUSING

Mitchell Cotts Freight (K) Limited is one of the leading logistics companies within the region

With its headquarters at Mombasa- the gateway to East Africa region Procurement and Logistics Magazine team had a one on one interview with Mr Martin Olimba, General Manager, Nairobi Operations 26

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


WAREHOUSING

1: Thanks for this opportunity, for how long have you been in this position - 4 years 2: How were your facilities when you joined MC compared to today? - The number of warehouses in the area were very few, however that has now grown tremendously over the period 3: What services do you offer here verses the labor force? - We offer various services including but not limited to: • General warehousing • Bonded warehousing • Collateral management • Cold storage • Inventory management • Packing & removals • Re-packing • Labeling • Stock management 4: There are a number of companies that offer same services, how do you address the competition? With our expertise spanning over 80 years and our state of the art facility, we offer our customers tailored solutions that incorporate security, safety, stock management and a customer experience that is un matched. 5: Every warehouse does a lot with shipment; how do you monitor and oversee shipments to ensure products aren’t lost or stolen? We have invested heavily in security equipment including but not limited to CCTV, electric fence, razor wire,double walls, motion sensors, vibration sensors, biometric access control, alarms, K9, armed guards and a thorough review of the staff working within each facility.

6: What procedures do you use to limit damage to products during loading and unloading? Our warehouse team including the material handling equipment operators are trained to ensure extreme care is taken when moving any consignment. 7: Does your company handle hazardous or toxic materials, if yes, share with me the experience storing and transporting those goods? We do not handle hazardous or toxic materials in our facility 8: Warehouse owners often provide logistics services in addition to storage and shipping services. Have you ever performed logistics services in conjunction with warehousing?” or “What experience do you have labeling, pricing and assembling merchandise? Mitchell Cotts being a logistics firm offers these other value added services depending on customer needs. We have offered services such as labeling, re-packing, kitting etc all subject to customer requirements and requests. 9: Warehouse employees communicate with dispatchers, suppliers, moving companies, transportation services, company managers and warehouse coworkers on a regular basis. What are your communication strengths in a warehouse setting? Communication between the different players in the warehouse solution is key in ensuring that the team gets it right the first time. Our warehouse team ensures prompt responses to any requests and clarity of any instruction issued. We ensure that all instructions are documented to avoid any miscommunication in the various stages of providing customer solutions. 10: How would you communicate with a business owner if you couldn’t meet shipping or unloading deadlines? Timely communication by both e-mail and phone in order to ensure that the business owner is in the picture and can make the necessary adjustments to accommodate the fact that the deadlines earlier set are not achievable for whatever reason. Communication is key as it can be very costly when certain information is not shared on time. 11: What types of inventory tracking and notification systems have you used? Navision is the current main inventory tool that we use, however just as technology keeps changing we are also changing and will soon be rolling out a new system that is compatible with most systems allowing our customers that flexibility in interacting with our system and having real time information at their fingertips. 12: What are your specific roles in this position? I manage the Nairobi Operation of Mitchell Cotts Freight. 13. Adhering to company policies and cooperating with other departments are both vital to the success of the company, so stress your organizational strengths and willingness to follow protocol? Company policies add value to the organization and bring structure to how things are done. Mitchell Cotts has a strong culture in adhering to company policies and has been both ISO and AEO certified for a number of years now. Cooperation amongst departments within an organization cannot operate as silos but have to operate in support of one another in order to achieve great results. On a daily basis as consignments move from door to door in the value chain that we provide each department plays its part and relies on the others to deliver theirs in order to meet the customer expectations

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COVER STORY

Extending port services closer to hinterland customers,

KPA upgrades Nairobi ICD

Inland Container Depots, otherwise known as ICDs, are dry ports equipped for handling and temporary storage of containerized cargo as well as empties. This means that hinterland customers can receive port services more conveniently closer to their premises. Due to the expected upsurge of cargo traffic when the new standard gauge railway becomes operational in June this year, Kenya approved the expansion and modernization of its inland container depot at the country’s capital city and as the commissioning of SGR draws near, our Writer Malachi Motano finds out the progress and developments that have come with the project in question (Q) and answer (A) interview 28

Q: Explain what inland container deports are? A:Haji Masemo is the public relations officer at the Kenya ports authority: Referred to as ICDs, are a convenient shipping alternative extending port services closer to hinterland customers. The depots are directly linked to the container terminal at the port of Mombasa by rail through a service called ‘railtain-

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


INSIGHT BRIEFS BRIEF er’ provided by the Rift Valley Railways. This service transports containerized cargo by rail, on Through Bill of Lading (TBL) status. Q: What were the objectives of creating the depots? A: KPA intended to bring Port services closer to hinterland customers- same services offered at the port of Mombasa without having to travel all the way for the same thus saving time and money. The ICDs are therefore an efficient shipping solution, decongesting the Port of Mombasa Minimize road damage

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and carnage, provide safety and security to transit cargo - cargo transported by rail is safer and more secure therefore ensuring the safe transportation of cargo to and from the port of Mombasa and Saving customer costs Q:In total how many deports do we have in Kenya? A: Masemo: Inland Container Depots within the Northern Corridor enhance the Port of Mombasa throughput capacity, the clearance of cargo and container handling. In Kenya, the depots are located at Nairobi, Kisumu and Eldoret, and have transit sheds and stacking grounds equipped with various types of cargo handling equipment like forklifts trucks, front loaders, tractors, trailers, reachstackers and crane. Q: Then let’s narrow down to the Embakasi depot in? Nairobi. When was the depot initially created, its size

1 Organizing training workshops for procurement, logistics, professionals and stake holders. 2 Develop and design organisation magazines. 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 Limited

P.O BOX 40619 00100 GPO Nairobi-Kenya, Mobile + 254713727860 Tel +254 0204404488/02044002479 projects@procurementandlogisticsonline.com www.procurementandlogisticsonline.com

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COVER STORY

Q:

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and when did the upgrading exercise begin A: Masemo: The Cabinet approved the expansion and modernisation of the inland container depot at Embakasi last year and even the development of access roads. The ICD was established in 1984 and had a container stacking area of 99,000sq m with a capacity to handle 180,000 TEUs annually. This facility provides a one-stop shipping centre that not only caters for all shipping needs but in addition also includes; a commercial bank to ease financial transactions, a weigh bridge and a railway siding for transportation logistics. How has the depot performed in the past that fosters its upgrade? A: Well over the years, the depot has experienced considerable growth in throughput. With developments that include acquiring more efficient equipment and a competent work force, the ICD has been dedicated to improving service delivery through focused superior customer service as well as fostering strong working relations with its stakeholders. In tandem with KPA’s vision to be rated amongst the top 20 ports in the world in terms of reputation and performance, ICDs strive to be the best in terms of technological advancement, efficient and effective business management processes as well as offering competitive and superior customer service. When is it going to be ready what is the anticipated situation? A: Masemo: We are anticipating an increase in handling of cargo at the Embakasi depot once SGR trains start full operations by mid this year. New data by the KPA showed that its ICD in Embakasi, Nairobi handled a total of 29,103 TEUs (Twenty Equivalent Foot) in 2015, marking a 23 per cent dip from the previous year. Upon completion it is expected to handle 450,000 TEUs The project was approved last year how far has it gone and how much will it cost when it becomes fully operational? A:Masemo: The project is though under SGR is at the very final stages. Recent statistics by statehouse spokesman Manoah Esipisu indicated that the construction of the Mombasa-Nairobi section of the SGR is 98 per cent complete, giving an indication that it would be ready at the commissioning in June. On how much it cost, there is no separate statistics, and it is all in the SGR project which again according to the State house spokesman is Ksh 327 billion What are the benefits expected with the upgrade of the ICD? A: The inland container depot arrangement offers diverse benefits to shippers including cargo safety and convenience due to round-the-clock operations. Importers are also allowed 12 days free storage while exporters are allowed 15 days free storage for consolidation and nomination of vessels. Government agencies such as the Kenya Revenue Authority, Kenya Bureau of Standards, Kenya Plant Health Inspectorate Services, Veterinary Department and Port Health are also located

within the depots to ensure faster documentation. Q: Despite the immense benefits how comes, KPA’s international depots both in Embakasi and Kibos in Kisumu have remained underutlised? A: Cathrine Muturi-Wairi is the Managing director KPA: Not only the Embakasi depot, all KPA’s international depots even the one Kibos - have remained underutlised mainly because of the current unreliable railway services. New data by the KPA showed that its ICD in Embakasi, Nairobi handled a total of 29,103 TEUs in 2015, marking a 23 per cent dip from the previous year. The situation is worse off at the KPA internal depot in Kibos, Kisumu where no single shipment was handled in 2015. The Kisumu depot handled 74 TEUs of cargo in 2014 and 204 TEUs the previous year. Q: KPA former Chairman, Danson Mungatana said that inefficiencies at KPA saw the authority lose billions in revenue and big spenders like coffee, tea and sugar firms diverted from rail to road transport. Will SGR bring a new story? A: Muturi: We are alive to the fact that our port capacity as it is now cannot handle large volumes of cargo. As we shift attention from road to rail, we want to make sure the dry ports along the railway are spruced up and ready for the expected influx of cargo. Q: Let’s widen our look. SGR focuses mainly on rail transport where does ICDs leave trucks that have been carrying the cargo-the entire logistics companies? A: Daniel Tanui Mitchell Cotts Freight Kenya boss, “All logistics for transfer of cargo are in place.We will support it and facilitate faster imports logistics so that RVR remains competitive in the market. We had commissioned a new cargo terminal at the Jomo Kenyatta International Airport.The cargo terminal, is set to open in May, will handle both perishables and dry cargo. The terminal will have an annual output of 80,000 tons and plans are underway to expand the capacity to 150,000 tons. Mitchell Cotts has continued to make its name in freight forwarding, and is one of the largest logistics enterprises in Kenya. The firm offers an array of world class logistics and transportation services. Q: What about other companies? A: Job Kemboi is the general manager Siginon Global Logistics Company at JKIA: Transporters should not be worried especially in this first phase. SGR in phase one will only ferry cargo upto the ICD in Nairobi while still the cargo would be transported further by the trucks to different destinations Q: How is Siginon prepared for the development? A: Kemboi: Because we (Siginon logistics firm) are eying more business, we have acquired 100 trucks. There will be increased demand for road transport for our customers who are located inland, away from the Northern Corridor who will still need our services. We are confident that the SGR is a partner and not a threat to road transporters. The ICD was upgraded to realize maximum benefits of containerization of cargo, which is the current trend, and to avoid over-investment in port facilities and storage capacity. The ICDs serve as ‘Dry Ports’ linked directly to Mombasa Container Terminal by a special regular ‘Railtainer’ service.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


EVENTS Ethiopian Airlines hosts OGMA Exhibition & global aviation symposium Conference to Highlight Growth Opportunities in East frica’s largest airline group, Africa Ethiopian Airlines, is preparing

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hile opportunities are emerging in East Africa as a result of the region’s strong economic performance and billions of dollars in investment into its oil and gas, petrochemicals, and mining industries, the impact and risk, particularly of the current infrastructure development for the mining sector is a big challenge. This will be discussed and presented by top mining experts and policy makers at the first Oil, Gas & Mines Africa (OGMA) Conference at the Kenyatta International Convention Center, Nairobi, Kenya, from May 9−11 this year. The presentations will also cover investment and finance, policy and legislation, and the growth opportunities presented by the top-performing commodities for East Africa’s mining sector. Also part of the conference is the exhibition, aimed at providing a venue for trade professionals, companies, and stakeholders to learn and understand the growth potentials of the countries in the East Africa region and showcase related products, services and technologies of companies to encourage and establish business and improve their operations. Nader Abbas, general manager of Omanexpo, one of the organizers of OGMA, says: “OGMA is a ready platform to present products and services that are relevant to the ongoing largescale projects in the region. It will help open new businesses in the East Africa markets for participating companies, provide them direct access to opportunities arising from the current projects. The event, will, as well, invite new investments into the region’s mining, oil and gas, and petrochemicals resources.” The exhibition is expected to attract about 40 companies from different countries, representing various segments of the industries. OGMA is organized by Oman’s pioneer and well-established trade exhibitions and conferences organizer Omanexpo in cooperation with Trade and Fairs East Africa under the patronage of the Ministry of Energy and Petroleum Kenya. The conference is organized by the European Association of Geoscientists & Engineers (EAGE).

Visit http://www.ogmaexpo.com/ for more information about the event.

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to host the International Civil Aviation Organisation (ICAO) Global Aviation Training and TRAINAIR PLUS Symposium from April 11 to April 13 at the seat of the African Union, Addis Ababa. The event will be on the theme: “Together, Enhancing Training to Build Capacity.” This is the first time that the symposium will be held in Africa, and the fourth time globally. Close to 500 people are expected to attend the event including including the ICAO council president and the secretary general, transport ministers, ambassadors, Civil Aviation and Airport Authorities, Civil Aviation officials, aircraft manufacturers, airline and airport operators, industry policy makers, and tourism experts. Ethiopian Aviation Academy, the largest and most modern aviation academy in Africa, ICAO TRAINAIR PLUS Member and Regional Training Centre of Excellence and IATA Authorized Global Training Centre, is playing a vital role to address the growing need for skilled aviation professional in Africa and the region. Group Chief Executive Officer of Ethiopian Airlines, Mr Tewolde GebreMariam, said: “It is a profound honour for all of us at Ethiopian Airlines to host the ICAO Global Aviation Training and TRAINAIR PLUS Symposium which brings major industry players together.” He said the symposium aims to exchange best practices and experiences in human resources development and aviation training, and more specifically on the TRAINAIR PLUS Programme for the advancement of global aviation. “I believe this symposium will also be an opportunity for us to showcase our hospitality, the state-of-the-art aviation training facilities at our Aviation Academy and the key role Ethiopian is playing in the development of the African aviation industry.

First African Aviation Forum comes to Ghana

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hana is set to host the first ever African airshow, positioning itself as the next investment frontier in the continent. The African Airshow Exhibition and Conference, to be held in October will establish Ghana as a transportation hub within the West African sub-region, and at the same time create awareness within the continent and the global aviation industry about the vast opportunities in the country. Ghana’s minister of aviation Cecelia AbenaDapaah said they are looking forward to the show which will bring together industry stakeholders and prospective investors. The show is also expected to ensure stakeholders were in tune with the dynamics of the industry where they could share their experiences, findings and new investments. According to the minister, Ghana is the ideal choice owing to its democracy and political stability which had gained recognition, and the success of the aviation industry could give access to 250 million people in ECOWAS and one billion in Africa. The three-day show, to run from 24−26, October is being organised by 4M Events, host of the France Air Expo and the Abu Dhabi Air Expo. It will be hosted by the Ghana Airports Company. Didier Mary, general manager of 4M events said one of the aims of the African Airshow was to highlight the importance of the infrastructure within aviation industry including airport procurement, supplies and solutions and technology. He also stated that the Air show would attract key aviation industry players to discover first-hand the range of new technologies and solutions that the industry has to offer. The African Air show presents a great platform to discover the latest technologies and learn about emerging trends and networking with key decision-makers as well as acquire firsthand knowledge about the industry’s present and future growth.

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PROCUREMENT

Self-motivation is key in driving change in Procurement and Supply chain

Self-motivation is essential for success in any area of life, in any task regardless of how overwhelming it may seem. Knowing how to motivate yourself and keep your spirit high no matter how discouraging a situation is at the center of this.

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erfecting this art is the only way to get the power you need to overcome difficulties. Those who are discouraged in difficult times are certain to lose even before the battle is over. How else would Supply chain professionals drive change? Overcome resistance? Be at the forefront of driving value initiatives? To be truly motivated, you need to have hunger (not physical!) and not just desire. Desire won’t take you through difficult times since you don’t want things badly enough. In many cases, hunger makes the difference between the best performers and the mediocre ones. Hunger for best practice in supply chain, hunger for value creation in and through Supply Chain. Hunger for professionalism. Your cause and your dream play a big role in developing hunger. You have to care for and dream of your cause, you should have the hunger inside of you. If you think that you are losing hunger, all you need to do is to connect again to your cause and dream. Let them inspire you and bring the hunger back. What if your hunger is an area

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different from supply chain? Do not worry, find a way to use your supply chain skills to deliver change in the area you hunger for. Passionate and hungry for a cause in climate change? Then you are the best supply chain professional to champion green supply chain! Join the dots, the dots of your passion, your hunger, your cause, yourskills, your education and you. Obstacles are necessary along the way, there could be the tendency to quit. You may think that it’s too difficult to move on. You may think that your dream is impossible to achieve. But this is where you can see the difference between winners and losers. Though both of them face the same difficulties winners have the courage to continue. In difficult situations, when board room disagreement seem to digress and shoot down the best Procurement and supply chain initiatives or when your proposal to do something differently is shelved, just focus on taking one more step forward. Don’t think about how to complete the race. Don’t think about how many more obstacles are waiting for you. Just focus on taking the next step. Today is a new day and you have the chance to start again. No matter how bad your past might be, you still have a bright future ahead waiting for you. Just don’t let the burden of the past stop you.

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PROCUREMENT

Challenges affecting public procurement in Kenya Challenges affecting procurement performance has been attracting attention all over the world from scholars, practitioners, academicians and researchers due to poor performance resulting from non-adherence to proper processes and procedures. Lillian Mutiso looks at key challenges that affect public procurement in Kenya.

Procurement Process: Selection of the most suitable procurement methods and record keeping remain the most prevalent challenges in the public procurement process. To arrest the situation, Kenya must improve on record keeping, data and documentation controls and contract management processes and follow up mechanism have to be established by the oversight authority to ensure that firms are conforming to the existing procurement laws. Ethics in Procurement: The high value of the transactions in the public procurement process along with pressures to lower costs could result in bribery, corruption and other practices which could be deemed unethical. In the public sector, it is important that procurement professionals exhibit the highest levels of ethics through being impartial, professional and transparent in the day to day conduct of procurement activities. Ethical procurement best practice starts with the employees following a code which dictates their behavior and actions while conducting business. Though the Public Procurement and Disposal Act (2005) provides for procuring entities to practice confidentiality and disclose conflict of interest in the procurement process, ethical procurement practices should be extended to all stakeholders in the procurement cycle. Ethical procurement should also include an understanding of suppliers’ operations and the procurement professional should offer guidance and support when improvement is necessary or appropriate. Use of ICT in Procurement Process: The adoption of ICT

in Kenya is relatively low; hence there are still many factors that need to be considered. Based on research, it is certain that the adoption of ICT would bring about enormous opportunities for Kenyan public entities. It is necessary for the Kenyan government to develop a generic ICT plan that will assist its public entities to successfully adopt ICT, and technological infrastructures should be put in place by the government to support ICT adoption. For Kenyan public entities to remain competitive or to become successful, it is important for entity leaders to understand the critical success factors related to ICT adoption. This involves the Kenyan government making more funds available to public entities and putting some structures in place to ensure a successful investment. Supplier-Buyer Relationships: In Kenya, public procurement context, buyer-supplier relationship is handled on a transactional basis in almost all public entities. There is no sense of partnership or working together because the buyer is always focused on getting the cheapest price, usually making the suppliers give bids to see who would come out the lowest. At the same time, the supplier is trying to get a high enough price to cover their costs as well as make a profit. This type of transactional relationship is not beneficial to both parties, which means that for one side tow in the other would have to lose. The existing public procurement laws do not support establishment and management of effective buyer-supplier relationships in the procurement process. There is need to review existing laws with a view of encouraging suppliers to perform better and foster formation of long term relationships. The existing markets are becoming dynamic and implementation of the Public procurement private partnerships in 2009 is a step in the right direction in terms of encouraging private firms to partner and therefore the need to encourage public procurement entities to form long lasting partnerships with suppliers.

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REPORTS

The world’s most valuable logistics brands for 2017

Valuation and strategy consultancy, Brand Finance, has revealed the most valuable logistics brands for 2017.

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rands are first evaluated to determine their power/ strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable logistics brands are ranked and included in the Brand Finance Logistics 25 2017.

Most valuable, most powerful logistics brand

With a BSI score of 83 and brand value of $22 billion, UPS is the most valuable as well as the most powerful logistics brand. UPS recently invested in 14 Boeing 747s, in addition to some much smaller aircraft, as it joins Amazon in the race to use drones for deliveries. It rolled out its ‘What’s Your Story?’ campaign in March last year, to further develop its relationship with small business customers. This forms part of its broader “United Problem Solvers” strategy intended to position UPS as more than a delivery service, but rather as a go-to service to realise business ambitions or overcome hurdles. It humanises the factual, though (arguably) less engaging ‘We Love Logistics’ campaign adopted in 2010. Though still in second place, FedEx, saw its brand value grow by an impressive 31%. The company has increased its spending to $5.1 billion for the year starting 1 June 2016 to update its aircraft fleet and to facilitate growth in e-commerce facilitation. FedEx has also recently handed its UEFA Europa League sponsorship assets to the UEFA Foundation and children’s charity, Street League to enable over 100

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children the chance to walk out with Liverpool Football Club’s players. Though there is a risk that this move will reduce FedEx’s awareness scores, the goodwill gesture may improve recommendation and scores for governance and CSR measures.

Holland’s TNT Express takeover bid

FedEx and UPS have been embroiled in disputes over their controversial takeover bid of Holland’s TNT Express. UPS was blocked from acquiring the business for $5 billion by EU anti-trust authorities in 2013 over concerns about market dominance in Europe. Eyebrows were raised however when FedEx was subsequently allowed to acquire the business. In a significant decision this month, the EU’s general court ruled that UPS’ rights of defence had been infringed, opening the door for UPS to sue for damages. UPS may well have dodged a bullet, however. FedEx acquired TNT Express for $1 billion less than the previously agreed price and over the course of the last year, the value of the brand has plunged. Brand value is down 42% to $810 million, making TNT Express the fastest falling brand this year. Profitability has been weak for years but brand value remained high on optimism that the picture would change. Time and optimism have now run out for TNT Express however and even FedEx may find maximising value a challenge.

Royal Mail down 21%, compounded by Brexit

Royal Mail is another poor performer, down 21% year on year. The Brexit referendum has negatively affected many UK brands but Royal Mail’s troubles go beyond this. Its share price has dropped consistently from September 2016 and now stand at a near all-time low. Online migration of ad budgets is hitting revenue from direct mail (despite the best efforts of the great and the good of the UK’s advertising and marketing community pitching in for the ‘MailMen’ campaign) while a continuing fall in letter volumes is weighing heavily on Royal Mail given its Universal Service Obligation.

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REPORTS

South Africa’s reefer market booming as fresh fruit demand soars

Refrigerated container trade (reefer market) still makes up about 19 per cent of total South African container exports even though 2016 saw the market contract by about 3 per cent – largely due to lower crop yields of citrus caused by the severe drought.

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his is according to Matthew Conroy, trade manager of Maersk Line Southern Africa, a member of Maersk Group. He explains that the reefer trade sector connects South Africa’s shopping trolley – the agriculture sector – to the rest of the world. “South Africa’s moderate climate make it the ideal location for fruit farming, which makes up over 90 per cent of total reefer exports. “The large majority of produce that gets exported via reefer containers from South Africa is fruit, consisting mainly of citrus and deciduous varieties. Citrus fruits such as lemons and oranges make up the bulk of this trade, accounting for about 58 per cent, while deciduous fruits such as apples, pears and grapes make up around 35 per cent. Citrus crops are sourced from throughout the country, while deciduous crops – par-

ticularly grapes – are found predominantly in the Western Cape.” In contrast to the thriving reefer export trade, Conroy says that reefer imports for South Africa are very low. “Total reefer imports that South Africa receives are in single digits. Operationally, because of the imbalance, we actually bring thousands of empty reefer containers into South Africa just to service our strong reefer export market.” In terms of demand, the European continent receives close to 60 per cent of South Africa’s reefer exports, a market which has been very consistent over time. “Our biggest importer region would be the EU, which receives around 35 per cent, while the UK and Russia receive roughly 15 per cent and 7 per cent respectively. Other import regions include Asia (17%), the Middle East (16%), IntraAfrica (5%) and North America (4%). The market has experienced no major shifts in demand with this split having been largely the same over the past five years.” While South Africa is still experiencing extremely dry conditions in certain regions, Conroy concludes that moderate growth can be expected in 2017. “South African fruit is in high demand globally, so the market decline is more a reflection of the reduced crop output associated with the drought. As fruit farms are spread across the country and the drought has impacted each of these regions differently, the full impact of the drought on 2017 produce remains unknown. While this impact is very much dependent on water supply, our initial estimate is that there will be mid-single digit growth.”

“South African fruit is in high demand globally, so the market decline is more a reflection of the reduced crop output associated with the drought. As fruit farms are spread across the country and the drought has impacted each of these regions differently, the full impact of the drought on 2017 produce remains unknown. While this impact is very much dependent on water supply, our initial estimate is that there will be mid-single digit growth.”

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TRADE

WTO’s Trade Facilitation Agreement to ease trade across Africa The Trade Facilitation Agreement (TFA), a World Trade organization-backed pact is expected to accelerate the movement, release and clearance of goods across Africa, creating a boost for commerce and the multilateral trading system.

South Africa’s e-commerce growth in Smartphone Apps E-commerce is set to increase in popularity and buy-in consumers in South Africa in 2017. This is due to a number of supporting trends of greater variety offered by online shopping sites. The evolution of e-commerce has seen websites offer Android and ISO shopping apps to ease buying across the channels.

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he TFA, which came into effect on February 22 this year, has seen a number of African countries ratify the agreement including Kenya. The agreement seeks to expedite the movement, release and clearance of goods across borders. The full implementation of the agreement is forecast to slash members’ trade costs by an average of 14.3 per cent, with developing countries having the most to gain. At a sensitisation programme held recently for African shipping stakeholders by the Ghana Shippers Authority on the opportunities following the coming into force of the WTO trade facilitation agreement, shippers in the continent were tipped to boost their capacities as the agreement will result in more traded goods. The agreement also aims at reducing time needed to import goods by over a day and a half and to export them by almost two days, representing a reduction of 47 per cent and 91 per cent respectively over the current average. The WTO obtained the two-thirds acceptance of the agreement from its 164 members needed to bring the TFA into force. Implementing the TFA is also expected to help new firms export for the first time. Once the TFA is fully implemented, developing countries are predicted to increase the number of new products exported by as much as 20 per cent, with least developed countries (LDCs) likely to see an increase of up to 35 per cent, says a WTO study. According to WTO director general Roberto Azevêdo, TFA’s entry into force represents a “landmark for trade reform.”

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ccording to Kevin Tucker, founder of Price Check, South African consumers are increasingly turning to e-commerce shops when looking for, and purchasing various items. 26% of respondents of a recent survey did their first online purchase in June 2015 – a massive number compared to the total number of new online shopping for the period June 2016 which stands at 14%. The use of mobile devices – such as the smartphones presents development of mobile applications and the introduction of new payment options. It is an important consideration for online retailers in terms of ensuring mobile-friendly online display settings. While the majority of the mobile online shopping transactions tend to take place on desktops, shopping programs that are easy and convenient to use on mobile devices is likely to increase in popularity in South Africa this year. In today’s app-centric world, research suggests that customers prefer using the mobile web as a place to shop when compared to e-commerce apps. This means that having a high-performing, responsive site is just as important as investing in an app. This survey also suggests that: 31% of consumers prefer shopping on the mobile web against the use of a smartphone app. 52% of mobile phone retail turnover is expected to come from the Web in 2017. 62% of smartphone shoppers use their mobile to find products in online store. 47% of shoppers say they have a mobile website directly against 21% who say they use app from a dealer for online shopping. The majority of online retailers under-utilise their chance to sell through a responsive e-commerce website. The big advantage now is that the latest App Technology has the ability to create push notifications to their users to inform them about new promotions.

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TRANSPORT & LOGISTICS

Government must be clear about SGR and save Transporters from the agony of losing jobs Transporters in Kenya are blaming the government over what they term as misinformation about Standard Gauge Railway (SGR) which is leading to uncertainty and eventually affecting their business. And as Lilian Mutiso writes, Road transport operators in the Country are worried that SGR will edge them out.

Misinformation by the Government is making the situation seem like we (transporters) are competing with the SGR project instead of supplementing each other, a situation which has already affected our business.” AlfayoOtuke CEO Kenya Transporters Association He says, “Banks are now not interested in facilitating us through loans because of the uncertainty hanging around.” According to Kenya Ports Authority (KPA), the first train on the standard gauge railway (SGR) line will make its way from the Port of Mombasa to Nairobi in June this year. But as this date draws closer, road transporters are getting increasingly jittery about their future saying that the Standard Gauge Railway will edge them out. Otuke who was speaking during the African ports expansion conference at Mombasa said there are over 30,000 trucks in Kenya and each truck supports over 20 Kenyans. All these are likely to lose their jobs. Those involved in logistics along the Northern Corridor fear the SGR line will render thousands jobless and waste millions of shillings in investments, as the train replaces the bus and truck. Truck operators have dominated cargo ferrying from Mombasa to various inland destinations, with rail volumes dropping from about 70 per cent in the 1970s and 80s, to a paltry 5 per cent today. Currently, trucks charge between Sh85,000 and Sh90,000 to move a container from Mombasa to Nairobi. The transport industry anticipates lower rates once modern rail services are available. According to the latest statistics road transport accounts for 98% of the transportation of all the port cargo while railway accounts for the rest. While SGR will ensure efficiency in the transportation of cargo from Mombasa, it comes with the burden of triple-lifting goods – from the port, to Inland Container Depot (ICD) and then the final destination, which will carry costs. The investors likely to immediately feel the brunt of the new line, areContainer Freight Stations (CFSs) near the port, as more containers will be moved to the ICD in Nairobi. Road transporters are likely to face cargo shortages temporarily, but get back to full operations once the port attracts more cargo due to improved efficiency. Cargo volumes at the port, which also serves Uganda, Rwanda, Burundi, South Sudan and parts of Tanzania, Democratic Republic of Congo and Ethiopia, are already on the rise.

According to the transporters the full impact of SGR will be felt when the line is extended to Kisumu and Malaba. This may hurt business for operators who distribute cargo across the region. SGR which is set to start working in June is expected to ferry over 50% of the port cargo. Kenya Railways Corporation Managing Director Atanas Maina however downplayed the anticipated cut-throat competition for cargo and passengers between transport operators, saying SGR would take what used to belong to the rail. He asked transporters and Container Freight Stations (CFSs), which offer temporary cargo storage, to embrace innovation. “The key in any business environment is innovation, therefore, the existing transport businesses will survive if they embrace it,” Maina said. Business men in towns along the Mombasa high way and others that depend on long-distance trucks are however facing a bleak future as Kenya moves towards improved railway transport. An environmental and social impact report on the standard gauge railway reveals that such towns will experience economic downfall once railway operations kick off. The railway, which is under construction, will handle both passengers and cargo, and this will dramatically reduce the number of long-distance trucks plying the Mombasa-Nairobi-Malaba highway in the long-term. Towns along this transport corridor which act as stop-overs for long distance trucks, face economic decline once this happens. Business enterprises such as hotels, restaurants, lodgings and garages that are vibrant in these towns because of the long distance trucks are likely to collapse, the report says. People whose livelihoods depend on long distance trucks, such as drivers, turn-boys, truck owners, sex workers and vendors might need to change occupations or relocate to other towns. More than 50,000 drivers and turn boys might lose their jobs, as well as workers in related businesses like mechanics and oil recyclers. Truck owners are also likely to experience loss of business. The report suggests that Kenya Railways should enable truck owners to buy cargo trains or become shareholders in the railway transport business so that they are not pushed out of business completely. The railway is expected to be fully operational by 2018. The first phase of the project, from Mombasa to Nairobi is nearly complete and is expected to start operations in June 2017. Some economists however downplay these negative effects of the railway, saying they are nothing compared to the economic growth the SGR is likely to generate.

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FLEET MANAGEMENT

Riding on technology, a company delivers efficient accurate and robust tracking solutions The ability to manage a fleet with vehicle tracking systems is increasingly being utilized in businesses today in Kenya. In that respect, technology has proven to be a great advantage to many of these businesses and is helping them improve fleet productivity. Malachi Motano features a Kenyan company that utilizes a technology to deliver efficient accurate and robust tracking solutions on vehicles

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afetrac Limited is a Kenyan based company specializing in Vehicle Tracking, Fleet Management, and Personal Tracking. The company also provides affordable ICT solutions for the logistics sector, warehouse and inventory management with deep domain knowledge in technologies such as GPRS, Active and Passive RFID. “Our solutions aid individuals and organizations in making meaningful operational and financial decisions. At Safetrac, we go beyond just tracking; into providing critical solutions that aid individuals and organizations in making meaningful operational and financial

decisions,” says Ben Limo the general operations manager Safetrac. Safetrac technology is powered by Arvento, the 5th biggest company in the world in the field of fleet telematics. Arvento boasts a 55,000-client portfolio with technology utilized in more than 700,000 vehicles across three continents. Limo, “Managing a fleet is a challenge, to say the least, but the incorporation of the latest technology can make the entire process simple and very efficient. The tracking combines the use of automatic vehicle location in vehicles with a software that collects these fleets’ data for a comprehensive picture of vehicle locations.” Although there are so many companies offering these services to vehicle owners and most owners rely on them for the vehicle safety, Safetrac-a relatively new tracking company entering the Kenyan market, wants to revolutionize the sector “We provide affordable ICT solutions for the logistics sector, warehouse and inventory management across the East African region. We help business work smarter and more profitably by delivering technologies and value added services that can be used to increase efficiencies and gain competitive edge in the market place,” Limo He says the company client base range from gov-

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FLEET MANAGEMENT ernment institutions, the private sector, SMEs and large global companies wishing to secure valuable assets and goods. “Safetrac Limited technologies offer solutions for consignment stock management, chain of custody control, issues related to congested bays at malls, student monitoring and tracking, and indoor asset tracking. Some of the solutions include Urban Logistics (U-LOG), QuikCount, ATLAS™ BLE - For Indoor Asset Tracking and Student Tracking and Monitoring System (STARS),” Limo says U-LOG is a cloud-based solution that aims to solve issues related to congested bays at malls; low truck utilization; traffic congestion and high carbon footprints that all modern cities face. It has been designed as a lightweight urban solution for last mile delivery of roller cages to malls, valuable packages for clients and the securing of urban utility assets rather than long cross-border journeys. “QuikCount is a solution that enables clients to count entire pallets or groups of stock affixed with our passive RFID label with just a single sweep of our RFID gun which is linked to the QuikCount mobile app. With QuikCount, an RFID tag is labeled on each item on your shelf or stock. An RF Blaster Gun with a bar code reader is then used to scan the stock in seconds. Once scanned, QuikCount then computes the quantity of the stock, this could be in terms of sold, misplaced or lost items,” He explains It also providesStudent tracking and admin reporting system (STARS) is a simple solution used for monitoring students’ movement in and outside of school. STARS uses ATLAS is a simple solution allowing parents and schools to keep track of young children on the move.” Safetrac Limited uses world class technology in the tracking space. The company has received recognition from different national and international organizations since its establishment and has presence in over 30 countries worldwide; 13 in Africa (Senegal, Ghana, Guinea, Ivory Coast, Tanzania, Tunisia, Algeria, Morocco, Sudan, Kenya, Uganda, and Rwanda). Ruth Kang’ong’oi, the General Manager, Safetrac Limited says there is a need for fleet management solutions in the transport Industry in the country. She says most if not all companies claiming to offer this only deal with tracking. ‘’Safetrac is changing this by doing more than just tracking. We are granting advanced, timely reports and real-time notifications hence providing companies to not only optimize their fleet, vehicle performance but also minimize the phone call traffic with the drivers on the field resulting in time and labour savings.” She says Safetrac will be offering solutions that relay reports such as fuel usage, temperature control and monitoring systems, tipper and bucket lift control system, transportation, school tracking and management system. “The benefits of utilizing the latest technologies and software in business are extensive. Real-time vehicle tracking, for example, enables companies to save dramatically on things like fuel

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and insurance costs. This helps you increase productivity and efficiency at the same time. It also enables companies and individuals to save drastically on fuel and insurance costs. You can increase efficiency and productivity at the same time.” Kang’ong’oi According to Limo, Safetrac’s entry into the market marks a very big step in the vehicle tracking market in Kenya significant part of every company’s operating cost comes from fuel costs. The cost could be reduced significantly if the company managed and controlled how the fuel is used. For cargo transporters, the dilemma they continue to fight is their trucks crew siphoning fuel from their trucks. “Rogue drivers and turn boys make a kill as they steal from their employers by drawing diesel from the trucks and selling it to fuel dealers along the highways. Some of the traders have even put temporary structures along the highways to carry out this illegal trade.” Driving through Mombasa to Malaba border point, it is common to spot these men with clothes drenched in oil who are involved in oil siphoning. These scenes are also common in major points of our Kenyan highways. In fact, it is estimated that the 12,000 transit trucks that leave Mombasa port to deliver cargo to the Great Lakes region every week lose about 100 liters of diesel each on a one-way trip. The introduction of fuel control and management solutions is, however, helping to curb such cases. These solutions have been designed to monitor, save and optimize fuel related costs. Information about fuel level and consumption is obtained by connecting GPS tracker to onboard or installing fuel level sensors directly in the fuel tank. At Safetrac Limited, our fuel Level Sensor once installed in the fuel tank allows users to easily monitor fuel levels online, real-time and retrospectively. In case of sudden or unexpected changes in fuel levels, an alert is sent to alert the users. For truck owners, our Fuel Tank Lid Sensor also allows monitoring when the lids are opened and closed. When the fuel tank lid is opened outside of defined or authorized areas, an alert is sent to prevent fuel theft. If you are a truck owner then this world-class technology solution should be in your requirements lists. Cases of rogue drivers siphoning fuel should make you less worried once you have this solution in place. These fuel monitoring solutions also generate reports which should help you identify drivers who waste or steal company fuel as well as vehicles that use too much fuel. You can significantly save costs by monitoring fuel levels, and the amount of fuel actually consumed. This will, in the end, help the company make meaningful operational and financial decisions.

“Safetrac Limited technologies offer solutions for consignment stock management, chain of custody control, issues related to congested bays at malls, student monitoring and tracking, and indoor asset tracking. Some of the solutions include Urban Logistics (U-LOG), QuikCount, ATLAS™ BLE - For Indoor Asset Tracking and Student Tracking and Monitoring System (STARS),” Limo says

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FLEET MANAGEMENT

Kenyan firm finds fleet management solution to manage expenditure Increasing cost of doing business remains a major challenge facing many organizations today. As cost reduction becomes a priority for commercial enterprises, Risk Management and Security Solutions Provider G4S Kenya Limited comes up withasystem, dubbed ‘G4S Fleet Control’ that corporate organisations will use to monitor fuel consumption and vehicle location, writes Malachi Motano/Lillian Mutiso

G4S understands the challenges facing many organizations today as a result of increasing cost of doing business. Cost reduction is a priority for commercial enterprises today, and we believe G4S fleet control will empower fleet managers with control over fuel siphoning, vehicle misuse, cargo theft including the safety of staff,” G4S Managing Director, Martin Otiti. According to Otiti, fleet management system is a priority for monitoring and controlling all company vehicles including cargo, public safety and transport vehicles. The MD says, “The G4S fleet management solution will

not only help customers to keep control over their fleets’ movements but also act as a theft prevention, fuel-tampering, and driver behavior management device.” The solution (G4S Fleet Control) comes in three packages which include Fleet Minimum, Fleet Optimum and Fleet Optimum Plus. The packages are affordable and are designed to allow customer’s select packages that meet their requirements including tracking, recovery and roadside security response. The solution also provides real-time data and instant visibility through mapping and vehicle control modules that are user-friendly and provides a rich environment to be in complete control of your mobile assets. Otiti, “The G4S 24 hour control centre and countrywide response infrastructure (comprising over 150 crewed response fleet) provides the platform for emergency security response in the event of an incident.’’ He says G4S partnered with Enigma Vehicle Systems Plc, one of the leading global vehicle tracking, data management and security system provider to provide technical support and new product development in line with new technology. “Enigma Vehicle Systems are specialists in Commercial Vehicle and Plant security and offers a flexible and feature-rich tracking platform that provides tracking for Vehicles, Plant, Mobile Assets and People,” MD Some of the benefits of the G4S Fleet Control include advanced tools and support system that ensures better fleet efficiency, reduced accidents, reduced motor vehicle theft, security for vehicle occupants, increased fleet visibility, educed operational expenses, reduced insurance claims, improved asset recovery and improved customer satisfaction. G4S Fleet Control also provide other features like driver management system (driver key), impact sensor (accident detection), hands free kit for safe driver communication, roadside support and emergency services and recovery of vehicle to nearest police station. It has a robust Windows-based web application with innovative features enables users to keep track of their mobile assets like GPS satellite transmits data that the tracking device installed stores. The system improves productivity as it provides daily activity reports; fleet utilization reports; detailed summary reports per vehicle or per group as well as special reports for private and business use. He sayscorporate organisations will use to manage fleet operation expenditure.

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FLEET MANAGEMENT

Launch of Regional electronic cargo tracking system a plus for East African Truckers

Transport firms in Kenya, including market leader Siginon Global Logistics have welcomed the latest cargo tracking technology‒Regional Electronic Cargo Tracking System (RECTS)−which is expected to ease movement of goods across transport corridors and cut down transportation time.

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iginon Global Logistics has reinforced cargo security by implementing real time cargo tracking systems in all its trucks, in a bid to offer its customers optimal and real time cargo tracking while in transit. “The trackers monitor cargo movement from loading at the port of Mombasa and it is only disarmed once it is confirmed that the container seals are unbroken and trackers disarmed by our centrally located fleet office on arrival at the destination. The technology also tackles soft issues such as drive behavior while on the highways to ensure that safety is observed at all times,” said Siginon Global Logistics, Divisional Manager, JobKemboi. RECTS is a harmonized cargo tracking system that connects Kenya, Rwanda and Uganda by monitoring cargo movement for both the Kenya and transit markets transported within the regions. The technology will enhance cargo movement along the Northern corridor, which stretches from the port of Mombasa to the Kenya/Uganda Malaba border. The RECTS system was launched on March 1st by the Kenya Revenue Authority (KRA) following a July 2014 directive by the Northern Corridor Head of State Summit that was held in Kigali. Mr Kemboi said, “The RECTS system guaran-

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The fleet management system monitors speed limits, harsh braking, vehicle idling as well as support route planning. These have greatly hindered the risk of transit cargo getting diverted into the local market contributing to dumping.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017

tees cargo safety and security as the cargo is transported within the East African region. The expectation is that the system will also act as a deterrent against highway theft”. Kenyan transporters implemented the Electronic Cargo Tracking System (ECTS) in 2014 to monitor cargo movement while within the confines of the Kenya border. The RECTS will expand the cargo monitoring scope to include Rwanda and Uganda. It also presents 24/7 Central Monitoring Centres (CMC) in Nairobi, Kampala and Kigali with a view of the entire region. A report by TradeMark East Africa, an East African not-for profit that supports the growth of trade – both regional and international – in East Africa indicates that the new system replaces the existing Electronic Cargo Tracking System (ECTS) where monitoring is done independently through stand-alone platforms. This forced KRA officers to toggle between screens, therefore making the process very tedious and prone to abuse. The new system also consists of 12 Rapid Response Units consisting of Customs and Police Officers along the Northern Corridor. It comprises of smart gates and automatic number plate recognition at the port gates and borders. This eliminates manual data capture and reduces the dwell times at the borders and port gates. The fleet management system monitors speed limits, harsh braking, vehicle idling as well as support route planning. These have greatly hindered the risk of transit cargo getting diverted into the local market contributing to dumping. The $4.4 million tracking system will also eradicate tax leakages and create a level playing field for importers and local industries. The fleet systems also manage transportation costs that arise such as fuel siphoning and vehicle wear and tear. Siginon Global Logistics is part of the Siginon Group with over 30 years’ experience in logistics and transportation. Key logistics services offered are; transportation (road/rail/air), warehousing, customs clearance, distribution, project cargo logistics with a customer base in East Africa and the Great Lakes region.


FLEET MANAGEMENT

Fleet Management Solutions Market to reach $9 billion with 22.88% CAGR Forecast to 2020

Fleet Management Solutions Market 2016 Global Trends, Market Share, Industry Size, Growth, Opportunities, and Forecast to 2020.

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UNE, INDIA, The Fleet Management Solutions Market was projected at USD 3.21 billion in 2015, and is expected to reach USD 9 billion by 2020, with a CAGR value of 22.88%. Fleet management solutions (FMS) market integrates hardware, software, network infrastructure and connectivity solutions to offer effective monitoring as well as reporting systems for fleet operators. Fleet management solutions are often perceived as vague; however, it refers to a set of tools, which offer greater control over fleet activities by making use of data logging, data communications and analytics. The various services provided by FMS include vehicle & asset management, operation management, supply chain management and regulatory compliance. These services are provided, using a combination of telematics devices, navigation system, network and software tools. This management solution plays a major role in saving costs and resource expenditure, while ensuring that the entire fleet complies with prevailing standards. Therefore, fleet management solutions are increasingly becoming an indispensable part of fleet operations. The overall effectiveness of a business can be greatly enhanced by eliminating services that offer marginal value. Increased demand for operational streamlining, greater access to connectivity and plunging hardware costs are expected to drive the growth of this market. The general market outlook is optimistic due to increased demand for fleet solutions, growing service sector and incremental innovations in technology. Suppliers comprise of original equipment manufacturers and after-market suppliers. Although fleet management services have been

around for over three decades, they are yet penetrate the market due to several mitigating factors. These factors include lack of awareness among small fleet owners while large fleet owners face bureaucratic hurdles for gaining approval. Fleet management solutions are increasingly being deployed on the cloud due to several cost and operational advantages. On-premise hosting is an alternative to the cloud model; it is based on local deployment of solutions. Hybrid deployment uses a combination of cloud and on-premise hosting facilities. This market is segmented based on solutions offered for different verticals such as, telematics, asset management, fleet analytics, driver management and other services. Fleet management solutions are used across various business verticals like manufacturing, transportation, government, energy utilities and others. North America leads the market for fleet management solutions. It was worth USD 1.18 billion in 2015, and is expected to retain high growth during 20152020. Presence of major fleet management solution vendors and increased demand for freight traffic is driving this market. The European market is the second largest contributor to revenue, with United Kingdom, France and Germany being the major markets in this region. Europe fleet management services market was valued at USD 0.91 billion in 2015. The Asia-Pacific region is expected to record the highest growth rate in this market. Increased market penetration and presence of large fleets in China and India will aid in the adoption of fleet management solutions in the region. The Latin American market is expected to grow at a CAGR of 24.20%, due to increased awareness and demand for cost effective solutions. Fleet management solutions in the Middle Eastern region are forecasted to record high growth owing to increased retail activity and presence of large/medium fleet operators.

REPORT BY:WISEGUY REPORTS

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FLEET MANAGEMENT

Goodyear introduces new smart tyre for future urban fleets

On-demand transportation or ridesharing, as an alternative to taxis, rental cars, or actual driving is no longer just the choice of millennials. The value in the convenience of immediacy, location and payment is appealing to all demographics and is bringing ride-sharing services into the mainstream. The trend toward urban life creates an ideal environment for the adoption of new modes of transportation.

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s such, tyre and rubber company, Goodyear, has introduced the IntelliGrip Urban−a concept tyre designed for future generation autonomous electric ride-sharing vehicles in urban areas. The new product includes technical features designed to maximize uptime and energy efficiency. President of Goodyear Europe, Middle East and Africa Jean-Claude Kihn said: “IntelliGrip Urban is crucial for ‘mobility as a service’ providers to offer improved mobility to their customers.” The Goodyear IntelliGrip Urban, with its advanced sensor-in-tyre technology, is a smart tyre designed to support autonomous vehicle control systems and enhance passenger safety. The concept tyre senses road and weather conditions. By gathering this critical data and sending it directly to the vehicle’s computer system, it enables the car to optimise speed, braking, handling and stability. Future-generation autonomous fleets will be operating in a complex environment, with other vehicles, drivers, pedestrians and data from all of the elements making up the Internet of Things. Tyres such as the Goodyear IntelliGrip Urban could play a critical role in this evolving ecosystem. Furthermore, fleet operators will benefit from the tyre’s

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tall and narrow shape, which reduces rolling resistance to increase energy efficiency and range of electrical vehicle fleets in an urban environment. The IntelliGripUrban’s sensor technology would also allow operators to precisely identify and resolve tyrerelated issues before they happen. The IntelliGrip Urban would enable fleets to monitor their vehicles and tyres in real time, giving them a competitive advantage whilst helping to increase their profitability, supported by following key features: • Sensor-in-tyre technology helps autonomous cars to better read road conditions, supporting and enhancing passenger safety and peace of mind. The entire fleet can benefit from the crucial Tyre-to-Vehicle information exchange via the cloud. • Proactive maintenance allows fleet operators to precisely identify and resolve tyre-related and potential safety issues before they happen. A one-stop, user-friendly solution to maximise tyre performance and schedule proactive maintenance helps to reduce total cost of operations and improve the uptime, efficiency and sustainability of the fleet. • Tall and narrow shape reduces the rolling resistance of the tyre in order to increase the energy efficiency and range of the electrical vehicle fleet in an urban environment. The concept tyre’s shape also contributes to improved aquaplaning performance, which allowed Goodyear’s designers to decrease the amount of grooves on the tyre, increasing mileage and reducing noise levels.

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SUPPLY CHAIN BRIEF

Nutrition supply chain distribution system in Kenya

Kenya must enhance monetary and evaluation (M&E) as a way of increasing transparency in the supply chain to enable a quicker response to fluctuations in demand, focus on capacity of county teams, support the scale up LMIS to facilitate ease in management including order placement and reporting, as a way forward on integration process

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oH, UNICEF and KEMSA and other partners should also sign off on agreed KPIs that will be reviewed quarterly to monitor progress, integrate other partners on an ongoing basis through a national MoH led process, use and regularly update the Master Facility List as provided by MoH and ensure and invest in adequate storage that is safe and secure for these

Commodities

The supply of nutritional commodities in Kenya is currently done via parallel logistic chains by various donors and stakeholders. However, Dr Patrick Amoth who is the Head, Division of Family Health in Kenya, the parallel systems make it difficult to coordinate and manage the nutrition program supply chains since they require parallel reporting and parallel logistics systems. Ministry of Health earlier on organized nutrition supply chain workshop with the objective of assessing the parallel nutrition logistics chains for Integration into the GoK National SCM System. The assessment focused on the activities within the supply chain functions which include planning, sourcing, storage, distribution, monitoring and evaluation

with phase one focusing on the parallel nutritional supply chains and identifying the bottlenecks within the system. Phase two developed an integration roadmap that entails the activities, roles of stakeholders, KPIs to guide the implementation process and the last phase piloting the integration model to evaluate its feasibility and generate lessons learnt The key benefits of the integration would include direct delivery of nutritional commodities to health facilities, increased collaboration in forecasting and quantification of needs, dedicated warehousing and distribution partner, continuous flow of commodities from Mombasa (port) to satellite facilities (no supply chain breaks), commodity tracking information system, trained personnel and increased accountability Capacity Building and full Integration would involve the roll out of the integrated supply chain to other counties, which will occur after the successful completion of the pilot project. The full integration will require roll out of integrated supply chain in the country, Standardized reporting tools, steering committee /coordinating, entity to guide the implementation Establishment of funding mechanism, establishment of project management office for and Implementation capacity Building. “This will address the downstream supply chain bottlenecks to have a fully integrated supply chain model. It will involve training of targeted personnel from the entities involved in the integration process equipping them to effectively participate in the integration process,� Dr Patrick Amoth. He says the focus of the training will be on integrated supply chain management. The approach to undertake capacity building will involve: Identifying audience needs, Assess content development, capacity development, scale up identifying the targeted personnel and stakeholders to be trained in supply chain On management, DrAmoth recommends conducting a high level analysis of the capacity gaps of identified personnel and stakeholders to include order processing, forecasting, inventory management, stores management, reporting, M&E. it welcomes use of various approaches to build capacity for targeted individuals. The trained individuals are expected to cascade the knowledge to other personnel and stakeholders to develop a Capacity development Scale -Up Strategy for the country Direct delivery of nutritional commodities to health facilities and Commodity tracking information system, dedicated warehousing and distribution partner-KEMSA, trained personnel and increased accountability, continuous flow of commodities from Mombasa (port) to satellite facilities (no supply chain breaks), increased collaboration in forecasting and quantification of needs Stakeholders Nutrition supply chain system assessment of parallel Nutrition supply chains project Piloting Deploy resources /build capacity to address gaps, Lessons learnt and road map for scaling up ownership/ country leadership.

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ADVERTORIAL

Siginon Aviation connecting Africa to the world with innovative cargo handling solutions As Nairobi strengthens its position as East Africa’s business hub, the imports and exports business has been on a steady growth, fueling stiff competition among aviation players who are now investing heavily in modern cargo handling facilities to cement their position in offering comprehensive air freight solutions in the region. One of the players in the Kenyan cargo handling market− Siginon Aviation has established itself in East Africa as a reliable service provider taking the lead as far as service excellence is concerned Writes Sandra Dinga

Humble beginning

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iginon Aviation has evolved into a fully-fledged cargo handler since inception, combining its business expertise and state-of-the-art technological applications to weather the intensive competition from its peers to remain the most preferred handler in the region. “It was in 1985 when Siginon Group journey began in Mombasa, as a humble transport company comprising of 2 trucks. The firm later expanded its warehouses, with business operations only limited to the port city of Mombasa,” Ruth Nduta, Brand and Corporate Affairs Manager at Siginon Aviation explains. “The firm witnessed steady growth and in 1997, Siginon Aviation was born. A time when the market was just taking root and the Jomo Kenyatta International Airport (JKIA) opening up operations to receive bigger freighters from across the globe.” “Siginon Aviation gained momentum, expanding its wings with a second cargo center at Eldoret International airport as it looked to firm up its base in the industry.” In 2014, the operator moved its Nairobi operations to a state-of-the-art facility at JKIA terminal in an investment worth $10 million. This marked a major milestone, ushering a new era of prominence for the aviation expert whose vision is to be a provider of world class logistics services.

Modern cargo handling facility

Siginon Aviation is one of the four air cargo terminals at JKIA, serving twelve leading global airlines includ-

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PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017

ing Cargolux, Singapore Airlines (SIA) Cargo, Magma aviation, CargoLogic Air and Qatar Airways. It also serves Etihad and Emirates airlines at their Eldoret facility. Being an era of technological boom, Africa’s aviation sector demands a sophisticated level of operations for customer satisfaction. Siginon Aviation has stepped up to the challenge with its new $10 million cargo terminal at JKIA which has given it a new lease on life. The design and structure of this terminal has been guided by global standards of optimal cargo handling underlined by focusing on safety, security and efficiency as the key principles. It is important to note that the cargo handler has attained industry qualifications. Siginon Aviation got its ISO certification in 2006 and has since endeavored to consistently improve its services to offer clients the best solutions. In 2012 Siginon became ISAGO (IATA Safety Audit for Ground Operators) certified to match the IATA standards for ground handling services. This certification was renewed in renewed in 2014 and 2016. “The continuous improvement and certification ensures that Siginon Aviation offers world class service to remain competitive and maintain its top position in the region,” says Jared Oswago, Acting Divisional Manager at Siginon Aviation. Their new terminal is a gem in itself and is well equipped to cater for all kinds of cargo, including general cargo warehouse with an annual throughput of 60,000 tonnes, specialized storage areas for dangerous goods (DGR),


ADVERTORIAL systems to ensure client safety. We have also contracted security companies to boost what’s already being done by our team including a 24-hour manned CCTV room,” says Oswago.

Quality Customer Service

temperature sensitive and oversized cargo. This unique facility boasts of having the longest access to the airside as well as offers the unique proximity to the passenger terminal. The firm has also invested in the latest security equipment at its facility to boost its operations and ensure safety at all times. “Security is a major issue of concern especially when you are dealing with world’s leading carriers. This has seen us invest in modern security equipment including CCTV cameras and access control

The expansion into the aviation arena is part of the company’s strategies to raise the standards and level of service in this industry as people have come to expect nothing less from this dynamic company. Not only has it succeeded in doing so, but Siginon Aviation has grown beyond expectations and the same philosophy of service excellence is applied beyond borders to offer world class cargo handling services. Siginon Aviation is made up of a professional, customer focused service team. Its staff is committed to ensure customer satisfaction by exceeding expectations. This is made possible through annual staff training and rigorous recruitment process. “Our operations staff members are all fully trained and meet IATA standards, with regular refresher courses as a standard in our operations,” Mr Oswago says. “They all have undergone dangerous goods (DGR) training to bring them up to speed to always be alert when handling the most sensitive out of gauge cargo such as oil and gas equipment,” Nduta interjects. The firm also conducts regular surveys to ensure their customers’ needs are met and according to Nduta, this guided the design for their new termiSiginon is cost conscious and em“Security is a major issue of nal. ploys integrity and innovative measures concern especially when you are to ensure they all benefit together with dealing with world’s leading airline partners to remain competitive. Achievements and Successes carriers. This has seen us invest In 2014, Siginon got certified by the in modern security equipment European Union to handle direct flights including CCTV cameras and access into Europe‒a major achievement in its towards service excellence. This control systems to ensure client journey has given it a mileage in its operations safety. We have also contracted with major airlines streaming in for security companies to boost what’s partnerships. The ambitious cargo handler already being done by our team recently concluded a deal to provide including a 24-hour manned CCTV ground and ramp handling services for room,” says Oswago. the third largest airline in the world,

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ADVERTORIAL

Qatar Airways. This marked yet another significant milestone for Siginon Aviation and instilled the trust that global airlines have in their services through their modern facilities. “We are delighted to be the cargo handler for Qatar Airways Cargo in JKIA, Nairobi. This move reiterates Siginon Aviation’s commitment to attract and serve global airlines with internationally benchmarked facilities and operations and exceptional customer service delivered at global service standards,” notes Oswago. We have proved our efficiency to Qatar during this year’s Valentines period when exports volume increased and they commended us for the good support and quality service we provided them during that period.” Siginon also clinched another deal last year to handle the national examinations for both primary and secondary schools in the country. With their robust security procedures and advanced facilities, they provided smooth operations during the entire period and ensured timely delivery of the examination papers to the Kenya National Examination Council. “Siginon has one of the best operating systems in the world and this has really helped in winning the trust of our partner airlines. From 2009, we have had cargo spot−the main operating system which is internet based to offer innovative solutions to our clients. Partnering with globally recognized airlines and our new terminal is really a plus for our company. We take pride that we are setting pace with JKIA as a cargo airport of repute.”

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Future

“Siginon has one of the best operating systems in the world and this has really helped in winning the trust of our partner airlines. From 2009, we have had cargo spot−the main operating system which is internet based to offer innovative solutions to our clients.

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017

Cargo handling has not been an easy task for the aviation expert as it has weathered challenges in the unpredictable market environment such as high operational costs, lower revenues and extreme security compliance costs. The firm has maintained its leading position with the help of its collective knowledge of cargo handling and operational management strengths to provide all potential customers with a competitive and preferential aviation option. Siginon Aviation is betting on Africa for its future as can clearly be seen in its goals and vision. With the region’s increasing prominence and activities such as oil and gas exploration, East Africa is fast demanding the most efficient and convenient means of cargo handling. With its growing population, the region is becoming the destination of choice for investment and tourism and as air travel is one of the drivers of economic growth, Siginon Aviation has positioned itself as the cargo handler that can cater to the growing demands of aviation services in East Africa. The firm is looking to expand its footprint across East Africa and further South and West Africa as it continues to build its brand through its world class business solutions. The cargo handler is also looking to diversify into other services such as passenger handling, to cater for the growing number of travelers. Indeed, Siginon Aviation is betting on Africa, as it has done since its inception, and it is betting big. This regional cargo handler is clearly the best positioned operator to lead the continent, bringing Africa to the world and the world to Africa.


ADVERTORIAL

“Air freight in Africa:

Building tomorrow’s market today,” Air Cargo Africa 2017 raises the bar By Daniel Edwards

The restrictive and protectionist intra-African regulatory regime hampers the expansion and improvement of air transport on the continent, became the Yamoussoukro Declaration from the February Air Cargo Africa convention held at the Emperors Palace in City of Ekurhuleni, Johannesburg-SA.

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ommenting on Africa’s Yamoussoukro Declaration and the debate on opening skies, Jan de Vegt Chief Operating Officer, Kenya Airways said Africa needs to take cautious steps and not rush to open skies outside Africa. “We have to come to a situation, where Africa has an open sky within Africa first. Harmonisation is critical for all countries across Africa particularly as the continent has got a growing population, and a young labour force, which would be able to become a young

workforce and then a young consumer market,” Jan de Vegt The fourth edition of Air Cargo Africa brought together a record number of 80 exhibitors, 533 global industry decision makers as registered delegates and an impressive number of 3027 trade visitors from across 29 African countries and 32 countries from other continents. The convention registered even bigger number participation of industry stakeholders, this time with the shippers onboard, which made the three-day conference-cum-exhibition a resounding success to unearth the growth potential of the African continent The convention, under the theme, “Air freight in Africa: Building tomorrow’s market today” was inaugurated by the guest of honour Dr. Ismail Vadi, Gauteng Member of Executive Council for Roads and Transport and Dr. N Xhakaza, Member of Mayoral Committee, Finance and Economic Development, City if Ekurhuleni along with Tleli Makhetha, General Manager, South African Airways

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ADVETORIAL

“Significant innovations are compelling people to ‘rethink’ the way they live, interact, transport domestically and internationally. They are influencing people to rethink about all the well-established norms and practices,” says Dr Ismail Vadi during his inaugural address. According to the Acting CEO South African Airways, Musa Zwane, For South African Airways, the air cargo is an important and significant part of business. He says South Africa is singularly proud of that our country is playing host to this event, which seeks to highlight and enhance the development of the air cargo and the opportunities in the African region. “We are also excited that for the first time this year shippers and forwarders are participating fully in the event to both exhibit and deliberate.” Although infrastructure is somewhat in place when it comes to handling the import shipments or the export shipments at the African airports, there is need to improve the ground transport says Rainer Mueller, Vice President, Commercial, Saudia Cargo “What I would be hoping is, we as an industry manage for setting up an effective ground transport product in addition to what we are having as an air cargo product,” Mueller Rudolf Steiner is the Senior Vice President Cargo, Global Accounts & Commercial, Swiss port International, “Investments are being made to improve the current scenario. We invested in brand new facilities in Africa. We have opted for facilities in Dar es Salaam and Kenya. It is an absolute must to invest in Good Distribution Practices (GDP) and core facilities, we have done that. Are we yet there? Most probably not, but compared to two years ago “Significant innovations are compelling we took a big people to ‘rethink’ the way they live, step. We have interact, transport domestically and to work closer to internationally. They are influencing the producer, in people to rethink about all the well- order to further in the established norms and practices,” says improve logistics chain. Dr Ismail Vadi during his inaugural Barry D address Nassberg,

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Group Chief Operating Officer, Worldwide Flight Services says, a lot more can be done and that airports need to be a willing partner in looking at how it would develop a policy where it allows a necessary investment to happen. His colleague at the convention Graham Perkins pointed out that with regards to the readiness supporting e-commerce, African people are ready to take this on but the question is whether Africa is ready to take it on. He said that custom infrastructure is a major issue as it does not support e-commerce. “In many cases a lot of countries have customs rules and regulations that dates back decades and they are being used unfortunately,” he said. During the first panel, participants pointed out to an interesting fact. “When the air cargo traffic in a country increases by one per cent, then trade grows by 6.3 per cent. So, air cargo is the biggest contributor to the development of trade. That’s why those nations which understand the importance of trade and connections, they give industry stakeholders a chance to develop and support the trade.”

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


AVIATION ROUNDUP

Nigeria’s aviation industry is in turmoil, but how deep is it? By Jenipher Hellen

Nigeria may consider itself a regional aviation hub but years of mismanagement and now recession have blighted domestic airline operations, making delays and cancellations the norm.

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ndustry experts say the sector needs a fundamental overhaul, pointing to opaque management practices, rampant corruption and risks for passengers from security and dilapidated infrastructure. Earlier in March, the government of Nigeria announced the closure of the country’s second busiest airport,Abuja, to pave the way for runway repairs. This further exacerbates financial losses in the aviation industry which has just seen the biggest carrier Arik Air taken over by government. The Nnamdi Azikiwe International Airport is also undergoing urgent repair work to the airport’s only runway. The closure of one of the country’s two main airports will heavily impact business schedules and add further financial losses to the already ailing econ-

omy. Major international airlines have canceled flights to Abuja for the repair period which started on March 8. The latest to do so is South African Airlines (SAA). It follows British Airways, KLM, Air France and Lufthansa who have played downa government proposal to divert flights to northern Kaduna city. Flights to Lagos, Nigeria’s commercial hub, will however continue. Officials say the runway in Abuja is in shocking disrepair and that attempts to fix it since its lifespan ended 14 years ago have failed. An SAA plane was damaged while landing there last August.

Passengers most affected

Many airlines have refused a government proposal to divert flights to northern Kaduna city and then bus passengers the 250 kilometers (155 miles) south to Abuja - a three-and-a-half-hour ride on a road which is notorious for accidents, hijackings and kidnappings. “That proposal would impact on aircraft availability and connectivity for our passengers,” SAA spokesman Tlali Tlali said in media reports. The refusals come despite promises by Nigeria’s government to provide security on the highway from Ka-

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AVIATION ROUNDUP

duna to Abuja and to upgrade facilities at Kaduna’s airport. Three months ago, the airport still did not have computers and airline staff issued handwritten boarding cards. Lack of maintenance affects not only the aviation industry in Nigeria but also the country’s entire infrastructure, despite its status as one of Africa’s largest economies.

Airlines in spiraling debts

The country’s aviation sector has been hard-hit by currency crisis, with tickets paid in devalued naira but scarce foreign currency needed for fuel. To avoid the closure of the country’s biggest airline, the government throughthe Asset Management Corporation of Nigeria (AMCON), stepped in taking over Arik Air, a heavily indebted company with erratic operation challenges. According toAMCON spokesman Jude Nwauzor, Arik failed to repay loans totaling 135 billion naira ($429 million) by the end of 2016 and was also in debt to numerous foreign creditors. “AMCON has taken over the management of Arik because the whole place is in a mess. “We have appointed a new management to stabilize the airline and prevent it from going down like other airlines in Nigeria,” Nwauzor said.

No pay for workers

In December last year, Arik Air’s planes were grounded by a 24-hour strike over unpaid wages. The airline was unable to pay workers for months and has had aircraft seized for non-payment of leases.

The dilemma worsened when Arik Air had to cancel flights regularly because it could not pay for fuel. Thousands of passengers were stranded during the past year. Arik is the biggest airline in West Africa and flies 55 percent of domestic flights in Nigeria as well as transcontinental routes to London and New York. Arik is not the only airline struggling, Nigeria’s second largest airline Aero Contractors also announced it would lay off two-thirds of its workforce to save costs and prevent it from plunging deeper into losses. The company said in a letter to employees that it was “constrained to place them under redundancy because of operational challenges” that had hit its finances. Aero Contractors had earlier halted services for four months due to financial difficulties. Airlines say a lack of foreign currency caused by the economic recession in Nigeria has left them unable to pay fuel suppliers and, in some cases, pay landing charges at airports outside the country.

Millions of dollars lost

Last year two other Nigerian airlines stopped operating and United Airlines and Iberia also pulled out of Nigeria over the currency crisis in which international airlines lost millions of dollars while the government blocked their remittances in foreign currency and the naira tumbled. More than 40 operators have gone bust in 35 years including Nigeria Airways, which collapsed in 2003. Aviation analysts have criticized the running of Nigerian airlines for trying to minimize operating costs in order to boost profits. However air travel is the only viable way to get around Nigeria relatively quickly because of the underdeveloped road and rail infrastructure.

“AMCON has taken over the management of Arik because the whole place is in a mess. “We have appointed a new management to stabilize the airline and prevent it from going down like other airlines in Nigeria,” Nwauzor said 52

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


TECH & BUSINESS TRENDS

KPMG to take the lead with industry solutions at African Utility Week in Cape Town in May

KPMG has taken the mandate of generating value and creating agility in the evolving business landscape of power and utilities.

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ith the firm’s goal to focus on ‘future proofing’ in an effort to prepare for both foreseeable and unforeseeable forces that are fundamentally changing the power and utilities industry, KPMG has taken up a diamond sponsorship opportunity at the 2017 African Utility Week. This is part of the firm’s strategy to execute their mastery from an advisory perspective. Apart from the wealth of knowledge that the firm has to offer to African Utility Week’s attendees, KPMG looks forward to exercising their commitment to helping organisations with robust, sustainable and flexible strategies, in addition to models that can adapt quickly in a dynamically unfolding future. When KPMG’s experts were asked about the biggest challenges currently engulfing the sector, the first issue that they outlined was that energy security remains elusive on the African continent. The International Energy Agency (IEA) estimates that two out of three people in sub-Saharan Africa do not have access to electricity. This translates into 620 million people on the continent without electricity – and for those that have – the supply is unreliable and very expensive compared to world standards. “There is an emerging trend in the sector. Utilityscale developments are decreasing, while we see a lot more of community-sized generation projects. Businesses and communities are also showing interest in becoming less dependent on the national grids. In

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rural Africa, especially, the economics of expanding the national grids do not make sense, hence there is a significant trend towards mini-grids and other off-grid solutions,” says Ahmed Jaffer, Chairman of KPMG in South Africa and the Head of Power and Utilities. De Buys Scott, Senior Partner in Deal Advisory and Head of Infrastructure Advisory at KPMG in South Africa, adds that gravitating towards off-grid and smaller solutions in terms generation projects is a wise solution for the African continent. “These solutions are cost-effective as the costs that are invested in the general infrastructure of generation projects are eliminated in smaller scale solutions,” says De Buys. Power and utilities companies globally face the triple challenge of improving environmental performance, keeping consumers’ costs down and maintaining system reliability. As a result, KPMG has developed a long-term strategy that seeks to continue investing in innovation, thought leadership, and refreshing existing methodologies that have proved to be effective over the years. “I am eager to see a truly integrated resource plan with a more diverse baseload. It is essential for our audience to know that KPMG is a “one stop shop” for the power and water industry. As part of our strategy to perpetually manage unexpected changes, we are able to provide services through all project phases as well as to offer valuable solutions from a strategic, forensics, tax, internal audit and audit perspective,” concludes Jaffer. African Utility Week and Energy Revolution Africa are organised by Spintelligent, leading Cape Town-based trade exhibition and conference organiser, and part of Clarion Events Ltd, based in the UK. Huawei has also been a long standing supporter of another flagship event of Spintelligent, formerly known as WAPIC (West African Power Industry Convention) in Lagos, and rebranding as Future Energy Nigeria and returning in November this year. Dates for African Utility Week and Energy Revolution Africa: Conference and expo: 16-18 May 2017 Awards gala dinner: 17 May 2016 Site visits: 19 May 2016 Location: CTICC, Cape Town, South Africa Websites: http://www.african-utility-week.com

PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


TENDERS PROCURING ENTITY

TENDER PARTICULARS

IMPORTANT DATES

EAST AFRICAN PORTLAND CEMENT

Outsourcing of Bissel Quarry Mining Operations

Publication Date: March 10, 2017 Closing Date: March 15, 2017 15:12 Opening Date: Wed, Mar 15th 2017, 15:12

Downloadable documents from the website are FREE while hard copies are available from our offices at Ksh 1,000 Geothermal Development Company Limited

Pre-qualification for Insurance Brokerage Service for Year 2017-2019

STATE DEPARTMENT OF IRRIGATION

CONSULTANCY SERVICE TO UNDERTAKE LAND DEGRADATION ASSESSMENT (LADA) FROM 1990s AND MODEL DEGRADATION IMPACT TO 2030 FOR LAKE MAGADI BASIN KENYA

DOCUMENT :The office of Manager, Supply Chain at Kawi House, South C off Mombasa Road, Red Cross Road

OBTAIN DOCUMENTS: www.water.go.ke or supplier.treasury.go.ke Kenya Film Commission

PROVISION OF WORKMAN INJURY BENEFIT (WIBA) PLUS SCHEME AND PUBLIC LIABILITY The tender documents can be viewed and downloaded free of charge from the following website: www.kenyafilmcommission.com and IFMIS portal http://supplier.treasury.go.ke

Publication Date: Fri, Mar 10th 2017, 00:00 Closing Date: Mon, Mar 20th 2017, 14:00 Opening Date: Mon, Mar 20th 2017, 14:00 Publication Date: Mon, Jan 30th 2017, 00:00 Closing Date: Wed, Feb 15th 2017, 11:00 Opening Date: Wed, Feb 15th 2017, 11:00 Publication Date: Wed, Feb 1st 2017, 00:00 Closing Date: Fri, Feb 17th 2017, 11:00 Opening Date: Fri, Feb 17th 2017, 11:10

Application fee Kshs 1000 KENYA TRADE NETWORK AGENCY

PROCUREMENTOF THE KENYA TRADENET SYSTEM SECONDARY SITE HOSTING SERVICES http://www.kentrade.go.ke/index.php/procurement/tenders

CENTRAL BANK OF KENYA

BATTERIES FOR UNINTERRUPTIBLE POWER SUPPLY SYSTEMS A complete set of tender document containing detailed information may be obtained from Central Bank of Kenya, Head Office.

NATIONAL HOSPITAL INSURANCE FUND

SUPPLY, DELIVERY AND INSTALLATION OF OFFICE FURNITURE FOR NYERI, MOMBASA, KISUMU, MERU AND ELDORET REGIONAL OFFICES NHIF Website www.nhif.or.ke and from the National Treasury IFMIS Website http://suppliers.treasury.go.ke

Publication Date: Thu, Mar 9th 2017, 00:00 Closing Date: Thu, Mar 23rd 2017, 10:00 Opening Date: Thu, Mar 23rd 2017, 10:00 Publication Date: Thu, Mar 9th 2017, 00:00 Closing Date: Tue, Mar 14th 2017, 10:30 Opening Date: Tue, Mar 14th 2017, 10:30 Publication Date: Wed, Mar 8th 2017, 00:00 Closing Date: Thu, Mar 23rd 2017, 10:00 Opening Date: Thu, Mar 23rd 2017, 10:00

The tender is open to all Disadvantaged Group under “Women”. NATIONAL HOSPITAL INSURANCE FUND

MOTOR VEHICLE LEASING SERVICES NHIF Website www.nhif.or.ke and from the National Treasury IFMIS Website http://suppliers.treasury.go.ke

NAIROBI CITY COUNTY

SUPPLY AND DELIVERY OF POLYTHENE TUBES Prices quoted should be net inclusive of all taxes and delivery must be in Kenya Shillings and shall remain valid for 30 days from the closing date of the tender. 1. Only prequalified candidates with Nairobi county are eligible to apply for this tender

Publication Date: Wed, Mar 8th 2017, 00:00 Closing Date: March 15, 2017 15:12 Opening Date: Wed, Mar 15th 2017, 15:12 Publication Date: Wed, Mar 8th 2017, 00:00 Closing Date: Fri, Mar 17th 2017, 12:00 Opening Date: Fri, Mar 17th 2017, 12:00

Obtain Documents: www.nairobi.go.ke/www.supplier.treasury.go.ke -tender portal

PROCUREMENT & LOGISTICS MANAGEMENT APRIL 2017 Issue No.: 09/2017

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TENDERS PROCURING ENTITY

TENDER PARTICULARS

IMPORTANT DATES

EAST AFRICAN PORTLAND CEMENT

Addendum No. 2 Disposal of Idle Assets

Publication Date: Wed, Mar 8th 2017, 00:00 Closing Date: Wed, Mar 15th 2017, 15:12 Opening Date: Wed, Mar 15th 2017, 15:12

Downloadable documents from the website are free while hard copies can be obtained from our offices at Ksh. 1,000/=

THE NATIONAL TREASURY

Procurement of the IFMIS primary site infrastructure refresh and disaster recovery solution http://treasury.go.ke/tenders.html

THE NATIONAL TREASURY

Provision of onsite support and improvement of IFMIS application oracle e-business suite financial, purchasing, budgeting http://treasury.go.ke/tenders.html

THE NATIONAL TREASURY

Provision of IFMIS security solution http://treasury.go.ke/tenders.html

Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Tue, Mar 21st 2017, 10:00 Opening Date: Tue, Mar 21st 2017, 10:00 Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Tue, Mar 21st 2017, 10:00 Opening Date: Tue, Mar 21st 2017, 10:00 Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Tue, Mar 21st 2017, 10:00 Opening Date: Tue, Mar 21st 2017, 10:00

RURAL ELECTRIFICATION AUTHORITY

TENDER FOR UPGRADE OF WEBSITE AND SOCIAL MEDIA INTERESTED BIDDERS MAY INSPECT AND DOWNLOAD THE TENDER DOCUMENT AT WWW.REA.CO.KE OR FROM THE IFMIS PORTAL AT SUPPLIER.TREASURY.GO.KE

Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Tue, Mar 21st 2017, 10:00 Opening Date: Tue, Mar 21st 2017, 10:00

RURAL ELECTRIFICATION AUTHORITY

TENDER FOR DATA CENTER INFRASTRUCTURE SUPPORT & MAINTENANCE CENTRAL UNITERRUPTIBLE POWER SUPPLY (UPS), AIR CONDITIONING SYSTEM

Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Tue, Mar 21st 2017, 10:00 Opening Date: Tue, Mar 21st 2017, 10:00

INTERESTED BIDDERS MAY INSPECT AND DOWNLOAD THE TENDER DOCUMENT AT WWW.REA.CO.KE OR FROM THE IFMIS PORTAL AT SUPPLIER.TREASURY.GO.KE Kawi House, South C, off Red Cross Rd, Behind Boma Hotel EAST AFRICAN PORTLAND CEMENT

Addendum No. 1 -Supply and Delivery of One Hundred and Twenty Thousand (120,000) Metric Tonnes of Coal -Consignment Basis Downloadable documents from the website are free while hard copies can be obtained from our offices at Ksh. 1,000/= Drop tender documents in the tender box at customer care offices in Athi River off Namanga road ,East African Portland Cement Co Ltd on or before 12.00 noon

Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Wed, Mar 15th 2017, 15:12 Opening Date: Wed, Mar 15th 2017, 15:12

CENTRAL BANK OF KENYA

TENDER FOR SUPPLY, DELIVERY, TESTING AND COMMISSIONING OF UPGRADE OF THE CORE NETWORK FOR CENTRAL BANK OF KENYA

Publication Date: Tue, Mar 7th 2017, 00:00 Closing Date: Wed, Mar 22nd 2017, 10:30 Opening Date: Wed, Mar 22nd 2017, 10:30

A complete set of tender documents containing detailed information may be obtained from Central Bank of Kenya, Head Office, along Haile Selassie Avenue, Procurement and Logistics Services Department on 5th Floor upon OR Down loaded from the Central Bank Of Kenya website. Application fee Kshs 1000

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PROCUREMENT & LOGISTICS MANAGEMENT APRIL, 2017 Issue No.: 09/2017


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