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World Bank Study
Box A5.2. Using Science and Technology to Improve Product Management and Logistics: Mukwano’s Transition to an Electronic Fleet Management System Barring improvements to the road or rail networks, ICT offer manufacturers another route toward enhanced efficiency in transport and logistics. The efficiency of a trucking fleet derives, in part, from the quickness of the turnaround time between treks. It is often the case that drivers park and waste valuable time. Through ICT-enabled tracking systems, managers can monitor drivers and create disincentives for making unauthorized stops. Upgrading toward ICT-based transport, logistics, and supply-chain management systems offers a host of benefits that enhance competitiveness and efficiency and allows for the pairing of related processes that are not linked when managed without these tools. A site visit to Mukwano Industries revealed that the firm is currently migrating its supply-chain management to SAP. Simultaneously, it has purchased a new ICT-based transport management system, called VDO, from a South African vendor. Some of the processes that these investments will improve include truck loading, links between distribution and transportation, and customer relations. With respect to truck loading, at present, people called “counters” stand by and manually count all products to be loaded into Mukwano’s trucks before they begin their distribution circuit. The loading of goods onto trucks is then performed manually. Sale orders are sent to the central warehouses, and then goods are shipped to distributors. All products are back-ordered using a “first-in, first-out system,” meaning that the packers must physically locate the oldest batches to ensure that the goods closest to expiry are the ones shipped out first. But people make mistakes. Relying on people and manual labor for this task, Mukwano risks confusing shipments when the wrong batches of goods are sent out at the wrong time to the wrong customers. Using an ICT system such as SAP, automated batch location offers a faster, more efficient option. Regarding the ability to link distribution and transportation, the gains in efficiency that are possible by migrating from a fleet management system that utilizes handwritten log books to one that creates an interface between fleet management and distribution data entail a significant jump in terms of efficiency. For example, using VDO, Mukwano managers can access real-time digital maps that allow them to follow each specific truck in their fleet. With the click of a mouse on a map, they can look down to the village level to know precisely where a given truck is. Using real-time playback, they can monitor how a given truck moves (at what speed, whether it has stopped) across the whole journey. Managers can know the driver, the speed, and the contents of the truck remotely. This relates to customer relations; staff in logistics can utilize this information to communicate with customers to assure them that a given delivery will arrive at a precise time. VDO stands in stark contrast to Mukwano’s previous nonautomated system. Historically, the firm’s fleet management system relied on the utilization of log books. Drivers were responsible to record the date, speedometer reading, kilometers traveled, time in and out, all lubricants used, and the purpose of journey. This written narration was fallible, however, because drivers could omit or edit the data they entered. Furthermore, for the data processors who tried to input the written scripts into Excel spreadsheets, the process was laborious and failed to take advantage of the power of the Internet. Because the old system was not Web-enabled, opportunities to collaborate and engage in decision making in real-time were limited to those individuals looking at the same piece of paper or gathered around a particular computer. The VDO system will constantly update data on fuel averages, mileage per vehicle, drivers’ histories, maintenance schedules, etc., to facilitate more precise maintenance and management.
Integration of ICT into Production Processes Is Rare for Ugandan Firms, Particularly Small and Medium-Sized Enterprises
Processes that could be drastically enhanced through the application of ICT and automated technologies remain reliant on manual labor to both maintain employment and exploit low-wage labor. For example, at the Monitor (one of the two major national