As tea generally remains a focal point and an important way of life for several cultures, Kenya, one of the world’s top exporters of the crop, is on a deliberate mission to ensure it delivers in value and volume in record time. Tea being a critical foreign exchange earner has robustly reset how Kenya Tea Packers (KETEPA) is packaging and supplying the beverage and spreading the culture of loving the drink worldwide. Nearly five years ago, KETEPA deliberately embarked on a business-first focused initiative to heighten the firm’s service delivery for its on-demand tea across the world. Behind the realm and scenes of profound change sits Bernard Rono, CIO, KETEPA, backed by the organisation’s Managing Director, Albert Otochi, and an inspired board of directors zealously spreading the gospel of digitisation. “Guided by the insight of investing in data analytics to drive innovation, and for significant improvements in efficiency in the company, I was moved by the support accorded by the KETEPA leadership,” said Rono during my interview at the firm’s headquarters in Kericho, Kenya.
During the interview, Rono shared his thoughts on how the market is shifting away from selling hard goods to selling services and the right to use tangible goods such as tea. He observed that change, more so digital transformation in the manufacturing industry, leads to ripple effects through departments inside companies and across supply chains.
Here is an excerpt of our conversation.
Bernard, thank you so much for the invaluable tour at KETEPA’s tea packaging plant. You seem to have accelerated a journey geared towards pivoting KETEPA to Industry 4.0. How is your steady transformation tied to the way KETEPA is rethinking its services and delivery of the same?
Firstly, I am glad that you have pieced our conversation on Industry 4.0. That’s where we are squarely headed. But let’s first break this down. As a concept, Industry 4.0 came out of an initiative of the German government, as a definition for the fourth industrial revolution (4IR). Since I am so excited about transformation, it is only prudent that I recap the transition the world has walked and how we are fast-tracking to keep pace. At a global level, the first three industries were inclined on mechanisation, mass production and automation. What’s new in 4.0 is connecting the physical assets to digital networks. Industry 4.0 mostly looks towards the manufacturing and digital supply chain side of Industrial Internet of Things (IIoT). With the Internet at our disposal, companies are starting to realise this is not only about technology, but it also about end-to-end perspectives on business.
Wow! That’s Interesting. And you are so fired up! As we speak, what is the status of digital transformation at KETEPA?
We are leveraging technology as a business enabler. For over 40 years, KETEPA has been a household brand and leading tea blending/packaging company in Kenya. But we couldn’t sit pretty as the industry front-runners. Reason? We serve the world. We serve the world with Kenyan tea.
Oh yes! We do. And to address your question on digital transformation, I am happy to point out some of the cutting-edge technologies KETEPA has deployed over the past five years range from sales force automation, business intelligence systems with predictive analytics, Smart Fleet Management System to a robust ERP to support operations. Order Management System and the Distributor Management System within SFA has enabled seamless transaction during the current COVID-19 pandemic.
Considering the manufacturing industry still stands out as an enabler of the national economy, to what extent was business continuity at KETEPA put into test by COVID-19?
The pandemic is impacting every part of our lives. From places, we can go to, to how we spend our time right down to our priorities and the way we spend our money. The food and beverage manufacturing companies are continuing to experience varying levels of disruption as a result of the global health crisis. With uncertainty associated with the spread of COVID-19, KETEPA was able to identify mission-critical operations and business functions and accelerated the digital transformation plan.
Travel restrictions imposed by the government to mitigate the spread of the virus has triggered a lot of innovation and investment in technology to enable operations to continue running. Through the business intelligence tool, KETEPA has been able to analyze customer trends and respond well to the global health crisis. The ERP has been central to ensuring optimal inventory stocking as well as alerts on critical raw materials. More people globally, Kenya included, are avoiding crowded malls and the normal trade channels to work from home and make online purchases. Our e-commerce platforms including our own tea shop www.ketepa.com has seen increased sales from customers in Kenya and abroad. We are a gold supplier to Alibaba, active in Jumia and listed with Amazon.
Prior to the recent health crisis, how was KETEPA developing its digitalisation agenda? How has it now purposed to scale up for sustainability challenges facing the tea industry and communities using technology?
KETEPA kicked off the digitisation agenda about five years ago. The approach taken involved reviewing the entire ICT infrastructure first to support innovative technologies that had been lined up. We kicked off with several projects implemented in parallel with others in the pipeline. The biggest digitisation project is the sales force automation system which has transformed the business from a manual way of booking and processing orders to an efficient electronic system. Other projects are the implementation of an HRIS system, optimization of the network infrastructure, virtualisation of servers environment through VMWare and the digitisation of factory floor operations.
Considering that COVID-19 affected operations in various enterprises across the world, how did KETEPA address the immediate challenges?
Immediately the WHO announced there was a global pandemic, the business, under the MD’s leadership, immediately appointed the COVID-19 response committee to co-ordinate KETEPA’s response to the disruption brought about by the pandemic. The business leaned on already existing robust infrastructure to sail through this season. Employees are encouraged to work from home where possible and KETEPA ICT has ensured that the requisite tools are in place for online meetings, a secure virtual private network (VPN) and connectivity.
KETEPA’s ERP assisted in the management of critical packaging materials with automated re-order levels alerts. The biggest automation project Sales Force Automation came at the right time to enable the sales team to place orders on the Mobile Apps with a paperless system. KETEPA has continuously been putting up measures to mitigate against the threat of the virus based on recommendations from the WHO as more information about the virus came to the fore.
The world seems to have awoken to the fact that supply chains are the backbone of the business world. To what extent did the pandemic expose weaknesses in your supply chain’s soft underbelly?
Commodity prices shot up because of scarcity as the source countries were locked down and manufacturing stopped. This affected even countries that did not have a big problem with the c-virus because they could not sell or buy items from the affected countries like China. The biggest weakness in the supply chain is the focus on low prices and not diversity for purposes of risk mitigation in times of disasters like this one. Factories outside China that depended on parts from China had to shut down as an example. If they had alternative sources, they would still be operational.
Another way the supply chain was exposed was the normal distribution channels of selling through physical outlets. This was disrupted with more people avoiding crowded places like malls, supermarkets and hotels. On the flip side, more people were making online purchases because they were either working from home or in lockdown. The trend to search for, and eat healthy foods to boost immunity in case of infection, was also on a steep rise. KETEPA’s website, www.ketepa.com, has an e-commerce platform where customers can purchase tea and get it delivered to their homes, be it in Kenya or abroad. Incidentally, our rich range of healthy teas witnessed a steep rise in sales.
From a technological standpoint, how has KETEPA improved its supply chain?
Innovation has been a key driver and enabler to the digitisation of KETEPA’s sales, logistics and distribution operations. Earlier this year, we held our inaugural Annual Distributor Conference bringing together all key distributors. The forum provided an opportunity to listen to the customer’s pain points and craft a winning strategy powered by technology. KETEPA’s strategic plan is anchored In technology. We crafted a strategy around SMAC (Social, Mobile, Analytics and the Cloud) and this without a doubt has been a key business driver.
What are some of the supply chain gaps KETEPA is still keen to address along with other industry stakeholders to ensure ease in a rapidly evolving market?
The recent introduction of sales force automation (SFA) into our operations and in particular the order management module, has significantly cut down the time and loopholes experienced prior to the distribution of our products. In our internal processes, the system has enabled fast collaboration and visibility within departments to ensure quick responses to customers inquiries ranging from logistics operations, credit limit and consistency in order processing. Marketing on social media is now de facto for today’s company.
We have leveraged relied on different platforms (Facebook, Instagram, and YouTube) with a mission to capture Millennials even while still maintaining the traditional approaches which proved to be effective and reliable. The continuous improvement of operations and customer service has also been a point of focus. We conduct regular training with staff across all our departments to ensure the right information is passed on and customers queries are handled amicably.
In your view, how should East African-based manufacturers build stronger, more agile, resilient and sustainable supply chains?
For the first time in a century, there was a global air-space shutdown that had a major impact on imported materials that directly affected many East African manufacturers. There has been growing over-reliance on imports of materials we can manufacture locally. This revealed the inherent gaps in the supply chain. East African manufacturers must rethink their strategy around multi-sourcing, ecosystem partnerships, inventory and capacity buffers as well as diversification. The government should come up with incentives to boost local manufacturer capacity and encourage innovation. Investors in the region must then invest in modern technology and capabilities to boost production capacity and meet the ever-growing demands within the manufacturing space.
Considering that the future consists of e-commerce, digital collaboration, business continuity and operational excellence, how should players in the manufacturing industry build agile supply chains to make an impact on the economy?
The new normal is full of uncertainty and it is critical that manufacturers develop strategies around resilient and agile systems. Companies are adopting more flexible sourcing and distribution strategies. Organisations will need to realign critical operations and supply chains to thrive in this new normal. There should be enhanced collaboration driven by the emerging virtual tools that support omnichannel ordering and fulfillment. New and emerging technologies such as blockchain can connect manufacturers across the globe. There is a need to collaborate more to eliminate existing bottlenecks in the supply chain as well as to build trust. Pulling on business intelligence, Big Data, predictive analytics and combining with Machine Learning (ML) can assist in building more agile and optimised supply chains. E-commerce with secure payment gateways will play a vital role, especially during disruptive periods. A year ago, KETEPA signed a deal with Alibaba as a Gold Supplier and worked with Amazon to list its products. It has been fulfilling to see orders delivered to more than 41 countries since venturing into the e-commerce space.
What is required today to be successful with an end-to-end supply chain in this volatile market?
A holistic and agile supply chain starts with the adoption of innovative and emerging technologies. This ensures a reliable and predictable supply chain. Businesses also need a buffer to deal with unexpected shifts in demand. Too much inventory can raise costs and the challenge is how to strike in maintaining manageable inventory without straining cash flow. By improving forecast management driven by accurate demand predictions, new technology can serve to reduce inventory requirements, increasing turnaround times for an efficient supply chain. Companies must think around how to grasp emerging technologies for efficiency and optimisation of resources. Artificial Intelligence (AI), blockchain, automation and robotics will reduce contact with products, improving operational efficiency.
Register for the 5 August 2021 Industry 4.0 Africa Summit for more of these conversations.