Made in Kenya: Building Patriotism by Cutting Costs in Logistics

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November 19, 2013

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Polling most Kenyans on purchasing local products will usually garner about the same responses: Kenyan goods are generally much more expensive than their imported counterparts, which are preferred.

This is usually followed up by a long rant questioning the quality of locally produced goods, citing corruption and general local incompetence as justifications for this telling assumption, so I urge you to quickly retreat once you receive your answer.

This worrying attitude was somewhat confirmed and explained as fact by Ministry of Transport and Infrastructure secretary Michael Kamau when he stated that Kenyan goods tend to be more expensive due to high transportation costs. How high, you ask?

Charges of ferrying products in Kenya are 30% higher than southern African rates. This means that even when exported abroad, Kenyan goods are likely to be far more costly than competitors.

With such startling statistics, it is upon us logisticians to find ways to cut transport costs, and therefore prices of locally produced goods in a bid to do our part to help local industries develop and hopefully, fan the flames of patriotism in these days of Nairobi socialites and apathy.

The first and most important cost cutting measure to be considered by any supply chain manager worth their salt would be to increase efficiency of freighting, by focusing on load and routes.

Calculating of optimal load per shipment essentially means determining the proper cargo weight that should be freighted in an individual trip to ensure that capacity is neither underutilized nor over extended. This goes hand in hand with optimizing transportation routes, with the goal of ensuring the travel plan makes proper use of resources, avoiding wasteful diversions, unnecessary route overlaps in the same trip, and other such issues.

Supply chain managers can also find ways to reduce transportation costs based on packaging of cargo. With plenty of wasteful packaging examples readily available online, it is clear that the logistics industry needs to tighten its belt as regards incidents of packing minuscule goods such as flash drives or memory cards, in boxes large enough to house a small washing machine. While protecting cargo from jostling during freighting is and will remain a major concern, the extreme cases of this practice present an insidious challenge, necessitating a discussion on finding a balance between securing cargo and being needlessly wasteful.

Freighting cost reduction can also be accomplished the old fashioned way: bargaining. By negotiating better rates from suppliers, such as externally contracted freighting firms, there is usually the probability of negotiating more favorable rates, therefore reducing logistics operating costs, savings which are passed on to consumers via lower prices of goods in retail.  Long term suppliers are also likely to agree to loyalty discounts that lower overall costs.

Costs associated with transporting cargo can also be reduced using consolidated shipping. Supply chain managers can tap their network of managers in other companies and combine their cargo. Where a good number of shipments can be gathered, most external contractors offer bulk rates that are more palatable than individual costs. This simple measure is mutually beneficial for all involved, helping cut costs across the board.

Photo Credit: Made In Kenya

Photo Credit: Made In Kenya

With freighting costs down and locally produced goods competitively priced, we can only hope for the day when the only people buying imports over Kenyan goodness are those in search of bragging rights by name dropping obscure Eastern European countries. Do wave your Kenyan flag proudly this week.


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