KENYA’S E-SOKONI B2B SITE PIONEERS ONLINE SUPPLY CHAIN SAVINGS
12 April 2002
The E-Sokoni B2B site in Kenya is probably the only fully functional one of its kind outside South Africa. A joint development between British American Tobacco Kenya and Symphony Software, its progress so far provides useful pointers as to how things might develop in this market.
In an increasingly competitive operating environment, British American Tobacco is finding e-enabled ways to improve supply chain efficiencies. But what about procurement - a significant and expensive element in the seed-to-smoke business? Could online migration help British American Tobacco operating companies access materials more quickly, cheaply and efficiently?
Earlier this year British American Tobacco Kenya took a giant step towards e-enablement when it joined the e-sokoni marketplace for procurement of non-production materials from its 260 local suppliers.
Sponsored by British American Tobacco Kenya and Symphony, a Kenyan IT support and systems organisation, e-sokoni (sokoni is the Swahili word for marketplace) aims to provide "the business solution for Africa," according to Chris Oanda, e-sokoni's Managing Director. Because it allows buyers and sellers to trade in a controlled environment using a web browser and without the need for new infrastructure, the marketplace is enabling British American Tobacco Kenya to improve operational efficiency and streamline tradition processes. These, combined, lead to the creation of new market opportunities, with reduction of costs and increased revenues.
British American Tobacco Kenya plans to save more than 80 per cent of its transaction costs by using e-sokoni - as well as realising significant savings by allowing professional buyers to focus on the most strategic aspects of procurement for the business.
Partnership has been a key element in the initiative. To facilitate quick realisation of the potential benefits, British American Tobacco Kenya in March 2001 seconded resources to e-sokoni managers to help implement the project. By May last year, the company had transacted its very first order with a key supplier, overseen by the e-sokoni team.
Symphony identified a business opportunity in multinational companies that needed efficient supply chain infrastructures to support their businesses. e-sokoni started life as Afrinet Commerce, launching its Indirect Procurement Marektplace with 33 pilot suppliers primarily in stationery services using Izodia software. From these humble beginnings, it soon added not only British American Tobacco Kenya but also Homegrown, one of Kenya’s largest exporters of fresh produce to the UK, to its client base.
With British American Tobacco Kenya on board, the company has signed agreements with Unilever (Kenya) in July 2001, Magadi Soda, part of the Brunner Mond Group, in August and Kenya Airways, partner of KLM Airlines, in September 2001 &SHY; bringing it one step closer to establishing a critical mass of blue chip companies using this B2B site.
"e-sokoni’s service offering is to capture the low spend, high transaction volume local market requirements for indirect procurement commodities," explains Chris Oanda, e-sokoni's Managing Director . "The lack of co-ordinated and effective supply chain infrastructures within the Africa region has allowed e-sokoni to build a business case based on transactional process efficiencies that internet trading provide."
With the marketplace for indirect procurement now integrated into British American Tobacco Kenya's CS3 ERP system, the team is developing a payments module for transactions between the company and Citibank.
British American Tobacco Kenya and their supplier community are trading live. Unilever Kenya and Homegrown are doing pilot and workflow studies. Kenya Airways and Magadi Soda are engaged in project scoping and business improvement analyses, as are other major purchasers in the industrial and services sectors. 300 leading indirects suppliers to these MNCs are working with e-sokoni to implement improvement programs - creating imaginative and cost saving marketing approaches to this growing new e-trading community. These developments continue to be achieved in an environment characterised by an inhibiting communications infrastructure and considerable legislative challenges.
e-sokoni is already making a difference in indirects buying at BAT Kenya and other key MNCs in East Africa. Initially, e-sokoni will continue to focus its growth and service offering on selected blue chip enterprises that have strong commitments to doing business in Africa, and which have operations across Africa. Expansion plans for growth to Africa are being prepared with these key clients as part of a rollout recipe development. e-sokoni is nurturing working partnerships with providers who understand Africa - like Citibank and PWC Consulting - to ensure the indirects supply chain business model being rolled out is suited to each trading region across Africa.
There is now no doubt that e-commerce is the most cost effective way to do business in Africa - and e-sokoni is committed to helping businesses adopt these new tools. According to Chris Oanda, "this century, technology and human development will eliminate many of the barriers that for aeons have separated Africa from the rest of world. We can now optimistically state that we can change Africa. We will change Africa. And e-sokoni and our team will be an important part of the process".
Not surprisingly, the public sector in Kenya is taking a keen interest in BAT's indirects procurement project. Recently, the World Trade Organisation's export promotion division jointly with the Kenya Institute of Supplies Management has started to investigate how the e-sokoni project experiences may benefit the public sector in Africa in future. Supply chains for most Africa based businesses are needlessly complex, manual and costly by world standards making them uncompetitive in liberalised trading. Their simplification is long overdue.
With its understanding of Africa, e-sokoni and it working partners are well placed to take role in bringing about much needed changes and galvanising economic growth in the region through e-commerce.
RESPONSES AND CORRECTIONS
ISSUE 104 - AFRICA ON THE THRESHOLD OF WIDER COMPETITION FOR INTERNATIONAL ACCESS
The topic on PTT & ITXC was very interesting. I wonder, which side are we on!?
Apollo BS Temu
What made me write was the statement "Recently however the Chad state telco has signed an agreement with VOIP carrier IXTC that will lower its outgoing call costs." For me of course the real benefits are how much the country will gain which can be ploughed back into universal access. We all have to assume that that is the Government’s unstated aim. I believe many do not appreciate this. The present regime appears to leave state telcos in Africa able to expand access. It can’t continue forever but for me the answer is to speed up the process. But if ITXC can lower costs and leave telcos with money........
Correction: Gateway IP’s turnover of $1 million is monthly, therefore annual turnover of approximately US$12 million.
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