SAP technology makes New KCC ‘cream of the crop’ in East Africa

With low operational visibility, slow, outdated processes and a vision of growing its footprint, one of Africa’s oldest dairy processor and distributor turned to technology to transform its operations and get it in shape for the 21st century digital economy.

The Kenya Co-operative Creameries (KCC) was founded in 1925 and is the largest dairy distributor in East Africa. The company was registered as a state corporation in 2005 and renamed New Kenya Co-operative Creameries Ltd. The company came into international prominence in the late 1930s supplying butter and condensed milk to British troops during World War II and later on in the 1970s after launching a School Milk Program that provided free milk to thousands of school-going children in Kenya and elsewhere on the continent until the mid-1990s.

According to Mr Samuel Onyango, head of communication and information technology at New KCC, the company had rebuilt its entire operations on a SAP-supported technology foundation. 

“Following our company’s relaunch as a government-owned company in the 2000s, we chose to put technology at the centre of our strategy. Over the past few years, we have been able to streamline our processes, gain visibility over all our operations, and can now make better decisions than ever before. This has improved our revenue, grown our bottom line and helped us build strong partnerships with a large community of internal and external stakeholders,” says Mr Onyango.

New KCC operates eight dairy processing factories, twelve milk collection centres and several sales outlets spread across Kenya. Onyango says the geographic spread of its facilities played a role in the company’s decision to deploy a SAP ERP system. “We urgently needed to strengthen our decision-making processes and increase operational visibility. We opted for SAP due to its strength in processing and manufacturing, and its multi-plant capabilities. We have worked closely with EIM Solutions as our SAP partner over the past few years as we roll out our digital transformation project.”

According to Edward Mwakio, managing director at EIM Solutions, several modules have been implemented to date. “We have activated the finance and control, materials management, sales and distribution, and human capital management and payroll modules, working closely with Samuel and his team to ensure the technology delivered direct business value. To date, the results have been outstanding, with streamlined processes, improved supplier management, and greater control and visibility over all aspects of the business.”

One of the key objectives of deploying SAP technology was to improve the management of New KCC’s smallholder farmer suppliers. “Our 100 000 smallholder farmers deliver as little as 5 or as much as 100 litres of milk a day,” says Onyango. “These farmers and their communities depend on the revenue generated from the dairy they supply, so it was essential that we were able to quickly and accurately process and pay for the produce. Building and maintaining trust with our farmers was a key outcome of our business strategy.”

For Onyango, this trust would be built on quick and fair payment for milk supplied. “Previously, farmers could wait up to a month for payment – in fact, simply processing the paper-based forms we used to rely on could take weeks. Our SAP platform enables us to pay in near real-time and has helped us build a healthy and growing community of smallholder farmers.”

Of the sales and distribution side of the business, Onyango says the company lacked visibility over the status of its sales teams. “We had no insight into the goings-on of our highly mobile salespeople, and had no access to the customers they sold to. We had to streamline our know-your-customer (KYC) processes and ensure all our customers are registered on a central platform. Now that we have greater insight into who our customers are, we can build far more meaningful relationships with them, which has delivered immense benefits to our business.”

Despite the disruption brought by the Covid-19 pandemic, Mr. Nixon Sigey, managing director at New KCC believes the business is in good shape to adapt to the new normal. “We have a strong foundation that can support our operations and management team. Through our SAP technology and other collaboration tools, our teams have been able to continue their work remotely largely undeterred by the disruption of the pandemic.”

Future plans include a migration to SAP’s flagship S/4HANA with a few ambitious goals. “We are looking at enhancing our transport management, and hope to employ more advanced analytics once we migrate to S/4HANA,” says Onyango. “We also want to look at a few major innovations, for example the use of drones to support deliveries. Core to this will be our on-going partnership with EIM Solutions, who have become indispensable members of our own team and have helped us realise our digital transformation ambitions. We look forward to a long and beneficial relationship over the coming years.”

Pedro Guerreiro, managing director Central Africa at SAP, says New KCC has paved the way to a bright future with a world-class technology deployment. 

“New KCC, supported by the expert guidance of its partner EIM Solutions, has achieved what any agribusiness should aspire to: a digital transformation that has improved its decision-making, unlocked greater efficiencies, increased revenue and helped build stronger relationships with the internal and external stakeholders that matter most to the business. As it embarks on further projects to build on this success, New KCC will edge ever closer to becoming a true Intelligent Enterprise that blends technology, processes and experiences to gain a growing competitive edge.”  

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