STUDY KENYAN-DUTCH HORTICULTURAL SUPPLY CHAIN. By Milco Rikken and Jeroen van der Hulst

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1 STUDY KENYAN-DUTCH HORTICULTURAL SUPPLY CHAIN By Milco Rikken and Jeroen van der Hulst

2 1. INTRODUCTION 2. OBSERVATIONS 3. CONCLUSIONS 4. RECOMMENDATIONS 2

3 3 DEVELOPMENT OF KENYA S FLORICULTURAL EXPORTS

4 BACKGROUND Growing volumes... Tremendous export growth Kenya s Jomo Kenyatta International Airport now biggest cargo hub of Africa and changing market conditions... Markets show signs of stagnations Rise of European mass-market retailers Margins are under pressure Playing rules are changing significantly have resulted in pressure on the supply chain. 4

5 OBJECTIVES OF THE STUDY On behalf of the Dutch Ministry of Economic Affairs, Agriculture and Innovation (EL&I): Obtain detailed insight into the performance of the Kenyan-Dutch horticultural supply chain 5

6 METHODOLOGY Comparison of theoretical standards with actual practice Desk research Interviews Supply chain measurements Two platform meetings with key stakeholders in both Kenya and the Netherlands 6

7 1. INTRODUCTION 2. OBSERVATIONS 3. CONCLUSIONS 4. RECOMMENDATIONS 7

8 8 AIRPORT FACILITIES IN 2003

9 9 AIRPORT FACILITIES IN 2011/12

10 AIRCRAFTS DC-8 BOEING 747 Height 163 cm Height 296 cm 10

11 AIRCRAFTS Crushed boxes 11

12 COLD CHAIN ISSUES Example graph; one of the measurements with the warmest supply chain 12

13 13 PACK RATES

14 1. INTRODUCTION 2. OBSERVATIONS 3. CONCLUSIONS 4. RECOMMENDATIONS 14

15 THE CHALLENGES Accepted workarounds Neglect by one player typically leads to costs for somebody else 15

16 CHALLENGE 1 - COLD CHAIN MANAGEMENT Lack of knowledge & awareness about importance of cold chain requirements No cold chain standards and protocols (incl. monitoring compliance) Inadequate cold chain facilities and equipment Poor information exchange 16

17 CHALLENGE 2 - TRANSPORT AND LOGISTICS Uncertainty about CO2 discussion (carbon footprint) Flight delays and indirect flight routes Increased transportation costs (oil prices, security measures) Tarmac time No use of load carriers for truck transportation in Kenya Sea transportation 17

18 CHALLENGE 3 - PACKAGING Insufficient packaging knowledge throughout the industry Lacking standard procedures for handling packaging materials Awareness of price/quality ratio of boxes Current packaging not optimal for direct sales channels Pack rates (over- and under-packing) Packaging waste 18

19 CHALLENGE 4 - INFORMATION & COMMUNICATION Absence of electronic information and documentation of all import documents and certificates Absence of a structural system for feedback through the chain Poor communication about delays 19

20 CHALLENGE 5 THE WEAK POSITION OF SME GROWERS VAT rebate system Difficulties complying with export requirements (direct market) Lack of cold chain knowledge and awareness Access to capital Access to post-harvest cold storage facilities and transport 20

21 CHALLENGE 6 - HANDLER PERFORMANCE No standards for handlers No structural and constructive system for feedback Logistical inefficiencies (aircraft pallets not composed on consignee base) Price is the decisive criterion. No minimum quality limits determined (SLA s) 21

22 CHALLENGE 7 INTEGRATION MASS-MARKET RETAILERS Retailers lack specific flower supply chain knowledge Product and packaging wastage at retail level Mixed transports (temperature requirements, ethylene production) 22

23 CHALLENGE 8 - SECTOR-WIDE TEAMWORK Lack of standards and protocols targeting supply chain improvements Matching phytosanitary (and other government) services with 24/7 requirements Road development and maintenance in production areas 23

24 1. INTRODUCTION 2. OBSERVATIONS 3. CONCLUSIONS 4. RECOMMENDATIONS 24

25 RECOMMENDATIONS THE FIVE THEMES Theme 1 - Standards and Protocols 1. Develop standards and protocols for cold chain & packaging 2. Develop framework for compliance 3. Training on implementation of standards and protocols Theme 2 - Education 1. Training in knowledge & awareness about cold chain requirements 2. Training in knowledge & awareness about packaging 3. Informing and training retailers Theme 3 - Synchronisation of Electronic Information 1. Improve system for electronic information exchange 25

26 RECOMMENDATIONS THE FIVE THEMES Theme 4 - Supply Chain Innovation 1. Stimulate sector-specific supply chain innovation 2. Sector involvement in carbon footprint discussion Theme 5 - Platform 1. Platform for Kenyan-Dutch Horticultural Supply Chain 2. Enhance existing communication platforms 3. Website for Kenyan-Dutch Horticultural Supply Chain 4. Coordinated (Kenyan-Dutch) industry advocacy 26

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