“Kenya has a love affair with their land and takes great pride in farming” – David Walker
Kenyan tea is considered as one of the best qualities of tea all across the globe and is widely acclaimed for its unique aroma and taste. It is a major cash crop grown in Kenya, providing most of the foreign exchange earnings of the country through tea exports.
Small-scale tea farmers of Kenya have seen a gradual increase in the line of the graph defining their income. According to a report, revenues of these farmers increased by more than one-third in the year 2015-2016. Although a gradual increase might have been noticed a parallel rise in production and labor costs have already started to make the Kenyan tea uncompetitive in the international market. With the companies now trying their hands in various niches like producing white matcha and purple tea has also shown a significant rise in the production costs.
Reviewing objectives and reforms
Stakeholders of various multinational tea manufacturing countries are already troubled by the increased wage demands of the workers involved in the tea industry – which if accepted will bring a steep downfall to a sector dealing in billions annually. If reports are to be believed, accepting the 30% hike in wages will consequently increase the cost for MNCs by 54%. In this critical time, the focus of such companies should shift to promoting the consumption of the beverage in local markets and search for opportunities in other markets such as China to compensate with the heavy losses that will be incurred to the companies after accepting the wage demands of the workers.
The objective should be to standardize the system and work for a streamlined improvement while monitoring the individual performances using the key performance indicators. Also, increasing revenue, optimizing costs and eliminating customer issues should be seen as a new paradigm for the billion-dollar industry.
At Faber Infinite, we helped one of our clients which is a leading tea manufacturer in East Africa in achieving transformational revenue and cost results. We analyzed these problems by emphasizing on re-imagining growth strategies and eliminating wastes in all forms and creating predictable, reliable workflow. We also tried to bring objectivity in the Performance Management System by building an internal training team for all major improvement drivers.
Approach to such critical obstacles needs a clinical touch to be crossed and ensuring rectification. We approached these problems by with a detailed Light House Exercise (a powerful Strategy Framework by Faber Infinite) with all top management and working out a way forward for key focus areas. Also, we ensured that every department had a unique strategy to get a broader surface covered in a quick span of time.
Strategies play a very important role in bringing down the impacts of the damages caused. A well designed and conceptualized strategy will never fall short of the line in the long run. LightHouse Exercise by Faber Infinite covers approaches focusing on Market, Product and Application, Excellence of processes and assets and others.
We conceptualized on these basic parameters and built a strategic module encompassing these factors to gain the desired growth. It helped in exploring new opportunities and markets that further led to profitable openings in the neighboring countries’ markets. This entire module also built and improved processes excellence like Cost leadership, Quality leadership, Safety leadership, Delivery leadership and Customer Service leadership. Moreover, the implementation of tools also showed a considerable decline in project time, costs, materials and efforts.
But what is the use of all these planning and strategies if they don’t produce desired results and fails to comply with the marked target.
But wait? Did we succeed? Well, the answer is a big YES!
With the proper implementation and monitoring, the graph rose and showed a 30% increase in the revenues. The productivity also increased by 34% with the standardized system for performance measurement. A drastic reduction of about 73% was seen in customer complaints, despite the company launching new products over the same period of time. A detailed customer research has also helped the organization to focus on the target customers and avoid audience fragmentation.
Other benefits are delivered are as follows:
|On Time In Full Deliveries||%||35%||95%||171%|
|Cost Per Kg||Ksh||117.5||69.6||41%|
At the moment, Kenyan Tea Market faces serious competition from tea grown in India and Sri Lanka. Without regular checks and deployments, the Kenyan tea industry is supposed to lose its marketplace in the upcoming years and might reach its unwanted bottom. The uncontrollable inflation level because of the current demands is likely to shake the return of labor in the industry and will also affect the retention of the present workforce. Hence, a proper and detailed customer research with the sustainably monitored implementation of strategies is required to expand the market and minimize the losses incurred over the past two years, supposedly to follow in the upcoming years as well.
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Written & Compiled by Faber Kishlay Krishna & Faber Mayuri Pandya