Francis: As we continue on this digitalization and supply chain transformation journey, we kind of thought, let’s get someone whom every day worries about where the truck is if the milk will reach on time, and if by that time the pH will still be okay, the acidity will be right and if the laboratory will say that that milk has to be put in the tray. So introduce yourself.
Laban : My name is Laban Kabiru. I work with Bio foods, I’m a food scientist by training many years ago. So I’ve been in the industry and worked with several businesses including Unilever, Mars, etc. Bio foods is a dairy industry and I’m sure most of you probably know it. I had hoped I would speak when the room is still full because I literally wished to convert every person present here to take Bio yoghurt and Bio milk. And the reason is that they’re the only safest, healthiest, and best-tasting products in Africa, not in Kenya in Africa. And I say safest, which means if you want aflatoxin-free milk, yoghurt, and butter, we guarantee that. I don’t think there’s anyone else who can guarantee that. If you want antibiotic-free dairy products, we guarantee that and this is because we control the whole process all the way from the farm. I think the model is very close to what I have heard from Kwik Basket. So, we work only with contracted farmers whom we train on hygiene and we test the total plate count (TPC) of milk before we process it.
We actually pay our farmers based on the quality they deliver. So they know if you deliver TPC below this level this is the amount you get, you get an additional two bob. If you have a low level of aflatoxin, you get this bonus, etc. If the cooler is at the expected temperature, you get this bonus, what we term a ‘quality-based bonus’, and that helps us to get quality from the word go.
If you start with a raw material of bad quality and you have very good processing, irrespective of what controls you have, you can’t change the poor quality into good quality, it will be compromised. So we control our whole end of the chain and that’s how we are able to assure you of the cleanest, healthiest, and best products. Our fresh milk, for example, has a shelf life of 16 days when refrigerated as opposed to other brands which last 3 days. So that’s how you know getting very clean milk from the farm, maintaining a cold chain in the whole process, having very good hygiene levels during processing, and controlling the cold chain all the way to delivery helps to keep the quality that high with zero preservatives.
Francis: Now, Laban, when we started, I talked about COVID. And just when we’re getting used to it, Russia and Ukraine war came. So we’ve faced lots of disruptions, maybe if you could just put it into perspective, how far has that affected your operations to find good quantity and good quality milk?
Laban: It’s been very rough since 2020, and I know it’s not just about the food industry, it’s everyone. Businesses suffered, demand went down because, you know, outlets were closed, we had the shutdown. And you can imagine you’re having a business, which deals with perishable products, like fresh milk. And cows don’t care whether there’s COVID or not, and you have contracted farmers. So if you’re expected to get 50,000 litres of milk, whether you are selling or not, that milk will still come. If you cancel the contract, then what does the farmer do? So COVID really disrupted the business, it disrupted how we operate and, you know, when it was just looking like it’s going to recover, then we, you know, landed at Russia, Ukraine war. With that now, we’re just trying to recover and the impact has been manifold.
One is the demands. It’s just this year that we started going back to the pre-COVID demand volumes, so the demand went down. So you can imagine you have done your three- or five-year strategy of where you want your business to go, and then all of a sudden, your strategy goes to zero. So I think one of the learnings that we have picked there is businesses need to be very versatile. We need to be very flexible, we can no longer operate with the three- or five-year strategy. You have to be able to be flexible enough to know exactly if this is not working, then what is working.
I’m sure that during the last three years a lot of businesses even here in Kenya closed shop. The difference between those who have closed shop and those who have thrived is basically how each of the businesses managed to manage their supply chain. How agile was a supply chain, for example, if you’re buying a certain ingredient from Russia, and now you can’t import from Russia, then what happens? So you only have two options. One is that you stop producing that product. And if it’s the main product for you, then you close shop or two, you have to think out of the box and say, ‘is there an alternative supplier? Is there an alternative ingredient that can deliver almost similar performance? And then you move to that.
With the disruptions in the supply chain, we had to offer farmers a higher buying price for them to keep on delivering.
Laban Kabiru – Manufacturing and Logistics Director at Bio Foods
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Francis: Have you been forced in any way to change suppliers, go down on your requirements in some cases like packaging, oils coming from outside? Have you had to change things in that kind of aspect?
Laban: So we used to buy some packaging materials from Russia, for example. And just before last year’s war, we were also looking internally because the cost of fuel has gone up, fuel is a big cost for our business. Our profitability went down, so we started saying, can we localize some of the packagings, for example?. Just three months after going local, the Russia-Ukraine war started. If we hadn’t made that decision it means we would have run out of packaging. And for you to change some of these packagings to buy molds, takes like three, four months. So that means we would have been out of the market in very key products.
I think we have looked at it from alternative suppliers, not just from a supplier perspective, but even regionally, and geographically. If you’re just buying all your things from Germany, for example, if something happens, then what do you do? For people who are also using imports, for example, shipping times changed. If you used to import something that used to take one month to get to Kenya, from Europe, we realized at some point it was taking three, or four months, hence your current stock-keeping target no longer now holds water. So you have to have more working capital and you have to really have very robust planning, because otherwise if you plan for one month you run out.
Francis: If you look at the whole supply chain, of course, we had closures, some farmers could not deliver milk. Are there some changes you’ve had to make in terms of the supply chain to assure quality, either coming into your factory or going into the market?
Laban: Yes, yes, we had to do that. So as I mentioned, one is to assure quality and food safety, which is the backbone of our business. And two is to do that at an efficient level because the cost is going up so you have to really reduce your cost. And remember, we are in times where for example, we don’t have maize, I mean unga now is being subsidized to 200 shillings, that doesn’t just affect Unga, it affects the cost of feeds. Some of these feeds also have aflatoxins and I’ve already just given you a guarantee that we offer toxin-free products, with very, very minimal levels of aflatoxins. That tells you that our farmers had very big challenges, they couldn’t make business. So we had to offer the farmers a higher buying price for them to keep delivering this quality. Internally, we have to look at how to get more efficient and remove waste, which is something that we are still going through. Look internally, do you have an optimized headcount, do you have losses, how efficient is your factory, etc?
For quality in logistics and supply chain, we had to invest in trackers for the vehicles, and sensors for temperatures. So when a vehicle goes to the farm, because we’re now collecting from more farms to get the same amount of milk, you have to know where the truck is, and the temperature of the milk. When you’re doing deliveries now, we are able to know exactly at what point is that vehicle and the temperature of the products across the chain. So we have more robust systems, of course, it means the challenges in COVID have made our supply chain more robust and more efficient. So even beyond the current recession, it means we’ll emerge out of it better, and therefore, the COVID and the Russia-Ukraine war become like a blessing, making us see opportunities that we couldn’t see before.
Francis: So now Laban, one of the tough things I experienced the few days I was in manufacturing is that you have demand, you have borders, sales guys, flashy, loud characters on your back saying ‘we want the product today’. But the fact is either you’re not getting enough raw material in, or what is coming in is not meeting your requirements. How tough is that balancing act; a demand that is high, supplies that are low, and also poor quality because of drought?
Laban: Yeah, its tough. I mean, every business wants to sell, you want to grow. And you can imagine, people want your product, but you don’t have it, you don’t have enough. So it’s a really tough scenario to be in. We have been there. I think the learning we have also picked from there is stronger relationships and partnerships with our suppliers, including the farmers. We work with them, helping them to plan long term rather than short term so that when you have a drought of one season, it doesn’t also affect supply. We are now having more robust relationships and we are almost fully back. But I think the silver in the cloud is we are having strong relationships now with our suppliers. Whatever was an assumption before now is no longer an assumption.
We don’t use any preservatives to keep the milk fresher for longer, it’s just the process. I have my head of Research & Development (R&D) here, she can confirm whether I’m right or wrong. We just ensure that the milk comes fresh. And we don’t buy milk from small farmers, because we can’t manage the quality. So we deal with the big farmers who are having like 500 litres a day. So most times than not they’re actually milking using milking machines and not by hand. The milk then goes to the cooler directly, which means there’s no handling basically. As such the hygiene level is very high. This milk instantly moves from the cow to a cooler at a temperature of four degrees, so it’s clean, and it’s cold. It is then transported in a very insulated vehicle straight to the factory. The process is very stringent. The factory is ISO 22000 certified, and the whole cold chain is not broken all the way up to the outlets. Of course, the processing itself also is a closed system so it’s an automatic system. So you’re ensuring that where you have a Critical Control Point (CCP), which is pasteurization temperature, it is achieved. That robust food safety system, the OPRPs, and the hygiene level are on point. Of course, there’s the machine packing in a sterile way. And we actually give 16 days but that milk even in 20 days will still be okay.
Francis: Okay, my last question is that of the cold chain. Let’s talk about the portion of the small-scale retailer in terms of maintaining your integrity through the whole supply chain system. Lots of our outlets don’t have cold chain systems. Does that mean that there are instances when you actually don’t sell to them? How do you ensure that the final consumer gets a quality product?
Laban: So for now, we are actually only dealing with modern trade because they have a robust Cold Chain system. So we are not in general trade right now. However, we also have a long-life milk product that does not require refrigeration, and that can actually go to retail without quality issues.
This feature appeared in the November 2022 issue of Food Safety Africa. You can read the magazine HERE
