The persistent headache for Kenya’s manufacturing sector has been how to increase its contribution to the economic pie.
For the longest time, the sector’s share of gross domestic product has stagnated at about 10 percent, with government and stakeholders seeking ways to unlock its potential and make it the catalyst for economic growth.
Under the country’s Vision 2030 manufacturing is at the centre of the economic transformation objective. So how then can expansion of manufacturing be accelerated?
Analysts say the adoption of technology is one of the ways to realise this goal.
The Kenya Association of Manufacturers (KAM) has been pushing for the integration of digital solutions in the sector, noting that innovations hold key to a vibrant sector.
“Our sustainability and self-reliance as a nation is only guaranteed through our capacity to be a competitive economy on a global scale, and the use of technology will play a critical role in growing our economy,” says KAM acting chief executive Tobias Alando.
Using technologies such as Enterprise Resource Planning (ERP) allows businesses to better manage their internal operations including procurement, manufacture, and distribution, and to store this transactional data.
Several manufacturers have already adopted digital systems into their operations in a bid to boost competitiveness and enhance efficiencies while cutting costs and wastage.
This adoption has especially accelerated on the realisation of the depth and scope of business disruptions caused by the Covid-19 pandemic.
A research by South African business management software provider SYSPRO notes the pandemic underlined the importance of technology in business operations.
“With the impetus displayed by Kenya’s international peers, the onus is fast becoming one of digital renovation. Change may happen slowly but it must happen nonetheless,” says the study titled Manufacturing CFO 4.0 Survey 2021 published by SYSPRO and the Institute of Certified Public Accountants of Kenya.
According to the survey, the adoption of ERP is producing positive results in Kenya, with 44 percent of the firms interviewed expressing a desire to invest and migrate into the new way of doing things.
“Warehouse Automation trails just behind at 39 percent, and Business Intelligence following at 38percent,” the study notes.
Xetova -a tech firm providing an interactive platform for the procurement ecosystem - in a recently research interviewed CEOs drawn from diverse sectors including manufacturing to determine the scope of their digital application and the benefits or setbacks they confronted.
The study, ‘The CEO Perspectives; The State of Digital Transformation in Kenya, 2022’ shows that agriculture firm Sasini established an automation roadmap with focus “on projects for significant bottom-line impact”.
Sasini now uses ERP at 95 percent from “barely used” before and in just two years of implementation, has witnessed a 25 percent increase in profits.
The Xetova survey notes that a rising number of local manufacturers, are embracing Artificial Intelligence to transform how they operate – by fully automating their production lines to be in touch with their customers and suppliers, with traditional customer service models taking a back-seat.
As manufacturers start the journey of digital transformation, experts say the success of the undertaking depends on how it is executed.
Tech experts advise manufacturing firm to get their digital shift right if they are to tap its promises, noting that digital transformation involves change in how enterprises use technology, workforce and business processes to improve performance and value to customers.