Motisun: supplying a diverse business portfolio in Africa
The port of Dar es Salaam, the ‘haven of peace’, is the gateway to eastern, central and southern Africa. The former Tanzanian capital has an international airport, and rail links to the landlocked nations, including the Chinese-funded TAZARA linking it with Zambia’s Copper Belt and a planned 2,190-km railway to Rwanda, Burundi and the DRC. It is expanding to rival Mombasa and Djibouti as the country develops its industry and the port acclimatizes with the demand for container and bulk mineral export capacity.
Tanzania is not being left behind in Africa’s internet transformation. Dar es Salaam is connected to the rest of the world by all the major undersea cables that have been laid in recent years, including SEACOM and the Eastern Africa Submarine Cable System (EASSy). Other deepwater ports such as Pangani, Mtwara and Bagamoyo are being developed to take the pressure from Dar es Salaam and provide access for Panamax vessels.
This vibrant city has been home to the Motisun Group since it was founded in 1992 by Subhash Patel. And, though it has grown to rank among the strongest business groups on the continent, it remains a family concern. It started with a small-scale steel plant with a single induction furnace and rolling mill, but today MMI Steel Mills produces more than 200,000MT of steel a year. However, steel is only one of many products the group produces. It also manufactures paints, pipe, beverages and juices sold under the Sayona brand, as well as cabling and plastic products of all kinds, distributing them throughout Tanzania and exporting them to all African markets. It manufactures locally in some of those markets. More recently, Motisun Group has been able to diversify into hospitality, hotels, resorts and real estate.
A glance at the diversity of interests reveals a complex logistics and supply chain network. Key to the smooth running and cost management of this network is the procurement department. Manoj Kumar is Head of Global Procurement for Motisun, oversees this vital part of the business from his office in Dar es Salaam and manages a team of procurement professionals there in each of the businesses.
The businesses are very diverse, he says. “Under the Sayona brand, we diverse range of juices, carbonated soft drinks and packaged drinking water, and we started going into pure fruit juices, which are produced at state of the art a new plant on a 40-acre site in the Mboga area, Bagamoyo, which is 150 km from Dar es Salaam.” The juices are prepared using fresh fruit sourced from Tanzania, and the beauty of this product is that fresh fruit of the highest quality, such as mangos, pineapple, Guava and Orange is available across Africa.
If raw materials for Sayona products are comparatively simple and reliable to source, the supply chain for the paints produced under the Kiboko brand is somewhat more complex. Only 30% of finished goods are imported, the rest is manufactured in high-capacity factories, backed by an in-house resin & emulsion manufacturing plant. The Kiboko division can produce 50 tons of top-quality paint a day to satisfy the 60% share of the Tanzanian market that Kiboko holds. Packaging and labelling are manufactured at a separate facility. The onward supply chain relies upon stockists with warehouses all over Tanzania, from Dar es Salaam to Mwanza and Arusha to Mtwara. No area is too remote.
“We have over 5,000 global suppliers in our supply chain,” Kumar continues. Chemicals for the factories are sourced via Dubai,South Africa, the USA and Europe, while much of the steel required by MIIT’s plants comes from India. Accurate forecasting is required to keep costs in check and avoid waste. In the context of Africa it is often not possible to achieve just-in-time sequencing of materials.
Sometime delays at the port congestion, fluctuations in availability and disruptions to the road and rail systems have to be factored in with the rise and fall of demand, making it necessary to store enough raw materials at the plants to ensure continuity of production. “Forecasting and planning always depend on market conditions,” says Kumar. “It’s a kind of rear-view mirror approach, in that where you’ve been can often help determine where you’re going; but that does not necessarily help you avoid a multiple car accident on the freeway. However, forecasting gives manufacturing companies a leg-up on these elements of planning and production cycles, companies can operate with more agility, transparency, and flexibility to adapt to changing production environments or schemes.”
Lead times are dependent on the location of the suppliers, he continues. Goods from Canada can take 90 days by sea, whereas from Mumbai the time from dispatch to clearance would be around 40 days. With reliable road and rail links, importing from South Africa is much easier. “Coordinating supply to a particular plant requires a backup plan that includes a number of pre-approved suppliers. Any disruption in availability will disrupt the entire supply chain.”
Kumar stresses that there’s real partnership between Motisun Group and its suppliers. “Many of our vendors have been in place since the company was founded, however the supply chain becomes more diverse as the product portfolio is extended, which happens almost daily.” The core software platforms in use within the group are SAP and the versatile Tally ERP, originating in India. A phased programme of migration is in place as individual businesses integrate legacy programmes and Excel-based practices. “With Tally’s accounting application we can manage our accounts, warehouse management inventory management and other key procurement functions,” explains Kumar, adding that parts of the business are still used to the familiar Excel for budgeting, preparing financial statements and creating balance sheets. During the migration period, it is easy to import and export cash management information and financial data to and from Tally.
It is very exciting, though challenging, to be part of a continually expanding group that dominates the East African market in a number of key verticals, says Kumar. “Our Chairman, Subhash Patel, has a simple mantra: there are three ‘Ms’ at the core of any successful business, Money, Mindset and Manpower. Our people find this a great way to focus our minds on our work. Clearly no business can survive without having a firm hand on its finances; then it has to have a clear vision and finally a committed and competent workforce.” Patel is a person of vision, retaining his humility and empathy, despite being a figure of huge influence in Tanzania and the wider African business world, Kumar acknowledges. Under his leadership the group is constantly diversifying and adding new products to the existing divisions. Kumar and his team are fully equipped to accept the challenge of keeping these supplied with the materials they need.