Achieving cost efficiency in a Kenyan organic waste collection logistics network

Abstract

Background
An increasing amount of waste is generated in developing countries, particularly in Sub-Saharan Africa. A key component in dealing with this growing concern is well-functioning waste logistics. While waste logistics is complicated in general, it is even more complex in developing countries as a result of lacking infrastructure and resources. As research on management practices in Africa often lacks attention to contextual factors, a research gap is highlighted in the field.

Problem definition and purpose
Sanergy is a Kenya-based producer of fertilizer and animal protein which uses upcycled organic waste for production feedstock. Collecting the unique raw material necessitates a somewhat responsive logistics network with the capacity to handle a supply chain environment that is highly uncertain due to dynamic supply capacity as well as contextual constraints such as low network trust and poor local infrastructure. At the same time, the company is struggling to keep costs reasonably low. Given these experienced issues, the purpose of this master’s thesis project is to present actionable measures for increasing cost efficiency in a Kenyan upstream waste collection logistics network.

Theory
The foundation of the study is formed by an extensive theoretical frame of reference, which is divided into three distinct parts, each one addressing an overarching research domain. The first of these domains is logistics cost efficiency, covering areas such as supply chain strategy, sub-elements of logistics networks, unique aspects of upstream logistics and waste collection, as well as principles for achieving logistics cost efficiency. The second research domain is business mapping. This part of the frame of reference addresses three different visual mapping conventions and their different interpretations and uses: supply chain mapping, value stream mapping, and process mapping. The third and final domain is contextual challenges, which encompasses topics such as national and regional culture, infrastructure, information and communication technology, as well as network coordination and collaboration.

Methodology
This study employs an embedded, single-case study with a systems and decision-oriented approach. The data collection phase for the study included a 9-week field visit to Nairobi, Kenya. The sub-elements network structure, business processes, and management components of the upstream waste collection logistics network form a basis for as-is description and analysis, which is based on data collected from semi-structured interviews, physical observations, and archival research.

Findings
The study finds several overarching issues within the logistics network of the case company that prevent cost efficient upstream logistics: poor decision support, substandard planning and control, poor data tracking, lack of external collaboration, lack of incentive mechanisms, and high/additional costs. To mitigate these issues, a set of pertinent logistics redesign principles originally developed by Persson (1995) are suggested to adhere to: improve information processing and decision support systems; differentiate; simplify structures, systems, and processes; reduce or adapt to uncertainties, strengthen internal and external integration; and eliminate or adapt to expected pattern demand. Complementing these principles are proposed specific actions for the case company to undertake. As for mapping, suitable procedures to visually map the upstream waste logistics network are put forth, along with suggested adjustments for the unique context of the case company, taking into consideration both strategic and operational activities specific to a waste logistics network. Lastly, some potential challenges connected to national and regional culture are proposed. High ratings in Hofstede’s (1980) dimensions collectivism, power distance and uncertainty avoidance are seen as potential risks. Additional contextual factors connected to the local SCM and logistics context are identified, such as poor infrastructure, low maturity in information and communication technology, and low network trust. Considerations to make in mitigating these potential risks are also discussed.

Contributions
The study findings contribute directly to senior management at the case company by providing an external assessment of the performance of its upstream logistics network, as well as by suggesting actionable measures which can improve cost efficiency. While not tailored and directly applicable for other organizations as for the case company, the findings and recommendations should also be of interest to other actors operating in similar contexts. From a theoretical point of view, there is a two-fold important contribution to the academic body of knowledge by (i) providing examples of which logistics redesign principles that could be the most relevant to consider within the context of organic waste collection in a developing country, and (ii) helping to bridge an important research gap on management practices in Africa (Honig 2017) by considering potential effects from local culture as well as other characteristic features to the Sub-Saharan African logistics context, such as lacking infrastructure.

Popular Abstract

Cleaning up logistics waste in waste logistics: enhancing cost efficiency in a Kenyan organic waste collection network

Navigating the intricate world of waste logistics and cost efficiency is like walking a tightrope. Imagine juggling aspects such as high collection frequency, non-conventional suppliers, and soaring costs. Follow along on the journey through the unique challenge of waste management in Nairobi, Kenya.

Inadequate waste management is a growing problem worldwide, with global waste generation expected to increase with over 70% within the next 30 years. The steepest increase is expected in Sub-Saharan Africa, where over 90% of all waste is already openly dumped in the open or placed in landfills.

Modern problems call for modern solutions. In Kenya, the social enterprise Sanergy offers an innovative way to deal with organic waste. By collecting waste throughout the capital city Nairobi and letting fly larvae feast on it, it can be processed and converted into fertilizer and animal feed. Moreover, a significant amount of the waste is collected from mobile toilets that are strategically placed in city slum areas, which helps to solve a serious sanitation problem while also providing a safe and dignified space for especially women and girls to take care of their sanitary needs.

Collecting waste in cities requires an efficient logistics network considering factors like frequent collection and diverse suppliers. However, high logistics costs pose a challenge. Limited academic research has focused on cost efficiency and waste logistics in developing countries, especially Africa. This study examines Kenya's unique context, considering infrastructural challenges and the influence of local cultural factors on logistics efficiency.

The case study, which included physical on-site observations, shone light upon several aspects that could potentially counteract cost efficiency. Guided by the literature study, six overarching problem areas were identified. These included lacking decision support and substandard planning and control. On the other hand, barriers to cost efficiency associated with phenomena found in the national culture of Kenya and Sub-Saharan Africa were examined.

To be able to mitigate these problems, a wide range of areas for further analysis were suggested. These included a set of actionable measures, sprung from the six overarching problem areas. Examples include: defining and adopting a supply chain strategy, reorganizing the client base, and increasing external information sharing. In addition, points to ponder of getting to grips with contextual challenges were outlined, such as encouraging open problem discussions and rewarding entrepreneurial behavior.

When all is said and done, it is the hope of the authors that the resulting smorgasbord of suggestions offered will be of help to Sanergy. At the same time, the study has entailed a contribution to research regarding cost efficiencies in upstream logistics, as well as a venture into bridging management practices and features unique to the Kenyan context.

• author: Lundin, Erik and Gunnarson, Fabian
• supervisor: Andreas Norrman
• organization: Production Management; Engineering Logistics
• course: MTTM05 20222
• year: 2023
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: supply chain management, upstream logistics, waste transportation, developing-country context
• report number: 5986
• language: English
• id: 9117524
• date added to LUP: 2023-06-09 15:42:07
• date last changed: 2023-06-09 15:42:07