In contrast, the Nairobi-based KickStart, which makes irrigation pumps for local farmers, used to make products locally but
moved manufacturing to China in 2007. There were two main
reasons for this shift: quality control and logistics costs.
“The manufacturing processes in China are actually more
efficient and better than the manufacturing processes in
Kenya,” says Fred Obudho, Manager of KickStart’s Product
Intelligence and Development Unit.
KickStart incurred considerable opportunity cost designing, fabricating and maintaining manufacturing equipment
for local companies, and operating its own quality control.
Logistics began to be a problem when sales outside of Kenya
rose significantly. The cost of sending a container from Kenya
to Malawi is similar to dispatching it from China to Malawi.
Since the free on board (FOB) cost—essentially the factory
price—of the Kenya pump was over $15 more than China
Free on Board, producing for Malawi from Kenya would have
meant a penalty for the Malawian farmer.
Though they have different approaches to supply-chain
management, both Burn and KickStart are wary of local
“A contract manufacturer might not produce the quality
that you want, or have the same timeline, or maybe they
are interested in doing work that’s more profitable [than
yours]—they aren’t in it for the long haul,” says Scott. “So
to outsource the manufacture of your key product is a very
dangerous thing to do in Africa.”
Other manufacturers agree. David Auerbach of Sanergy,
which makes sanitation units for use in Nairobi slums,
advocated local control of production. In an interview,
Auerbach said ownership of the production process was
essential to maintaining quality and keeping costs down.
The decision on where to manufacture sometimes hinges
on the type of product being produced. For KickStart’s water
pumps, fine tolerances are needed to produce waterproof
seals, and construction needs complicated fixtures to
maintain quality. It’s easier to accomplish this in a global
manufacturing center. Burn’s stoves, on the other hand, are
designed for formed metal parts, which obviates the need for
a craftsman’s judgment. Parts also do not deviate in shape,
and they intelligently interlock in assembly. All this makes
local manufacture more feasible.
Development professionals who have made one choice
for their supply chain economics recognize that different
products require different logistics. KickStart’s Obudho, for
instance, supports Scott’s decision to manufacture the Burn
stoves in Kenya, even as his pumps are made in China. At
one time, Obudho actually was a production manager for a
German company that had switched some of the produc-
tion for their stoves from China to a factory in Kenya. ( The
company retained the “Made in China” stamp for the East
“To me skill level is not an issue,” Obudho said. “I think
there are people in Kenya who can do work just as well as
people in China.”
Obudho underscored the importance of keeping jobs local.
“I don’t see any other manufacturer producing well under
contract without somebody looking over their heads,” he
says. “If [you are] going to control the manufacturing your-
It’s important to remember, however, that the location of
manufacturing is a secondary consideration. The most primary
goal is to provide products that deliver real value to customers.
But what if the manufacturing and logistics model compromises the customer value proposition?
Burn, for instance, has already evolved through two distinct
supply models, Peter Scott said, and is about to launch a third.
David Auerbach at Sanergy conceded that if local costs escalated, pushing up the product price by 20 percent, centralized
manufacture would still be an option. Conversely, Fred Obudho
at KickStart said that volume efficiencies and rising China costs
could allow manufacturing to return to East Africa.
D-Rev is already agilely adopting different production
and supply chain tactics to different products with different
market characteristics. In contrast to the ReMotion Knee, its
Brilliance infant jaundice treatment device is both manufactured under license and distributed in India.
D-Rev’s Vin Narayan said that while the prosthetic knee
had a distribution limited to a few rehabilitation clinics, for
the infant care device, “there are thousands of potential
clinics that we could be selling to.” That scale called for an
Indian-based partner with excellent local knowledge; D-Rev
decided to motivate the company to produce high quality
products by offering a significant stake in the operation.
There are any number of ways to manage the manufacturing and logistics of products for the developing world
consumer. But to be successful, providing the best value for
the customer must be the final deciding factor for those supply chain choices. •
ADRIENNE DAY is a New York based freelance writer and Contributing
Editor to DEMAND. ALAN SPYBEY is the director of product intelligence and
development for KickStart in Nairobi.
Centralized manufacturing makes it easier to
maintain consistent quality standards.