Our business partners include suppliers, dealers and agents. We rely heavily on our partners from both an operational perspective and also in terms of our reputation. We also understand that we can play an important role in encouraging sustainable practices throughout our business ecosystem and value chain by engaging with our partners in this regard.
In terms of our suppliers, we used 1,094 providers and spent a total of just under KSh 76.8 billion on products and services during the reporting period. We continue to favour local suppliers where feasible and we are satisfied with the weighting towards Kenyan companies achieved during the year, with 84% of our providers being local.
We have a network of 456 ‘active’ dealers across Kenya that sell data, devices and airtime on behalf of Safaricom. This is a reduction from the 487 dealers we had last year and reflects the termination of contracts with dealers that did not meet the requirements of their performance contracts during the year.
We believe that this is the right size of network to support the market at the moment so we are not actively on-boarding new dealers and expect this number to remain fairly stable in the near future. Our current focus is not to increase the number of dealers, but to help each individual dealer achieve greater volumes and success.
We also have 100,744 M-PESA agents who support and administer M-PESA-related transactions for customers. Our network of agents grew by 17.5% during the year as new areas of opportunity were identified in response to our regionalisation programme and the commissioning of additional BTS.
HOW DID WE DELIVER VALUE TO THEM DURING THE YEAR?
Annual Partners
Forum We meet with our suppliers every year to hear their concerns and exchange ideas and information with them. During the event, we conduct a survey to assess their perceptions and levels of satisfaction and confidence regarding Safaricom. We use the feedback gained through the survey to adjust our processes and offerings to partners.
We held a meeting on 9th February 2016 with our contracted partners to sensitise them to the Code of Ethics for Business in Kenya. The Code is based on the principles of the United Nations Global Compact (UNGC). By the end of the financial year, 269 or 81% of suppliers with running contracts had signed up to the Code of Ethics for Business in Kenya. Through such efforts, we continue to play a role in building the critical mass of businesses needed to create a responsible business community in Kenya. At the time of this report being published, 95% of our suppliers had signed up to the Code. For the suppliers who failed to sign up, the business made a decision not renew their contracts once they expire and not to engage with them on future opportunities until they sign the commitment.
Performance evaluations
We undertake performance evaluations of all of our suppliers on a quarterly or bi-annual basis. Suppliers are measured against a variety of indicators (e.g. cost, quality, delivery, responsiveness, flexibility, value-add, health and safety) and a performance score is calculated.
Suppliers whose performance is below the required threshold (<60%) are assisted with customised performance improvement plans (PIP) and mentored towards achieving acceptable levels of service. In case of lack of improvements after a PIP has been implemented, the contract is recommended for termination and no invitations are sent for participation in future business opportunities.
Supplier Portal Upgrade
Safaricom implemented three modules within Oracle ERP to address the concerns that our partners have raised in the past.
On payments, we implemented iSupplier portal specifically for supplier interactions. We trained and registered the 170 suppliers that had the highest number of purchase order (PO) transactions with Safaricom. These partners are now able to:
- view all approved POs;
- view all POs for goods/services for which Safaricom has confirmed delivery;
- create and submit own invoices directly into the accounts payable module of Safaricom and;
- view the status of their invoices and payments.
As a result, the accounts payable average payment days reduced from 69 days in the 3rd quarter of FY15 to 18 days at the close of FY16.
The iSourcing module was also implemented for online tendering. This has introduced more transparency to the way we interact with our partners on acquisition of goods and services.
Finally, Safaricom implemented a Supplier Lifecycle management module for all prospective suppliers. The module was deployed on the Safaricom internet page, making it possible for all prospective suppliers to express their interest without going through a lengthy process.
Procurement policy revisions
During the year, we revised our Purchasing Policy to include Diversity and Inclusion sections; for example, special group suppliers identified for purposes of diversity and inclusion (this is applicable to Kenyan companies/citizens only) include: Youth; Women; and Persons with Disabilities. The policy document is pending final approval before it is circulated for use.
Supplier risk assessments
Supply chain and Enterprise risk teams partnered to undertake risk assessments for the top 10 key suppliers selected from each of the four spend categories (Services, Networks, IT VAS and Terminals). The objectives were to identify, measure and apply mitigation plans for all supply chain risks and effectively evaluate the completeness of controls in place. Seven suppliers were fully assessed during the year and three are currently undergoing assessment.
Dealers
We delivered value to our dealers in the following ways during the year:
Relationship Managers
We introduced dealer Relationship Managers (RMs) in FY14. The RMs provide each dealer with a single point of contact to assist them with any challenges or issues they are facing. The RMs also put together business plans for each dealer to help them identify areas for improvement and potential growth.
Principle Forums
This is an ongoing initiatives and we host several Dealer Forums each year. It is an excellent opportunity for us to listen to dealers as they share their concerns, needs and ideas for ways in which we can improve our services and support them further. Our RMs were an idea that came out of a forum, for instance.
Customer Care
Desks We opened 54 ‘care desks’ at dealer premises across the country to assist with the handling of customer care queries and the provision of services.
Agents
In terms of our agents, we delivered value to them in the following ways during the year:
Relationship Managers
We expanded our team of agent Relationship Managers (RMs) to six during the year, who now handle the top 600 agent head offices that provide us with 80% of our revenues.
KCB service upgrades
As well as not being charged to replenish their fl oats at KCB, agents can now access loans at a reduced rate of 16% interest. During the year, KCB agents processed a total of 500 KCB KOPA float loans, amounting to KSh 949,613,029.
Principle Forums
We changed the format of our agent Principle Forums this year. We solicited feedback on challenges and issues at the start of the year, such as commissions and the migration to the new system, and then reported back on our progress against these challenges at the end of the year. As a result, the forums are much more intensive and focused and agents are seeing quicker, more tangible outcomes. These forums are held in 13 areas on a quarterly basis.
Merchandising
We expanded our branded merchandising initiatives to include all agent head offices and stores on a quarterly basis. The merchandising available includes calendars, umbrellas, caps and t-shirts.
Agent assistant training
A new initiative launched during the year, this is a one-on-one training session that identifies and plugs the gaps in an individual’s knowledge, empowering them and improving the service they are able to provide customers and colleagues. Our area managers in 35 areas are now trained every quarter.
Regional Agent Awards
Our annual Awards event was expanded and improved this year as well. Events were held in six regions and a total of 177 Agent Stores were awarded.
Weekend capital financing
Like the service launched for dealers, this new facility provides agents with an internal fl oat over weekends and public holidays, ensuring they have enough stock to meet demand during these periods. An average of 625 agencies are financed every weekend to an average amount of KSh 630 million or more.
Focus areas for the year ahead
In terms of our suppliers, our focus areas in the year ahead will include:
- The performance evaluation will focus in future on key/strategic vendors in terms of spend analysis and critical service areas. This will pave the way for the creation of high-level business reviews after the performance review and feedback meeting with the vendor. Evaluation for other vendors can be left to the administration of the user sections, while supply chain is given the reports/compilation from Symfact.
- Emphasis will be on end-user training and sensitisation to enhance performance monitoring and meeting expectations.
- We will implement contract management functionality for the Enterprise and Consumer Business Units to improve on customer experience.
- Visits to suppliers and holding performance meeting reviews at supplier premises will be undertaken.
In terms of our agents, our focus areas in the year ahead will include:
- Agent commission visibility — we intend to upgrade our systems so that sub-agents who do not have access to the Dealer Portal will be able to query their fl oat levels at any given time using a USSD code.
- Agent segmentation — M-PESA Agent Head offices and outlets will be segmented, depending on their transaction values and volumes.
- Staff uniforms — we intend to issue staff uniforms to 3,000 stores on a quarterly basis.
- Branding — we intend to brand 500 stores on a quarterly basis.
- Float level validation on till application — float checks for all the stores under an organisation will be performed automatically by the system before allowing the head office to apply for a new till.