How to Start / Open A Non Woven Bags Making Business in Kenya

Non Woven Bags Making Business Plan (Kenya)



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Overview

This quick guide looks at the making of non woven bags. Non woven bags are the now common carriers that substituted polythene after the August 2017 ban on the latter. The guide will give you a very good picture of the opportunity in the business, equipment, process, market and production.

On the face of it there is a huge opportunity in the business what with the rush to fill the gap created by the ban. However actual success will depend on a variety of factors including understanding of the market, efficiency of operations and the ability to get the products to as many consumers as possible.

The Opportunity

The Mass Market Opportunity

Mass market consumers are looking for practical and affordable packaging products for their everyday shopping and carrying needs. Until August 2017, this need was largely fulfilled using polythene papers. However, a government ban triggered by environmental concerns, of the kind of polythene papers used by the mass market consumers has left a gap in the market. A gap existing packaging material manufacturing companies are struggling to fill.

By law substitutes to the kind of polythene papers previously used by the mass market are supposed to be eco friendly and not necessarily biodegradable. Before the ban there were at least 260 packaging material manufactures, 176 of these in a way or another leaning towards polythene bags.

After the ban the latter’s equipment became obsolete and many closed down. Of the remaining, our market research shows, only 22 had the capacity to produce eco friendly bags for the mass market such as non woven bags.

These companies were largely focused on the Rwandan market which banned the use of polythene papers in 2008. Still Rwanda is a comparatively smaller market. According to World Bank in 2016 Rwanda had a population of 11.92 million people, compared to Kenya with a population of 48.46 million, growing at a rate of 2.6% annually.

With the ban the companies are besieged trying to serve both the Kenyan and Rwanda market and this has attracted new players. Apart from trying to meet the demand is the effort to come up with the right eco friendly bags for the mass market.

 

 

 

 

Presently the Kenyan market is presently at an experimental stage with as many types being introduced as are losing favour in the market.

A new company should enter the market first to help meet the demand for eco friendly bags. Secondly will be to come up with the ideal bags for the mass market.

Before September 2017 the mass market consumption of polythene papers was estimated to be around 160 million bags per month. Although consumption levels are expect to initially decrease because of increased recycling and the higher cost of the present biodegradable bags its not to a level that will make the bags business obsolete. Our estimate based on data from vendors is that consumption will settle at between 95 million and 130 million bags per month.

The Retail Sector Opportunity

The Ministry of Environment estimates the retail sector utilized at least 100 million polythene bags every month before the ban. These bags issued free of charge were used to pack customers shopping as a way of improving the experience. And since these bags were branded, reusable and in high circulation retailers used them as a form of marketing.

With the ban coming into effect retailers, especially supermarkets, have struggled to come up with an alternative that enhances the customer experience while also serving the marketing function. Only in the last two months (October 2017) has there been some progress partially the technology available locally is to blame and partially is lack of capacity and innovation among the packaging manufacturers.

A new company should first invest in modern packaging technology and combine with innovation to come up with solutions tailored to the retail sector. First this will aim at pushing down the cost of packaging in the retail sector. Secondly to allow retailers to brand the bags at a lesser cost hence use the eco friendly packaging bags as a way to advertise themselves.

The retail sector also compromises the numerous kiosks and grocery shops. These need to pack items like sugar, rice and other similar products. With the ban on polythene these companies are using Kraft papers as substitutes. And there too lies another opportunity which will be the subject of a different guide.

Non Woven Bags in Kenya

Overview

In Kenya non woven bags are either imported or manufactured locally with the number of bags being made within the country more. Since the ban on polythene some of the previous mass

 

 

 

 

market polythene paper manufactures have shifted to non woven bags, at the same time a number of new players have joined the business.

These new players range from the very small to large manufactures who are diversifying their product range to seize the opportunity that exists.

Non woven bags as those that are common in Kenya are made from a material called Polypropylene abbreviated as PP. This is the key raw material. In reality the material is not very different from what is used to make the banned polythene bags but let’s not go into that at the moment.

The PP material is premade and comes in rolls. Thus a basic non woven material manufacturing unit is equipment to cut join and if need be print the material into a bag.

Types of Non Woven Bags

As you probably have observed there are various types of non woven bags in the market. The key types are based on the design or shape of the bags, what could technically be referred as the cut. And secondly the weight or toughness of the material, what is technically referred to as the grammage.

It is important to understand the different types so that you are wiser when purchasing equipment and entering the market.

Classification by Design/ Shape

The below are the major classifications. Names could vary depending on the vendor.

a) D- Cut Non Woven Bags

Handle punched not attached. Don’t rip off easily.

b)T-Shirt Bags also known W Cut and U Cut Bags

 

 

 

 

These are the common grocery bags. Often they are made from very light material

c) Box Type with handle

They are made of heavier material are stronger and can carry more. Becoming increasingly common in supermarkets.

These are the basic designs and most of the other kind of bags are largely a modification of these. Other types include bags with wooden handles, shoe bags among others.

Classification by Grammage

Grammage is the weight of the PP material. Thus a weight like 30gsm means 30 grams per meter squared. The higher the grammage the stronger the bag. Also the higher the grammage the more expensive the material.

Grammage has an influence the equipment, the cost of the finished products possible uses and thus the target market.

 

 

 

 

What Is Being Made in Kenya

In the local market there are manufacturers producing all kinds of designs and grammage of non woven bag, while there are other specializing in particular types. This decision is primarily based on the capital available to the entrepreneur, and secondary to the market access.

In the first case if an entrepreneur has enough capital she will purchase all kinds of equipment. This way she will be able to fulfill the needs of diverse consumers in the process winning a bigger share of the market. On the other hand if an entrepreneur is low on capital she might decide to invest only in one kind of bag, and thus just purchase equipment for only that particular purpose.

Specialization is not always about capital but also to do with an entrepreneur’s outlook of the market ad what markets she can access. An entrepreneur can look at the market and see in her local market there is more demand for t-shirt bags compared to other bags so she sees no reason to make anything else.

On the other hand an entrepreneur can have access to a particular market say a link to supply a supermarket and thus invest in equipment to manufacture the kind of bags that the retailer wants.

So what kind of equipment should you go for? Ideally you should go for equipment that can make as a wide variety of bags. Like we mentioned above the market in Kenya seems to be at an experimental stage where there is still a lot of experimentation on what get what works.

Hence if you are a single product company there is always a risk of the market eventually throwing you out if a better and more affordable product gets in. Of course it could sound alarmist but there is some reality in it. Yet the single product you are making could be what the market demands in high quantities make you huge profits.

On the other hand if you have machines that do all types of bags but are not utilizing fully then it becomes a cost to the business.

Don’t be afraid if you don’t have the capability to get equipment to make all bags. There is still potential for all types of bags but you have to be on your toes with an eye on the market. For instance at the moment t box bags are becoming popular with retailers. And it’s okay if low on capital to start with one kind of bag and grow from there.

Process of Making Non Woven Bags

Basically the process of making non woven bags involves shaping and joining the PP material in the required form of the bag. It’s not the kind of manufacture where you have to make the core raw material then process it.

 

 

 

 

The equipment now varies with what it can do. For instance attaching handles, what shapes it can make, how the material is fed, the technology that is being used and such other factors.

Think of the machine as a tailor. The material is ready, what is required is to come up with the design then sew it together. The method of sewing and the designs will vary.

The technical details of the equipment are beyond the scope of this quick guide but to give you an idea let us illustrate simply with an example of a t-shirt bag.

Step 1: Roll of PP fabric is fed to the machine

Step 2: The fabric is folded into two

Step 3: The fabric is sealed on one side to form a ‘pipe’

Step 4: Depending on the desired length of the bag the ‘pipe’ is sealed at intervals. This will be the base of the bag.

Step 5: The fabric is then cut into individual bags

 

 

 

 

Step 5: The individual bags are rectangle and we want them to be t-shaped thus they go through a ‘punch’ which cuts a w shape out of the top part leaving them in t -shape.

Step 6: If they are to be printed they are then moved to the printer.

This is an over simplification of the process but should give you an idea of how the process and equipment works.

Equipment

Overview

From the above process then the equipment required to manufacture non woven bags consists of:

Slitting Machine – This is used to slit the non woven fabric for instance to make handles or hems.

Sewing Machine (Or Function) – This is used to join or sew together the fabric in order to make the bag

Cutting Function – This is used to cut the bag into various sizes.

Punching Machine – This removes by punching parts in order to achieve the desired design. For instance punching out a w shape in order to make t-shirt bags.

Printing Machine – For printing the bag if need be.

Equipment is designed in various ways such that some combine functionalities while others are separate. However equipment like slitting and printing are usually separate. Also there will be a machine which can make more designs than the other, another with faster speed, wider sizes or limitations in the gsm of the material that it can take. The major difference as will become clear below have to do with what the machine can achieve.

Terminologies and Factors To Consider When Purchasing Equipment

Before you purchase the equipment it’s good that you understand some of the basic terminologies:

Ultrasonic Sewing (Welding) – This is the modern method of ‘sewing’ together non woven bags instead of using needles which wear out or other thermal methods of joining the pp material. Whenever possible go for equipment with ultrasonic sewing. Ultrasonic also offers

 

 

 

 

better quality since it does not cause curling at the edge. An ultrasonic equipment has also the advantage in that unlike equipment that uses thermal technology you don’t have to preheat the equipment before starting to make the bag. This way you save time and increase productivity.

Production Speed – This is the speed at which the equipment is able to make bags. Speed is measured by pieces per minute such as 200pc/minute, 120 pcs / minute. The quoted is usually the maximum speed.

Equipment will often have ‘series’ with variations in speed among other factors. The higher the production speed the more expensive the equipment. You don’t have necessarily have to go for equipment with maximum speed. For a start 100pc – 120pc minute could be good. Picture at 100pc/minute in one hour you will be producing 6000 bags. In 20 hours that will be 120,000 bags. That’s fair quantity.

Moderate work for a start so as to not have lots of excess capacity. And the higher the speed the expensive the equipment. Choose the capacity based on the cash at hand, the share of market you plan to win and of course your future projections.

Manpower Required – Look at the level of automation of the equipment and the ease of operation. Equipment which is highly automated and easy to operate will require lesser manpower, thus saving you costs.

At the most the equipment should have three staff; an operator who is skilled and two assistants who can be unskilled. In an ideal situation the equipment should be operated by two people. A general rule of the thumb in such equipment is that if you as a non technical person have lot of difficulty understanding how the machine works then it’s more complicated than it should. . To gauge the ease of use look at the control panel, flow and how easy it is to achieve different functionalities

Bag Making Thickness – This describes the weight of the non woven fabric that the machine can work with. Thickness is measured in grams / meter squared, what is denoted as gsm. The lower the figure then the lighter the bag. You surely have noted bags which are very light; these are made from material with very low gsm. Then are the other heavier bags which came to the bag a little later often with handles; these have higher gsm. You should go for a machine that can work with material with a wide variety of gsm. When in doubt 30-100gsm is a good range.

Bag Making Width and Length – This describes the dimensions of the bag that the machine can make. The dimensions could vary with the type of bag. For instance a flat bag could have more width higher length than a t-shirt bag. Ideally the wider the range the more sizes that you can make. For instance the very common small t-shirt bags have a width of about 25 cms.

 

 

 

 

Running Costs - Consider the running costs. The key among them being power consumption, how often it requires service, how many people are required to operate it, the price of spare parts and its life ‘ expectancy’ ; keeping everything constant how long will the equipment last before you are required to replace.

Price - There are quite some price variations for the equipment .Although variations will depend on factors such as capacity, brand and extra features, at times prices differences are for the same equipment but from different dealers.

Look for the best deal. For equipment the best deal is not necessarily the cheapest, look at everything as a whole including other factors such as ease of operation, warranties and running costs.

Also look at what the price covers. For instance some manufactures will quote the price of making the machine at their factory. You have to add extra costs for transport from the factory to the port, local (manufacture’s country) taxes and such other costs.

Sample Equipment Set Up

Now that you understand the key terminologies let us look at sample equipment set up from a real manufacturer:

Example 1: Separate Equipment / Higher Cost

 

Equipment

Capacity

Cost (Kshs)

 

 

 

Handle bag making machine

100

6,180,000

 

 

 

 

 

 

 

 

 

Handle bag machine Spare

 

1,173,582

 

 

 

Parts

 

 

 

 

 

 

 

 

 

 

 

T-shirt bag making machine

120

4,635,000

 

 

 

 

 

 

 

 

 

T-shirt bag machine Spare

 

1,066,153

 

 

 

Parts

 

 

 

 

 

 

 

 

 

 

 

Automatic Punching Machine

 

927,000

 

 

 

 

 

 

 

 

 

D-Cut bag making machine

120

4,635,000

 

 

 

 

 

 

 

 

 

D-Cut bag machine Spare

 

1,066,153

 

 

 

Parts

 

 

 

 

 

 

 

 

 

 

 

Automatic Punching Machine

 

927,000

 

 

 

 

 

 

 

 

 

Zipper bag making machine

120

4,635,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zipper bag machine Spare

 

502,022

Parts

 

 

 

 

 

Fabric Slitting Machine

 

1,158,750

 

 

 

Ultrasonic Sewing Machine

 

231,750

 

 

 

Ultrasonic Spot Welding

 

231,750

Machine

 

 

 

 

 

Non-Woven Printing Machine

 

3,708,000

 

 

 

Compressor

 

880, 650

 

 

 

 

 

 

Total

 

31, 957,810

The case above is a whole package of machines from one dealer. However it’s not a must that you start this way. You can start with what you need. For instance if you are just making t-shirt bags you just need the t-shirt bag making machine , automatic punching bag ,slitting machine which and compressor and this will amount to 7292400.

Spare parts are optional but they come in handy such that in case of a breakdown you don’t have to stop production in order to get them from the source. Spare parts are of the parts likely to get worn out faster.

If you are not printing then you don’t need the printer. If you are making bags with handle of whatever kind then you need the handle making machine.

The separate ultrasonic welding and sealing machines are manual and are usually used when making samples. Making sample using the complete machinery can be costly and lead to wastages.

The compressor supplies air to the machine as a way of cooling it and as a way of stabilizing it. It also makes the fabric easy to work it. There is high risk of breakdown if the machine does not get the cool air.

The above scenario is a very versatile situation in that the equipment can make different types of bags and even print. Relatively the prices above are high. The prices and types of machines could differ, and will depend on the supplier.

 

 

 

 

Do also note this one of kind of several possible set up. In this case most of the machines are operating on their own. More space and possibly more operators could be needed. Nevertheless the advantage of this will become clear when we look at other alternatives.

Example 2: 5 –in -1 / Lower Cost

A 5 – In -1 machine means that unlike in the case where the equipment for the different functions are separate the 5-in -1 is a machine that can perform several functions. The example we are using in this case can attach handles, D- Cut bags, box bag and t-shirt bags an even shoe bags. Although a t-shirt bag will require a separate punching machine. `

The main sections of this machine include:

Unwinding - This is the part that unwinds the non woven fabric as its gets into the machine.

Folding – This basically the section that folds the fabric into the desired shape of the bag.

Gusset Making – Gusset are basically fabrics inserted in the bag making to make the bag firmer, accommodate more and stand on their own. They are especially used when making box bags.

Box Bag Making – This involves sealing by ultrasonic welding, removing unnecessary parts by punching, creasing and also D-Cut punching.

Handle Attaching – This involves attaching the necessary handles to the bag.

Main Sealing – This is the final sealing to make all joints of the bag stronger.

Distribution Box – This contains the main electrical parts of the machine and includes the touch screen user interface from where you control the equipment.

The punching bag required for the t-shirt can be attached to the main equipment or be on its own.

A compressor will be required as separate equipment.

A slitting machine will be required for cutting the rolls say for handles. A printer is also separate.

The cost of the machine for the above 5 in 1 set up is as follows:

 

 

 

 

Equipment

Cost

5 in 1 Non Woven Bag Making Machine

3,296,000

Automatic Punching Machine for T-Shirt bags

515,000

4 Colour Non Woven Flexo Printing Machine

1, 390,500

Non Woven Slitting Machine

515,000

Compressor

463,500

Spare Parts

628,815

Total

6,808,815

The equipment will require two containers. Each container will be about Kshs.210, 000 to the port of Mombasa. Thus two containers will be Kshs.412, 000.

The total cost will thus be: Kshs.7, 220,815. This is a far cheaper option.

The advantage of the separate equipment over the combo is that in the first case you can make different items at the same time thus increasing production. With the combo you have to work on one particular kind of bag at any one time. Combo machine are also often relatively slower. The example we used above does 75 pcs / minute.

There are several options of equipment in the market. When picking consider your budget, what productivity you want to achieve and the variety of items that you want to make. Don’t feel intimidated if you unsure of the terminologies or what kind of machine to go for. You can send photos of what you want to make to the suppliers and pick from there.

Suppliers

Compare several suppliers in terms of price, functionality of the equipment and support they offer. There are many suppliers with the Chinese dominating the market. There are also Indian companies making great machines. Where do you start? Well from contacts the internet and marketplaces like Indiamart and Alibaba. We can also assist you in sourcing but at a small fee.

To jump start you here are three trusted ones. Please note we are not endorsing any of the companies and that there are many more suppliers in the market.

Ideally it would be good if you visited the supplier yourself but due to logistics and capital limitations sometimes this is not possible. In that case you can still make your order online but after the necessary due diligence.

 

Supplier

 

Contacts

 

 

 

 

Zhengxin Machinery Co.Ltd (Great customer

www.wzzjx.com

 

 

 

 

service, fair prices)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KP Tech Machine (Leading Indian

www.kptechmachineindia.com

Manufacturer)

 

Kete Grouo

www.ketegroup.com

Raw Materials

Like we mentioned PP fabrics are used to make the non woven bags. There are no reliable manufactures of PP fabric in Kenya and often you have to import. Major countries from whence you can buy the fabric include India, China and Egypt.

When thinking of the raw materials consider what quantities you will require in a month and the duration it takes to get materials to Kenya. If you have enough capital and space then you can stock raw materials to last several months but if low on capital you have to make several orders within the year. For instance if you are buying from China it takes an average of 45 days to get the materials here. You have to factor this otherwise you find yourself without raw materials.

Prices of raw materials vary but in December 2017 they ranged between $1400 and $ 1800 per tonne of PP material. You have to factor the price of shipping which if from China.

To help get a better understanding let us illustrate with an example

Assume you have equipment with a capacity of 100bags / minute

Production per minute = 100 bags / minute

Production per hour = 100 x 60

=6000 bags / hour If you are working for 20 hours in a day:

Production per day = 6000 x 20

= 120000 bags / day

Approximately 100 bags will make 1kg.

Thus 120000 bags = 120000/100 kgs

=1200 kgs

=1.2 tonnes in a day

30 days = 1.2* 30 = 36 tonnes Cost per tonne = Kshs.175100

 

 

 

 

36 tonnes = 175100 * 36

= Kshs. 6,303,600

This excludes the cost of shipping from China to Kenya.

On average one container will fit 11.5 tonnes of non woven fabric.

Hence 36 tonnes will require 3 containers.

It costs about Kshs.210, 000 to ship a single container to the port of Mombasa.

3 Containers will cost: Kshs. 210,000 x 3 =630,000

By the time the raw materials arrive in Mombasa you will have spent: Kshs. 6,303,600 + Kshs.630, 000

= Kshs.6, 933,600

Then if your factory is not in Mombasa you have to factor in the cost of transport. At an average cost of Kshs.70, 000 and other costs to Nairobi it amounts to at least of Kshs.7, 103,600

This is only a guideline, and very practical at that, of what to expect. Your raw material needs could be more or even less depending on your production. The prices will vary with the supplier and the grammage of the material. Nevertheless they are in the range we have indicated above.

Some equipment suppliers also sell raw materials otherwise they are hundred of suppliers available from common markets such as alibaba and Indiamart. We have listed some below to get you started.

Premises

To get an idea of the size of the premises you require let us consider the two equipment set ups we used above:

 

Equipment

Size : L x W x H (Meters)

 

 

 

Handle no woven bag making

12 x2.6 x 2

 

 

 

machine

31.2

 

 

 

 

 

 

 

 

T-shirt bag making machine

10x2.6x2 26

 

 

 

 

 

 

 

 

D-Cut bag making machine

10 x2.6 x2 26

 

 

 

 

 

 

 

 

Zipper bag making machine

13.5 x 1.92 x1.9 25.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Woven Printing Machine

4.5 x2.2 x2.5 9.9

 

 

 

 

Total Floor Space (LxW)

119.02 Meters Squared =

 

1281.12 Square feet

For the 5 in 1

Equipment

Dimension (Lx Wx H)

5 in 1 Non Woven Making Machine

11.5 x 2.6 x 2.1

Flexo Non Woven Printing Machine

4.8 x 2.2 x 2.4

Total Floor Area (L x W)

40.46 Meters Squared =435.508 square feet

In both cases we are assuming the machines are next to each other but in reality you need working space. Then again these are just the main equipment; other smaller machines will also occupy space.

But beyond the equipment you need other facilities. These include:

Warehouse / Store room – You need a room to store the raw materials. Remember it takes an average of 45 days to get raw materials say from China. This is also means you need to have enough stock of raw materials to sustain you before the next shipment. This needs space. You also need space to store inventory before you distribute.

Toilets, Bathroom and Changing Room – You require toilet facilities for the staff. A changing room and a bathroom incase staff in need to take a shower

Breakout Room - Staff could need a room to take a breather if need be.

Office – You need an office however small to run the business and manage. Some of your staff will also need offices.

First Aid Room – You will need a first aid room in case of an accident.

In total you could require at least 5000 square feet. Present commercial rate in Nairobi range between Kshs.18 – Kshs. 27 per square feet. Hypothetically if you are setting up in Nairobi then you need to at least budget Kshs 125,000 in rent per month.

Of course it could be much lower depending on the area, method the landlord uses to charge and lease terms. Yes ideally you should sign at least a 5 year lease.

 

 

 

 

Renovations

Once you acquire the premises you need to renovate it to fit the business. Key renovations will include:

Lighting – A factory needs good lighting at all times of the day and night. The lighting should be factory friendly this is in terms of the setup / design and also the kind of bulbs. There are special bulbs for this purpose. This helps save electricity costs.

Floor – Because of the heavy industrial activities and to protect the equipment, floor and staff. A special kind of ‘floor’ called epoxy floor is used for industrial purposes. Still if the premise is factory ready then it could have the epoxy floor installed.

Security system – To ensure transparency, safety of staff, stock and equipment then it’s important to have a security system. The basic security system will be a CCTV system covering the whole area of the production. Security could also involve renovating the perimeter wall and ensuring even greater security for the factory.

Painting and Other works – It could be necessary to repaint the building, partition spaces, plumbing, electrical and other minor works.

Based on vendor estimates budget at least Kshs.800, 000 for the above renovations.

Production Process

The basic production process could be like this:

Receipt of Raw Materials

Sorting of the Raw materials

Storage of the Materials

 

 

Processing of Raw Materials

Making of Bags, Printing of Orders

Packaging of Finished Products

 

 

Distributions of Products

Direct sales to customers

 

To Distribution Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The production process will involve receiving of the raw materials from the store to the production area, processing the raw materials which in this case are making them to bags, then distribution of the products so as to reach consumers.

Of course this is an oversimplification of the process. There are many important details to think about:

What quantities are you going to produce

What designs of bags will you produce in a particular batch and in what quantities

What quantity of raw materials are required to produce a particular batch

Is there enough storage for the end product?

If it’s a custom design say of a supermarket is everything for all involved in the process? The design, quantities, packaging and timelines?

Who is involved in the production?

How much will it cost?

Whereas these could seem like simple matters they are the core of an efficient production unit. Where the factory is just producing without regard to demand, market conditions, inventory, clear communication it leads to inefficiencies, excess inventory, unwanted products, unnecessary costs and eventually losses. This often happens with new manufactures that at the start are excited and get into an auto cycle of just producing.

Production Staff

Production staff here implies those who are involved in the actual production of the bags. We will use the same set ups above which we have been using for illustration purposes.

In an ideal situation each of the machines should be operated by a single operator and a line assistant. However in the case as above where the machines are close together and highly automated you could have two operators running all the equipment. However for each you will require an assistant basically a line packer. This is the person who is at the end picking the finished products.

If you are also printing you require an operator specifically concentrating on that. This is because of the higher possibilities of things going wrong in printing.

Thus the key production staff and their roles will be as follows:

 

 

 

 

Production Manager

Consider this to be the liaise between the production staff and management. He is the single person taking full responsibility of the production process. Among the key roles

To coordinate all production activities.

Liase with the sales team to give quotations, timelines and implement customer orders.

To make sure there are enough raw materials and personnel for set production targets.

To act as the link between the production department and management.

To help in improvement of production processes.

To help recruit key production personnel.

To help come up with new product to utilize the full capacity of the equipment.

Qualifications

Degree or diploma in industrial processes or a relevant engineering course.

At least two years experience in a manufacturing company, preferably a printing company.

Good leader.

Innovative.

Remuneration: Kshs.50, 000

Each of the equipment will be manned by the following personnel:

Machine Operator

Duties and Responsibilities

In charge of one or maximum of two equipment.

Responsible for the actual operations of the equipment

Ensuring that production targets are met

 

 

 

 

Monitoring the equipment to help arrest any breakdowns

In charge of line packers and assistants.

Coordinate with the production manager to ensure necessary raw materials and facilities for equipment are in place

Qualifications

Diploma in plant machinery operations

At least one year experience in operating equipment preferably in a manufacturing plant

Keen and organized

Line Packers / Operator Assistants

Duties & Responsibilities

Help in operating the machinery

Packing finished products

Qualifications

Diploma in plant operations, mechanical engineering or related field.

Fast learner

Neither the qualifications, roles and remuneration are set in stone. This should simply act as a guideline

Other Manpower

Beyond the production staff you have to factor in other staff that will make the business successful. Whereas it’s always tempting to have the minimum number of staff so as to keep the

 

 

 

 

wage bill low, it should not be at the expense of the success of the business. And as much as you

could be hands on person with a variety of skill you can only do as much.

Among the key staff you should have are:

Sales & Marketing Person

If you are keeping it lean you could start with an aggressive, smart and street smart salesperson

to drive sales. The person should have a good understanding of first moving consumer goods and

also the retail sector. You can give him or her any title that you prefer as long as they are able to

deliver. The key markets for the non woven products will be the mass market in which case its

distribution which matters most. And secondly the retail market of which supermarkets is a key

player.

From a technical perspective the sales and marketing person should play the following roles:

Duties and Responsibilities

Coordinating the sales team including allocating regions and setting targets. That is if you have extra salespeople. As a point of note it’s always good to hire a sales or marketing manager who can actually sell and close deals not just supervise and direct those under him.

Market research to help in product development. The market is still young, there are opportunities in bags still yet to be discovered, there are products which are losing favour with consumers. Your marketing manager should monitor and research to help develop new products or fine tune existing ones.

Developing marketing strategies. You need to have a very clear and practical strategy of how you are going to attack the market. The marketing person should use her experience and skill to develop this.

Working with agencies to help develop advertising messages. It might be necessary to do a level of advertising to build brand or reach consumers who could be interested in the product. The marketing manager should help in this.

Forging partnerships with relevant firms in order to gain market share. Corporate clients will offer some sort of stability with orders. The marketing or sales manager should help develop relationships with corporate or other organizations which could be in need of the bags.

Help in pricing.

Monitoring the competition.

 

 

 

 

Qualifications

Degree or Diploma Marketing or related business course.

At least two years experience in a mid level marketing position.

Ability to conduct market research.

Good management and organizational skills.

Good interpersonal skill.

The above qualifications are not cast in stone, they are just a guideline. At the end you want someone who can sell, develop new markets and products.

Accountant

At the start accounting could seem easy because the number of transactions and the people are involved are a few. Thus you could be tempted to keep the records yourself or delegate to the receptionist. But then transactions start ballooning, there is this and that to be bought, there is so and so to b paid, there are sales at all levels and so much more. Within a short time you have lost control and if it goes for a little longer you might never regain control. So the leakages start, the true position of your business is never clear. You are caught up in a vortex that will be difficult to get out of.

For all these reasons you need an accountant. The accountant should not just do the accounting and prepare statements but he should be able to help you interpret them and advise about the financial position of the company accordingly. Indeed nowadays there are visual accounting tools that help even non technical managers understand what is happening in the financials.

Technically the roles of the accountant are as follows:

Preparation of the businesses financial statements

Preparation of quarterly financial business reports

Act as the financial advisor to the business

Authorization of the procurement of goods and services

Qualifications

Certified Public Accountant holder from a recognized institution

Degree/Diploma in related subject i.e. finance, accounting etc

 

 

 

 

Two years’ experience in a manufacturing company

The roles and qualifications act a guideline.

Administrative Manager

You need someone to handle the call, to manage employee records and needs before you can hire a full time human resource manager, someone who ensures the office and factory are cleaned, the person who buy utilities such as sugar and tissue for the office among many other roles.

Without someone in charge of these issues so much falls along the way.

The administrative manager should be an all rounded person with experience in office and people management.

Operations Manager / General Manager

This is the person who is the leader. In charge of day to day operations, motivating staff, product and market leaders. She should be hands on person with preferably with previous experience in sales.

Market Entry

The two chief consumers of non woven paper bags are retailers and the mass market. Your market entry strategy should be tied to winning these key markets. Let us look into a little detail of each:

Key Market: Retailers

The Kenyan retail industry consists of retail shops and supermarkets. According to a research by P & G Kenya’s retail spending is estimated at Kshs. 1.8 trillion. Despite the turbulence in the sector as characterized by financial challenges experienced by Nakumatt and Uchumi the retail sector is expanding.

The retail sector is one of the highest consumers of packaging material. Until the polythene paper bag, supermarkets and retail shops used polythene paper bags to package shopping for their customers.

After the ban supermarkets have resulted to selling non woven bags to their customers. Whereas this is working at the moment, in the future and as competition in the sector becomes intense

 

 

 

 

supermarkets will be forced to offer shopping bags at a subsidized rate or free of charge at least for some level of shopping. Even where the supermarkets sell the packaging bags they would like to take advantage of their high foot traffic to provide branded bags which will act as a form of advertising when customers reuses them or other purposes.

Packaging paper consumption in the retail sector will not reach the pre ban levels at least in the short term when the cost of biodegradable bags is higher than that of polythene but their demand for shopping bags will still remain significant.

Consumers at all levels of income use bags for several of packaging. This ranges from carrying items when shopping in markets to storing or protecting. The packaging material of choice has always been polythene bags, which have since been banned. Estimates put the consumption of polythene bags by the mass market at around 100 million per month. With the Kenya population standing at around 50 million this equated to two papers per citizen every month.

The choice of polythene bags was based on availability, pricing and functionality. And with the polythene gone the mass market are looking for alternatives that meet the same functionality. Presently non woven bags and to some extent Kraft papers are the closest alternative, though not a perfect alternative.

Due to the fact that until the last minute there was skepticism about the polythene ban taking effect the packaging industry taking was not fully prepared to meet the increased demand of biodegradable bags. This is quantity and also in terms of functionality.

The result is that the market flooded by all manners of bags as the manufacturers and importers experiment. The market is still not yet settled in terms of product, there are still gaps in terms of getting the right product it for some sectors.

Although because of the relatively higher cost of the papers mass market consumers are recycling more than before they still remain significant consumers of paper bags. And whereas previously they often acquired a large portion of their carrier bags free of charge from supermarkets they now have to buy.

You could first target regional and mini supermarkets before going for the nationwide retailers.

Research we have conducted and information publicly available shows that the bigger the supermarket the longer the credit period to make payments to suppliers. At the start you want to avoid relationships that will negatively affect your cash flow.

It’s also notable that the larger the supermarket chain the more the bureaucracy in making decisions. In most cases larger supermarkets tend to negotiate for the lowest prices possible

 

 

 

 

promising to compensate in terms of volumes. At times this could lead to very low margins that barely recoup the costs of the business.

Mid level supermarkets covering an area such as a single town or several counties are more open to new suppliers. In the case of shopping bags you understand their needs and seek to solve them. The vital of these wants being one how they can market and differentiate themselves using packaging materials and two how they can offer their consumers a variety of packaging bags at the lowest cost possible.

You or your salespeople will directly approach the supermarket’s decision makers, with samples and friendly terms.

Mass Market: Non Woven Bags

Our market research has shown that the decision to stock non woven bags by retailers is based first on availability, secondly on the margins offered and thirdly on the quality and variety of the bags.

With this knowledge your market strategy should first be aimed at making the products available and at competitive prices.

The Distributor Option

You can segment the country into regions and if well capitalized recruit salespeople on a retainer and commission each to be in charge of two or three regions. The salespeople will recruit regional distributors, who will then sell to retailers either directly or through smaller wholesalers.

Distributors will be business people with a good understanding of the region, with the ability to create lasting and beneficial relationships with retailers. They will also be smart businesses people who are able to read the market and identify opportunities.

Initially in recruiting distributors we will be biased towards already established businesses. These will have a good understanding of business trends in the area that they will cover. More important they should have existing relationships with retailers or lower level wholesalers. This will help in faster adoption of our products.

Since you want to make the bags as easily available as possible, the distributor will cover an area they can reasonably serve and at a profit. Thus a distributor could cover a small town center if it’s necessary to do so.

For instance in Nairobi where competition is intense you can have at least two distributors in each estate. In this case a distributor could be a wholesaler in the region, a dominant retailer or a shop proprietor who is aggressive and looking for growth.

 

 

 

 

The advantage of using wholesalers or other product distributors is that the distribution system is already in existence. Hence the extra cost in terms of building relationships and logistics will be minimal; this will make the margins more attractive.

Also the decision to use distributors rather than sell directly to retailers is informed by the logistical complexity of selling directly to retailers. More monetary resources and time will be required which at the beginning can be used in more effective marketing efforts.

You should set reasonable targets that distributors should meet every month. To achieve this and to keep them hungry for more we will give monetary incentives such as bonuses on hitting the target. We will also support them in terms of marketing.

Nevertheless you should make it easy for retailers or anybody else interested to buy directly from our factory as long as the quantities are the basic minimums we have set. Your strategy should be to have as few barriers as possible for traders and consumers in accessing the non woven bags.

Whenever consumers shop for items in supermarkets, kiosks, groceries and markets they require bags to carry the goods they have bought. Since the ban most businesses now require consumers to purchase their own bags. Considering the previous polythene bags consumption levels and the current recycling levels we estimate the consumption levels of consumers in urban centers to be an average of two bags per person every month. These are for non woven bags which more or less have substituted polythene bags.

Nairobi is presently one of the biggest markets because of the high level of retail activity in the city. Indeed with these business urban areas, not necessarily Nairobi is the best market. Rural consumers recycle more, have less impulse buying and their retail activity is at a lower level.

Looking at Nairobi with a population of 3.138 million then we are looking at a market size of 6.276 million non woven bags a month in Nairobi alone and 96.92 million bags in the whole country. This is working with the least averages. The market is definitely bigger in some areas compared to others.

Consumer Characteristics

But even as you approach the two markets it helps to understand some of their characteristics and modify your strategy accordingly:

 

Target Customer

 

 

Characteristics

 

 

 

 

Retailers

 

 

Significant share of the market in

 

 

 

 

 

regions or in particular centers

 

 

 

 

 

 

Have branches

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

• High consumers of packaging materials

 

• Looking for packaging material which

 

is low priced but functional

 

• Want to use packaging as a form of

 

marketing.

 

• High potential for growth

 

30-90 days credit period

Mass Market Consumers

• Looking for functional but cheap but

 

serve their purposes

 

• Buys packaging from the most

 

convenient location

 

• Recycles paper whenever they can.

 

Rate of recycling has gone up after the

 

ban on polythene papers

 

• Wants different bags to serve different

 

bags

 

• Not loyal to particular paper brands and

 

make purchases based on availability

 

and convenience

 

• Before ban retailers were a major

 

source of free bags

 

• Purchase rate has increased after the

 

ban because retailers no longer offer

 

free bags.

SWOT Analysis

In order to even be more aware of the market here is an analysis of the strengths, weaknesses, opportunities and threats awaiting a new small or mid sale non woven bags manufacturer:

Strengths of Existing Players

Better known brands.

Better capitalization.

Established relationships with suppliers as a result of having been in the market longer.

Efficiencies as a result of economies of scale.

Knowledge database that comes with having been in the market longer.

Weakness of Competitors

 

 

 

 

Higher minimum orders (big runs) locking out small retailers

Longer turnaround (Inefficiency)

Conservative in terms of products (Lack of innovation)

Average service.

Inconsistency in quality

Opportunities

Targeting small and medium retailers

Smooth (efficient) ordering and delivering process

Innovation that comes up with new products that helps customers lower costs, gain more market share or differentiate.

Innovation to come up with new products for underserved sections of the market like the seedlings market.

Threats

Economic downturn – The economic could slump due to politics, policies, weather or international economic shifts. You can guard against that by always remaining as efficient as possible, managing costs and offering products that would be attractive to the target customer even in times of bad economy

A better capitalized competitor coming into your very local market – You can use innovation and value to beat such competition.

Government policy on products changing

Heightened political activity or poor policy which depresses the economy

Increased regulation

Imitation – There is likelihood of other manufacturers copying your products. You can intellectually protect all our products.

Increased cost of raw materials which makes it difficult to compete effectively.

Costs and Margins

 

 

 

 

The major expenses every month will be:

Salaries

Rent

Raw Materials

Electricity

Transport

Communication

Advertising and Promotion

Stationery

Interest – If you have bank loans

Salaries

These include both the salaries of the production staff and administrative staff. From the above example let us assume you have two operators per sift; one in charge of the bag making and another running the printing. Thus the production staff expenses will be:

 

Equipment

Manpower & Salary

Total

 

 

 

Non Woven Machines

1 operators per shift @ Kshs.

146,000

 

 

 

 

35,000 = Kshs.35,000

 

 

 

 

 

2 Assistants per shift @ Kshs.

 

 

 

 

 

19,000 = Kshs.38,000

 

 

 

 

 

Total = Kshs. 73,000

 

 

 

 

 

No. of shifts = 2

 

 

 

 

 

Total for all shifts:

 

 

 

 

 

Kshs.73,000 x 2

 

 

 

 

 

 

 

 

 

 

Non Woven Bags Printing

1 Operator per shift @

Kshs.54,000

 

 

 

Machine

Kshs.35,000

 

 

 

 

 

1 assistant per shift @

 

 

 

 

 

Kshs.19,000

 

 

 

 

 

No. of Shifts – 1

 

 

 

 

 

Total : Kshs.54,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Slitting Machine and

1

Operator per shift @

Kshs.54,000

Punching Machine

Kshs.35,000

 

 

1

Assistant per shift @

 

 

Kshs.19,000

 

 

No of shifts – 1

 

 

Total – Kshs.54,000

 

 

 

 

 

Production Manager

1

@ Kshs.50,000

Kshs.50,000

Total

 

 

304,000

Assumptions

Plain bags are more than the custom printed bags, thus printing can happen in a single shift.

There is only one non woven bag making machine, e.g. a 5 in 1 or D – Cut Machine. If there are more machines then extra operators will be required.

Bag making is happening for at least 20 hours in a day.

Slitting and Punching machines are not labour intensive the raw material section above will be Kshs.7103600

Position

Salary (Kshs.)

General Manager/ Operations Manager

60,000

Accountant

40,000

Marketing & Sales Manager

50,000

Salespeople

35,000

Production Manager

50,000

Administrative Manager

35,000

Store Keeper

30,000

Driver 2 @ Kshs.20,000

40,000

Caretaker / Cleaner

18,000

Total

358,000

Assumptions

Production Manager can double as the quality manager.

Administrative Manager also performs the human resource role

The company is lean and using the least needed manpower for a start.

 

 

 

 

Outsourced Services

Service

Cost (Kshs)

Cleaning

32,000

Guards

24,000

Total

56,000

Total Manpower Requirements

 

 

 

Production Staff

304,000

Administrative Staff

358,000

Outsourced Services

56,000

Total

718,000

Rent

From the estimates in the premises example above – Kshs.125, 000 per month

Raw Materials

Kshs.7, 00,000

Electricity

Kshs.154780 an estimate based on a case study.

Transport

This is to deliver finished products, raw materials and sales. From a case study transport costs could amount up to Kshs.120, 000

Communication

This includes cost of airtime, internet and other communication. From the size of the organization we can peg at Kshs. 30,000 maximum.

Marketing Expenses

This include costs like marketing material and costs incurred by salespeople.Kss.80, 000

Stationery

Kshs.12, 000

 

 

 

 

Other Expenses

Kshs.60, 000

Item

Total cost (Kshs)

Salaries

718,000

Rent

125,000

Raw Materials

7,103,600

Marketing Expenses

80,000

Electricity bill

154,780

Stationery

12,000

Communication (Telephone + Internet)

30,000

Transport

120,000

Total Cost of Production

8,343,380

Assumptions

That we are using the earlier example and you are making 120,000 bags per day hence the noted consumption of raw materials.

Production per Month

Total Production per Day – 120,000 bags

Total Production per Month – 120,000 x 30

= 3,600,000 bags

Take the example above to be for 50gsm D-Cut bags of medium size. If we calculate with the least factory price of Kshs.8 each then to meet the monthly costs you need to a least

8343380 /8 bags = 1,042,922 bags which is possible with the right strategy.

If we assume an ideal situation where you sell all your monthly production then your total monthly revenue will be Kshs. 3,600,000 x 8 =28, 800,000.

Very attractive but the challenge is being able to sell all those bags.

Do also note there could be other costs. Prices could also vary. What we have used here are based on some case studies.

 

 

 

 

Licenses

The following are the major regulations that will be required for the business:

Government regulation

Source

 

 

Location

Cost Kshs.

United Business Permit (Trade,

Nairobi

County

Nairobi

60,000

Fire safety, Outdoor Advertising

Government

 

 

 

Health)

 

 

 

 

 

Company Registration

Registrar of companies

 

Nairobi

20,000

Certificate of Health

Ministry of health

 

Nairobi

20,000

Work place safety approval

Ministry of Labour

 

Nairobi

15,000

NEMA Licenses

National

Environment Nairobi

50,000

 

Management Authority

 

 

 

KEBS Quality Audit

Kenya

Bureau

of Nairobi

45,000

 

Standards

 

 

 

 

PIN

Kenya Revenue Authority

Nairobi

Free

Total Cost of Licenses

 

 

 

 

190,000

Starting Costs

The following are the basic costs that you could incur before you start:

 

Item

 

Cost (Kshs)

 

 

 

 

 

 

 

 

 

 

Rent

 

250,000

 

 

 

 

 

 

 

 

 

 

 

Renovations

 

800,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment

7,220,815

 

 

Electricity

120,000

 

 

Telephone and Internet

15,000

 

 

Legal fees

25,000

 

 

Licenses , Registration and permits

190,000

 

 

Motor Vehicles

3,000,000

 

 

Furniture, fixtures and fittings

150,000

 

 

Stationery

7,000

 

 

Raw Materials

7,103,600

 

 

Wages and salaries

718,000

 

 

Transport

250,000

 

 

Insurance

189,000

 

 

Other Costs

300,000

 

 

TOTAL

20338415

 

 

Please note these figures are just to give you an idea of what to expect. There are many items you can adjust to make the costs go lower. For instance you can start with a lower quantity of raw materials and increase quantities as you win more market.

You can start with a cheaper vehicle such as a pick up or even a three wheeler. Renovations could even cost less. The cost of equipment could be lower, maybe you can start without a printer. Also if you are starting say with one type of bag the cost of machinery can be as low as Kshs.2,000,000

Still in the end, however much you squeeze, budget at least Kshs.10, 000,000 for the venture. Remember it’s also advisable to have working capital to help you survive for at least three months.

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