Table of content

Executive summary……………………………………………………………….3

Chapter 1

1.1 History………………………………………………………………………………..4

1.1.1 History of New KCC ltd ………………………………………………………………4

1.1.2 KCC Vision…………………………………………………………………………6

1.1.3 KCC Mission……………………………………………………………………….....6

1.1.4 KCC Objectives………………………………………………………………………6

Chapter 2

2.1. New KCC Organization Structure……………………………………………………7

2.2 General activities undertaken in the organisation………………………………………8

2.2.1 Core functions………………………………………………………………………8

2.2.2 Finance Department………………………………………………………………..8

2.2.2.1 Mandate of the Finance Department………………………………………………8

2.3 Specific activities undertaken ………………………………………………………….8

2.4 Profile of skills and competences gained ……………………………………………….9

2.4.1 Skills Gained…………………………………………………………………………..9

2.4.2 Core competences……………………………………………………………………….10

2.6 challenges

Chapter 3……………………………………………………………………………………12

Analysis,Observation and critique………………………………………………………….12

3.1 Analysis…………………………………………………………………………………12

3.1.1 Swot Analysis………………………………………………………………………..12

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3.1.2 Stake holders Analysis………………………………………………………………13

3.3 Critique………………………………………………………………………………..14

Chapter 4……………………………………………………………………………………15

Conclusion and recommendation……………………………………………………………15

4.1 conclusion………………………………………………………………………………15

4.2 recommendation…………………………………………………………………………….15

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EXECUTIVE SUMMARY

This document aims to describe the work done during my internship, which took place from

January 14 to April 14 2015 covering a total of 13 weeks at the New Kenya Co-operative

Creameries.

The main goal of my internship was to be able to gain experience, to learn, and to contribute

towards the realization of the company’s goal.

Firstly I will present the history of the company since its inception which was in 1925, how the

company was able to conquer not only the Kenyan market but also the East Africa. It will also

encompass the reason why it collapsed and how the government was able to revive it to become

the leading producer of dairy products.

Secondly I will show the organization structure of the company and the different functions of the

department in finance department where I was attached.

Thirdly I will talk about my internship, skills learnt and challenges faced during the study.

Finally I will do various analysis of the company (swot and stakeholder), observations, critique

propose various recommendations to be done to improve the efficiency of the running of the

company efficiently.

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Chapter 1

HISTORY BACKGROUND

2.1.1 History of New KCC ltd .

The history of KCC Ltd to KCC 2000 Ltd to New KCC Ltd is equal to that of Dairy Sector in

Kenya. The New Kenya Co-operative Creameries Ltd was registered on the 25th of June 2003.

Its predecessor, the Kenya Co-operative Creameries Ltd has operated in Kenya since 1925. This

makes it the oldest dairy processor in the country. The company was created so that it can

provide a channel for dairy farmers to sell their milk. The principal business of KCC Ltd was

buying, processing and selling dairy products both in the domestic market and export market.

The company started with only one factory in Naivasha . Growth was mainly achieved during the

period 1966 to 1988. As at the time there was a lot of technical, technological and financial

assistance from DANIDA.

Besides the factory that was set up at Miritini to serve the coastal region, the rest of KCC

factories and cooling plants exist in the medium and high potential parts of Kenya, where over

70% of the population lives and where poverty is prevalent. By 1987/88, KCC was selling 1

million litres per day with purchases from dairy farmers reaching a peak of 1.4 litres per day.

The company operated as a monopolistic environment until the 1990s .Due to liberalization of

the dairy sub sector mismanagement in the company caused it to collapse in 2000 and was put

under receivership.

In August 2000, a select group of dairy farmers (majority of who were members of KCC)

decided to form a new entity, KCC 2000, to bid for the business and assets of KCC. KCC 2000

bid to acquire the business and assets on a going concern basis at Ksh. 406 million was

successful (KCCHL, 2001).

Come June 2003 the NARC government bought back the company at the same price and

renamed it New KCC Ltd. Over the last four years, the business has mainly been focused on

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revival and rehabilitation of its factories and plants which were in desolate state when the

company was revived in June 2003 (New KCC, 2007). According to the New KCC annual report

2006/07 the business is at its tail end of revival and rehabilitation program having successfully

re-opened all the 11 Cooling Plants, 11 factories and 12 Sales Depots at an estimated cost of

Ksh. 3 billion. During the year under review, the company achieved the operational targets set by

the government in the performance contract for the year. New KCC has sustained growing

profitability in the financial year ended 30th June 2007 despite increased competition and

historically high fuel prices in the year which led to an escalating cost of production (New KCC,

2007). 7

Kenya’s political environment traditionally has an impact on the economy. Following the

disputed outcome of the general election in 2007, there was widespread violence and

displacement of people throughout the country. This had a significant impact on milk supplies to

NKCC factories in the Rift Valley.

In 2006 New KCC was awarded the Parastatal status which required the company to follow the

Parastatal Act. The management staffs were put on Performance Contract as provided by the

Public Service Act. According to the New KCC annual report 2006/07 the company had put the

Performance Management system which has redefined the key result areas for the organization,

department and individuals and also put in place an appraisal tool and a reward scheme aimed at

realizing the full potential for individual employees and entire organization.

2.1.2 Vision

To be the market leader in quality refreshing dairy products in East and Central Africa

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2.1.3 Mission

New KCC is committed to provide quality dairy beverage and food products and

services that are of international standing through sustainable innovation and effective value

chain management.

2.1.4 Core values

Integrity

Loyalty

Innovativeness

Quality

2.1.5 KCC Objectives

To recruit suppliers through farmer registration and supplier registration

To set up more coolers and collection points to ensure close proximity to our suppliers. 

To develop an effective transport network that will ensure access to the various milk

collection points

To Provide farmer training.

To enhance fodder production

Through cattle registration into NKCC herds and later Kenya stud book

Promote cattle insurance cover

Support in developing regional breeding scheme

Support in developing regional animal health scheme

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CHAPTER TWO

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2.2 General activities undertaken in the organization

2.2.1 Core functions

Provision of quality products and services

Customer satisfaction

Corporate social responsibility

Good corporate governance

2.2.2 Finance department.

2.2.2.1 Mandate of the Finance department.

manage financial resources of the company , it includes services to our taxpayers and our

customers and suppliers.

During the attachment period I was attached in the finance department. Finance department

comprises of a number of small departments; account receivable, account payable and payroll.

2.2.3 The different activities undertaken by the different departments

2.2.3.1 Payroll

Processing the payroll

Dispatch payments using EFTS and RTGS modes of payment

Verification and posting of staff claims and overtime payments into the payroll using

memory software and sap

Making voluntary and statutory deductions from payroll such as NHIF, NSSF, monthly

insurance deductions, Sacco and loan deduction.

Communicating with Human Resource Department on staff issues affecting the payroll,

e.g. hiring, and termination.

Updating staff bank accounts records

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2.2.3.2 Accounts receivable

Bank reconciliation and coming up with the summary of both presented and presented

payment.

Receipt of sales revenue cheques from customers, listing them and banking them

according to due dates.

Allocation of customer’s payment to specific customers.

2.2.3.3 Accounts payable

Posting vendor invoices into respective accounts.

Posting supplier cheques and allocating to the respective invoices paid using sap system.

Reconciling supplier ledgers with their invoices.

2.3 Specific activities undertaken during attachment in payout.

Raising payment vouchers for transport, feeds, extensions, and payout. Posting invoices for transport, feeds, to Sap system. Posting payment for transport, feeds, Efts in Sap system. Filling and proper maintenance of accounting records and reporting. Receiving bank refunds and making payments to farmers on claim. preparing farmers payments Updating the payout deduction for various plants.

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2.4 A profile of skills and competencies gained

2.4.1 Skills Gained

Time Management skills: During my attachment I learnt how to manage time. Time

management involved my ability to adhere to a schedule and complete tasks correctly within the

given time. It also involved my ability to organize tasks allocated effectively. I was able to plan

my days and utilize available resources to work more efficiently.

Technical skills: During my attachment I gained technical skills and the ability to effectively

utilize workplace technologies and equipment. Technology skills include computer literacy,

understanding of basic hardware and software applications.

Research skills and problem solving skills: These skills allowed me to properly assess a

situation and make sound decisions based on the information available. Problem-solving skills

helped me use knowledge and information to think of creative ways to find solutions to student-

related issues.

Communication skills

During my attachment I learnt how to communicate appropriately. The communication skills

gained will help me to write and speak effectively. Effective communication also involves good

listening skills. These skills will not only help me understand the needs of others through

effective listening, but also convey information in a manner that is easy for others to understand.

2.4.2 Core Competencies

These are organizational competencies that all individuals are expected to possess. These

competencies define what the organization values the most in people.

During my attachment I gained teamwork, flexibility and communication competencies as the

requirement of the organization for all its employees to enable them perform in adverse number

of positions throughout the finance department.

2.5 Challenges

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The challenges that I faced during my attachment period were limited and could be easily

solved.

The computers were limited in number and this affected my work schedule.

The work load was a lot since we were short with one person, thus was not able to go to other

parts of the department to learn.

CHAPTER 3

ANALYSIS, OBSERVATION AND CRITIQUE

3.1 Analysis

3.1.1 SWOT analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It is a way of summarizing

the current state of a company and helping to devise a plan for the future, one that employs the

existing strengths, redresses existing weaknesses, exploits opportunities and defends against

threats.

Strength -Internal attributes that are helpful to NewKCC in achieving its objective

a. Diversified and well balanced marketing strategies to attract interest of the farmers

b. Innovative technological advancements with the institution using the best system to

manage its resources called the SAP.

c. Opportunities for increased revenue from income generating projects

d. Integration of ICT in the payout process saves time and it’s much easier to do.

e. Amiable relationship between farmers and the parastal this is enhanced through timely

payments

f. Transformative leadership style

g. Strong linkages with regional market that ensure its diversified product sales in volumes

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h. Strategic location of various plants and processors and cooler across the country to serve

the country and the local farmer

o Strong human resource base that ensures quality services is achieved.

Weaknesses -Internal attributes that are harmful to NewKCC in achieving its objective

a. Lowly motivated staff

b. Lack of elaborate and fool proof reward system for best performing staff

c. Inability to attract and retain best staff

d. Lack of clear policy for appointment to senior positions

e. Weak social and recreational facilities for staff and casual workers

f. Weak marketing strategies for the daily products as a result Brookside dominates more.

Opportunities -External factors that help KCC achieve its objective.

a. Change of government fiscal and monetary policy

b. Political stability in the country and within East Africa

c. ICT growth and its application in the database management and audit trail of all the

plants.

d. Strategic partnership with local micro finances who can give credit advance to the

farmers incase the payments delay.

Threats -External factors that are harmful to KCC in achieving its objective

a. Management of flush season when farmers are oversupplying-too much milk

b. Dry seasons when there is no milk.

c. Privatization of the plant to private stakeholders that means that famers will lose billions of

shillings from the planned initial public offers to privatize the institution.

d. Stiff competition from other dairy processors.

3.1.2 Stakeholder Analysis

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New KCC recognizes the existence of a number of stakeholders with diverse interests and

influence on the conduct of its activities. The major stakeholders identified include farmers, staff,

the Government. New KCC strongly believes that the identified stakeholders are critical to the

success of its activities. It is the commitment of the institution to carry out stakeholder analysis

on a continuous basis in order to identify changing needs to ensure cooperation and support in

the achievement of her mission.

3.2 Observation

Five forces model was developed by Michael Porter (1979), the idea was to analyze the

organizational environment and industry attractiveness. Hax & Majluf (1996) interpret that

“environmental scan identifies external opportunities and threats evaluate industry’s overall

attractiveness, and identify factors contributing to, or taking away from, the industry

attractiveness”. This report will use this model to analyze the observations of NEW KCC

environment.

Competitors (Private milk processors): There are more private milk processors especially

Brookside that took control of the larger market segment. The private milk processors are

demonstrating a fierce competition by employing best and highly qualified personnel and have

effective marketing strategies that help them market their products.,

New Entrants (Local dairies and self-help groups) : there are upcoming local dairies that

collect milk and offer faster payments and they sell this milk to private milk processor thus

inhibiting kcc access to larger volumes of milk for processing.

Buyers (Customers): with different taste and preference of customers who are the major

consumers of the dairy products have an influence on the sales volume of the company because

if the demand is low the sales volume will be low thus will affect the company overall

performance for example there is already a sh 1 billion worth of stock of powdered milk lying in

the warehouse that will soon cost the company if it’s not sold.

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Suppliers: this are the major players in the success of the company because they are the ones

that supply kcc with the required volume of milk to be processed , thus if they choose not to

supply the company will lose millions of shillings and will be unable to pay its credit balances.

3.3 Critique

It has not completed the adoption of the new SAP system. This leads to poor services given to

farmers and wastage of a lot of time while doing things manually.

NewKCC has a very complex operational structure/ bureaucracy which lead to wastage of time

and energy.

CHAPTER 4

CONCLUSION AND RECCOMENDATION

4.1 CONCLUSION

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The main aim of my attachment was to gain the much needed experience in the field of Finance,

to obtain essential skills that I can adopt in the working environment, improve on my already

existing skills and be able to improve my managerial skills.

The industrial attachment was successful and I learned more about my career, found out what it

is like to work in my potential career, gained valuable experience to build my resume, got some

contacts which will be used anytime I am in need of the institution’s service and also for

networking.

4.2 RECCOMENDATION

1. The company should invest more in information technology in order to improve on the

efficiency of its employees and promote time saving e.g. the company should connect all

branches or purchasing of new printers in every office

2. The company should also device new ways of motivating their employees as this would

improve on the effectiveness and also the time taken to do a certain task. This can be done by

selling of the company products at a subsidized rate to the employees.

3. The company to employ more staff in order to avoid overworking employees.

4. Proper coordination between the employees, in order to increase efficiency.

5. Proper communication network e.g. installation off more telephones

6. Reducing the number process involved in data management or information management

through delegation of duties as this will reduce centralization or reducing the number of

signatories to a cheque

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