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  • 1. Sermsuk Public Company Limited
  • 2. Company Background
  • 3.  Founded in 1952 and the head office was located in Bangkok  Operate 5 factories  1) Patumtani 2) Chonburi 3) Nakornratchasrima 4)Nakornsawan 5) Surattani  In 2011, Serm Suk became a subsidiary of Thai Beverage Logistics company
  • 4. Products and Services
  • 5. Pepsi-Cola International Ltd., New York  Must obtain the supply of concentrate from Pepsi-Cola Trading Company  Must maintain the product quality according to Pepsi standards  Manufacture and distribute: 1) Crystal drinking water and soda 2) Lipton Ice Tea (returnable bottles) for Pepsi Lipton International Ltd 3) Tropicana Twister (returnable bottles) for Pepsi-Cola (Thai) Trading Co., Ltd. 4) Gatorade Sport Drink under license from Strokely-Van Camp Inc. USA. Manufacturing and Distribution Pepsi, Pepsi Max, Pepsi Twist, Mirinda, Seven- Up
  • 6. • In November, 2012, Serm Suk Plc (SSC) introduced “Est”, its own cola drink • First cola brand in Thailand • Suffix  “great-est, new-est or cool-est"
  • 7. ROLE PLAYING
  • 8. • Red Carabao for Carabao Tawandang Co., Ltd. • Oishi ready-to-drink green tea for Oishi Trading Co., Ltd. • Lipton ready-to-drink tea in cans and PET bottles • Tropicana Twister ready-to-drink orange flavoured fruit juice (non-returnble bottles) for Pepsi-Cola (Thai) Trading Co., Ltd Distributor
  • 9. Soft drink DrinkingWater Juice SportDrink Energy drink Tea - Est - Pepsi - Mirinda - Seven-up - Crystal - Crystal Soda Tropicana Twister Gatorade Red Carabao -Lipton ice tea - Oishi green tea Product line
  • 10. Financial Overview
  • 11. Source: Serm suk’s
  • 12. Estimated Market share of soft drink (38 Billion) Including Cola and colored drinks (Fanta/Mirinda)
  • 13. Expected Market Share
  • 14. EST Pepsi Coke Big Cola Others
  • 15. Inbound Process
  • 16. Raw Materials • Ingredients • Packaging materials
  • 17. Non Alcohol Beverages • Raw materials are – Water – Concentration – Sugar, and fructose
  • 18. Concentration • Cola and other flavor drinks – Switzerland • Many sources – Brazil • One of the best cola ingredients • Comes in barrel with a specific amount – Ship • Sermsuk have their personal sugar supplier
  • 19. Packaging Materials • Raw materials are – Bottles – Can – Bottle Cap
  • 20. Bottles • Glass bottle • PET bottle
  • 21. Glass bottle • Returnable bottle – Domestic supplier • Thaiglass – Foreign supplier • Vietnam • China
  • 22. PET bottle • 4-5 Suppliers – Domestic supplier • PET pack • PET form – Domestic supplier • Depends on product types – What drink? – What size?
  • 23. Bottle cap • Crown Seal Public Company Limited
  • 24. Choosing the suppliers • Do not rely on one supplier • Location • Relationship • Reliable • Cost
  • 25. Warehousing
  • 26. Overview of Warehouse Strategies • Just-in-time • No big warehouses • “Small distribution centers” – No dead stock
  • 27. PET 1 litre Cool Hand 250 ml PET 455 ml PET 480 ml Can 325 ml 12 ounces in returnable bottle glass Outputs 7 SKU’s Post-mix dispenser
  • 28. Inventory Management • FIFO • Push strategy Raw Material Work-in- Process Finished Goods
  • 29. Raw Material Management • Just-in-time – reach the manufacturing facility shortly before they are required – stock levels are minimized – Warehouse costs are therefore reduced – less cash is tied up in stock – Suppliers take responsibility – depends on punctuality • penalties for late delivery – delegation of responsibility • make the production department’s job easier.
  • 30. Finished Good Management • Staging areas – At the end of production line – Keep products for no more than 3 days
  • 31. Storage Design • Cases – Maximum space utilization • Full heighted permitted by warehouse dimensions • Forklifts – Receiving – Storing – Picking • Loading process – Manual by drivers
  • 32. Manufacturing Process
  • 33. Water from natural resources Clarifying the water Filtering, Sterilizing, de- chlorinating Sugar to be dissolved Cola concentrates Proportioner to mix the ingredient
  • 34. Carbonating the mixed bevarages Filling at 4°C Sealing the caps Manually picking out defects Finished products into cases
  • 35. • Diew add manufacturing vdo here
  • 36. Outbound Process
  • 37. • Near Just-in-Time. Little Inventory, Few Dead stocks • Motor as the main type of transportation Sales Truck and Large transport truck • Two business model : Two types of distribution channel Traditional Trade and Modern Trade
  • 38. Distribute Processes Factory Small Warehouse Sale Truck Distributes Customers Returned Used Bottle by Sale Trucks Traditional Trade
  • 39. Modern Trade • Large trucks Sermsuk’s Plant • Third Party Logistics Warehouse Owned by Major retailers Modern Retails
  • 40. Large Truck is used to distribute goods from Plant to distribution centers of Major Retailers For examples, Tesco, Tops, BigC The warehouse management, however, is the retailers’ responsibilities. Serm Suk only receives orders from Retailers. Tesco’s temporary Distribution Center at BITEC during the flood
  • 41. Traditional Trade Model • The Strength of Serm Suk distribution interestingly lies in Traditional method • From Serm Suk plant, products are sent to each warehouses for each area, then distributed through sale trucks to each end-consumers, small business entity like small restaurant or food stalls on the street, deep in the soi.
  • 42. Traditional Trade Model • The drivers are also the sale person who contracts, delivers, and keeps information. • Two persons in a sale truck: drivers and a helper • Experiences are very important to operation: route, familiarity and relationship with customers are hard to be imitated by other distributors • They are given commission for the sales made.
  • 43. Traditional Trade Model • Most inventories are kept by the small business entity. It is not kept in large warehouses • That includes the racks and the used bottles Bottles waiting to be picked up by Sale Trucks
  • 44. Demand Forecasting • Serm Suk will not know the demand of the major retailers’ customers, but will know the units ordered by each retailer. • For Traditional Trade channel, each factory will be responsible for its region. The method most often used is to calculate the data backward. • From the driver/salesperson’s record, the units sold from each truck, consolidated, will be used to plan the demand, adjusted with seasonal demand, promotion requirement, and past data. • Combining the data, the demand can be forecasted for each region. The data will then be consolidated into demand for product, and thus the production size can be calculated
  • 45. Contrasting two business model • Modern Trade: Low margin, pays in credits with long maturity time. • Traditional Trade: Low cost, charge lower price and earn cash. – Efficiency: Driver is also salesman; approach end users and knows actual demand.
  • 46. Reverse Logistic: Return Bottle • Sermsuk’s strength • Takes 21 days for each bottle to return. Over 72 millions bottle in the cycle.
  • 47. Reverse Logistic: Return Bottle • Each truck carries spare bottle for any replacement. Mostly for UHT products eg. Oishi green tea. • Pepsi labeled bottle belong to Sermsuk, takes 1 year to take it out.
  • 48. Customer Profile
  • 49. • Aim to have largest share of cola market in Thailand • Focus on the “traditional” market • Focus on both businesses carrying product and the final consumer
  • 50. • Greatest strength is distribution network • Target market reflects this • Strong relationship with traditional stores – Reliable shipments to difficult to reach areas
  • 51. • Also distributes to modern stores – Tesco Lotus – 7-Eleven – there is an Est Cola SKU exclusive to 7- Eleven • Not where Serm Suk gets greatest sales • Purpose is for displaying product – Brand Awareness
  • 52. • Most likely consumers will be “traditional” Thais – Refers to low-income, often rural people • Not likely to travel far to shop, will purchase Est Cola at local stores, shops, and restaurants • Use of glass bottles – Some insist upon drinking from glass bottle – Pepsi is abandoning use of returnable glass bottles
  • 53. Major Issues And Possible Solutions
  • 54. • Issue 1: Loss of Control • Traditional approach for distribution • One helper and one driver/salesman • Takes charge of route, pick up time, etc • They know demand which is communicated back to headquarters – reliance • 30+ years of experience • Cost of hiring and training, expected to start right away • Cost of lost sales • Solutions: Route management system, linear programming, time management, etc
  • 55. • Issue 2: Lack of Bottles • Machines, capacity plus human resource • Not enough bottles, millions in circulation • 1 bottle, 21 in cycle • No centralized return center, go to each shop • Forget to pick up bottles, bottles mixing with other crates • Driver help separate bottles, average stop time increase • High cost of collection • Solution: Import from other countries (may add to cost)
  • 56. • Issue 3: Rusting Crow Caps, Cola backlog • Crow caps rust, unsuitable to drink • Less popular mom and pop shops where cola is kept at the back and ignored • Sometimes kept for months – related to rusting • Health concerns – nausea, vomiting, liver damage • Solutions: Use oxygen absorbing caps (overall cost), For ignored colas (45 days shelf life) – increase shelf life by using refrigerated trucks (partial solution) • Other Issues: – Cost disruptions : Pepsi wants back in the game, – Going through route of modern market segment – Ready to pay high premium, increase overall cost
  • 57. Thank you for your attention

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