Monday, August 25, 2008

Betagro postpones planned SET listing

Betagro postpones planned SET listing

Business thriving from focus on efficiency


Betagro Group, one of the country's largest food processors and exporters, has responded to the economic slowdown by putting off its planned listing this year on the Stock Exchange of Thailand to focus instead on further improving its operations. The group is launching new management tools after the models it has already implemented helped drive an impressive performance in recent years.

CEO Vanus Taepaisitphongse forecasts that this year's sales revenue will exceed 40 billion baht, up from around 30 billion last year.

He said that strong markets and high export prices, especially in Japan and Europe, would contribute to growth, but that implementing total quality management (TQM) and total productivity management (TPM) over the past seven years had significantly raised gross profits and cut operating costs.

The success of these initiatives _ which derive from the Kaizen concept developed by Japan Management Association Consultants Inc _ had inspired the group to bring in more efficiency programmes, an approach influenced by the company's Japanese counterparts such as the Ajinomoto Group, Mitsubishi and Sumitomo.

This year Betagro is working on preventing operating losses and on encouraging staff to think differently from their accustomed ways, said Mr Vanus.

Vanus: Rural job creation important

For example, he said, marketing staff normally set targets and blame risk factors when they miss their goals. The new idea would be for them to look at profit first and set better management plans, taking all risks into account.

He added that management ideas from Japanese experts were practical and straightforward.

''Before we employed TPM in our chicken processing plant, we did not realise that a big chicken-chopping board and a very long table lost time and productivity,'' he said. ''The Japanese experts advised us to reduce them to allow workers to work more easily.''

Betagro has had partnerships with Japanese groups since 1990, when it formed a venture with Mitsubishi Corp to produce portioned, processed and frozen chicken for export. Later, Ajinomoto and Sumitomo became partners in the chicken and swine businesses.

At present, Betagro is in the top five in the chicken industry, exporting 40,000 of the country's total of 310,000 to 320,000 tonnes of chicken meat in 2007. In the swine industry, it processes about 1,600 pigs _ 13.33% of Bangkok's daily total of 12,000 _ and is the country's largest pork exporter.

As well as putting new management in place, the group is also considering how to improve its competitive advantage in production.One idea derived from discussions with Mechai Viravaidya, chairman of the Population and Community Development Association (PDA), is to create jobs in rural areas or set up plants close to communities to cut operating costs and save workers' travel expenses.

This could be regarded as a sustainable competitive advantage, rather than a corporate social responsibility programme, said Mr Vanus.

Many of the company's 10,000 employees work at two food complexes in Lop Buri province but are from remote villages and the company bears the daily expense of taking them to work. Having factories near communities would not only create jobs but prevent heavy migration of workers, he said.

''For example, if the company is going to have a new grilling plant for 300-400 tonnes of chicken meat a month, it has to employ as many as 1,100 workers for two operations _ preparing and grilling,'' he said. ''Why not split them and set up one plant near the workers' homes?''

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