Monday, March 12, 2012


Retailers and manufacturers are taking steps to protect themselves from natural disasters. They want to avoid a repeat of last year, when massive floods severely damaged stores and factories.

Facilities were inundated, products could not be delivered, and consumers were left without necessities such as food and water.

So companies are making efforts now to minimise or completely avoid future damage and disruptions.
Manufacturers are busy improving plants and working to resume full production as soon as possible. Some companies uncertain about the future are opting to hire subcontractors to manufacture for them.

Last year's floods left the retail sector with losses in the billions or even trillions of baht when actual property damage and lost business are considered.

Normal operations are not expected until the second half of this year.

Piyawat Titasattavorakul, the managing director of CP All Plc, the operator of 7-Eleven convenience stores in Thailand, said floods or no floods the company will continue its expansion, opening 450-500 new stores this year.

The company will adjust its store design to ensure less damage in the event of flooding. It will apply techniques acquired from 7-Eleven in Japan and the US.

Mr Piyawat said two new distribution centres will be added to increase logistics efficiency _ one in the East and the other in the Northeast.

They will cost 500 million baht each and be used for distributing products to their respective regions.

Suvit Pholvivat, assistant managing director of Thai Dairy Industry Co, the producer of Mali-brand condensed milk, said it will take at least three months for it to restart production at its condensed milk factory in Ayutthaya.

Currently, the company imports condensed milk from Malaysia and Singapore.

For its Orchid butter products, the company has hired subcontractors for the manufacturing.

In terms of flood protection measures, logistics is of greatest concern.

Tesco Lotus has moved equipment from its distribution centre in Nonthaburi's Bang Bua Thong district to a new location in Lamphun province. It will be the company's northern hub.

Khon Kaen will be the company's northeastern hub and Surat Thani the southern hub.

"We'll work closely with our suppliers to increase our product management efficiency. We don't want to face product shortages again if the floods return," said Mr Suvit.

Kudatara Nagaviroj, Big C Supercenter's corporate affairs director, said the company has identified key areas for improvement and already started developing a better flood response plan.

"Should floods hit and affect our distribution centres again this year, we'll establish temporary hubs in all regions to service our stores. If flooding is imminent, then we'll work with our suppliers to arrange direct-to-store deliveries and local sourcing," she said.

International logistics providers are shifting from building more warehouse space to renting space from others as well as hiring local operators to handle some deliveries to reduce risk.

Shopping mall operators are preparing for possible floods with better designs.

"We learned a lot from the recent floods and will apply what we have learned to our future shopping centres. We're not only thinking of flooding but also considering possible earthquakes when designing our new malls," said Naris Cheyklin, a senior executive vice-president of Central Pattana Plc, the operator of Central shopping complexes.

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