Thailand enters 2012 emphasising restoration, with state agencies having to take the lead in infrastructure investment, including installing a heavyweight disaster warning system, to prevent not only floods but also other catastrophes in the future. Meanwhile, the private sector has to fine-tune its business models to cope with possible calamities.
The country's severest deluge in seven decades has forced the government to rethink crisis management and the private sector to rethink business operations after the World Bank estimated in early December that the total damage from the floods was about US$45 billion (Bt1.35 trillion) and reinsurers indicated that insured losses from the flooding could be up to US$11 billion (Bt330 billion).
The inundation of seven industrial estates housing leading multinational companies in the automobile, electronics, appliance and food industries disrupted vital supply chains around the world. The stupendous state budget to be spent on infrastructure projects to mitigate disaster risk will put a heavy strain on the country's fiscal resources.
The Nation today continues an overview of both the macro and micro economies as they are reshaped in the wake of the flood crisis in terms of business models, risk-factor management and infrastructure development plans as well as the opportunities and challenges they will encounter.
Major retailers have adjusted their logistics strategies, including setting up small sub-distribution centres around the country, to cope with flooding and other kinds of natural disasters that may happen again this year.
They also want to see a comprehensive flood-management plan and medium-to-long-term flood-preventive measures from the government.
Chatchai Tuangrattanapan, director of the Thai Retailers Association, said major retailers needed to adjust their logistics systems to ensure that their product distribution would not be limited by natural disasters.
"In my point of view, major retailers will adjust their logistics by spreading small sub-distribution centres in the provinces throughout many regions to diversify risks," he said.
Chatchai said those retailers had set up their major distribution centres mostly in Ayutthaya and Pathum Thani, such as Sam Khok district. These are strategic locations for transporting products to the North and Northeastern parts of the country, which cover about 60 per cent of total distribution network, and up to 85 per cent if including the middle part of the Kingdom. The major distribution centres have been located close to many industrial estates, which are the production areas and sources of manufacturing, for more convenience in transporting products.
"I don't think local retailers will relocate their main distribution centres, which require huge investment of more than Bt1 billion each, but open small centres in many provinces, such as Phitsanulok, Nakhon Sawan, Chiang Rai, Udon Thani and Ubon Ratchathani, to diversify risks and ease any impact in the future from floods and other kinds of natural disaster. They will also urge many suppliers to deliver their products directly to small or sub-distribution centres in the provinces," Chatchai said.
Kudatara Nagaviroj, corporate image director of Big C Supercenter, said that during the flood crisis in October and November, Big C had used every effort to keep its four distribution centres (DCs) in Ayutthaya and Nonthaburi open. When the water level got too high, they were forced to close.
"All DCs have now been reopened and are operating again with the exception of Bang Pa-in, which we expect to reopen in the coming weeks," he said.
Kudatara said that during the flood crisis, Big C put its crisis-management plan into place and set up a number of temporary distribution centres around Bangkok, Chon Buri and Chanthaburi - as well as regional distribution centres in every region of Thailand.
He added that the company had coordinated with suppliers to make direct deliveries when they could, and had sourced products from local suppliers to serve local needs as well.
These measures ensured a constant supply of products to Big C's customers.
"After the flood crisis, we evaluated these measures and incorporated them into our crisis-management plan should there be further crises in the future," Kudatara said.
"We expect the retail industry to continue to grow next year. As of now, many consumers are balancing their post-flood restoration with their spending on daily necessities. As most of the products sold at Big C are daily necessities, we expect the consumers will continue their purchases. What we have been doing all along is to offer maximum savings to customers and provide choice, convenience and good service to help ease the burden of the customers.
"Big C has a robust disaster-recovery plan in place should we encounter any natural disaster again in the future. As a company, we always learn from these events to make us more crisis-proof for the future.
"I believe investors still have a lot of confidence in Thailand. What investors would like to see the most is a comprehensive flood-management plan and holistic preventive actions that can be put in place quickly," he noted.
Kudatara said he also would like to urge the government to derive strategies and packages that would look after flood victims in terms of employment that was lost during the flood, rehabilitation of their homes and livelihoods, and the environment.
Tesco Lotus operations director James Scott said the company's distribution centres were affected, but all of them were now up and running again. Based on the company value "no one tries harder for customers", the Tesco Lotus team worked very hard to employ its skills and all available resources to get essential products to as many customers as possible.
The company has established temporary distribution hubs throughout the country. Most notably in the capital, Tesco Lotus has turned the Bangkok International Trade & Exhibition Centre (Bitec), a 54,000-square-metre convention and exhibition hall in the Bang Na district, into a temporary storage facility for goods to transport to different regions.
In addition, it used alternative transport methods such as trains and planes to deliver essential products to customers around the country. It also imported drinking water and noodles from Tesco Malaysia. Moreover, it worked with Tesco suppliers in Malaysia, China and Vietnam to deliver essential products.
"We have a business-continuity plan in place and will incorporate the lessons from the recent floods into the plan. The plan will help ensure that we are well prepared to take good care of our customers, our staff and our community," Scott said.
Lessons
He said there were many lessons from the recent floods that the government could take into con-sideration when developing me-dium-to-long-term preventive measures.
"After the flooding, we think it is very important to help affected people and businesses resume their normal lives as soon as possible. This will naturally boost the economy. At Tesco Lotus, we have implemented many activities to help affected people resume their normal lives. For example, we arranged a successful big cleaning day in Ayutthaya province whereby our staff, customers and the general public joined in to clean up the community," he said.
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