Food supplier reaps cost savings through outsourcing

Food supplier reaps cost savings through outsourcing

Even as other companies expand along the supply chain in an effort to reap economies of scale, CS Tay Foods finds that focusing on its core business is working in the company's favour.

The company, which is best known for its frozen food products, such as the Japanese Crispy Seaweed Chicken, identifies itself first and foremost as a food marketing company.

It thus made sense for CS Tay to outsource its supermarket deliveries to a third-party logistics partner such as Warehouse Logistics Net Asia (WLNA), says Raymond Hong, factory manager at CS Tay Foods.

Previously, the company had to recall three of its six reefer trucks every afternoon to handle the deliveries to the supermarkets, thus disrupting the delivery schedule.

Under the new system, WLNA handles deliveries to the supermarkets while CS Tay's six trucks deal with deliveries to its various retail outlets and other customers.

The outsourcing effort has also afforded the company long-term savings to the tune of $50,000 a year.

According to CS Tay Foods, the cost of purchasing or leasing a reefer truck is about $15,000 a year, with another $65,000 needed to maintain and operate the truck, including manpower-related costs.

However, outsourcing costs the company $30,000 a year, which results in savings of about $50,000 a year.

It also helps that the company was able to leverage funding support from Spring under the Capability Development Scheme.

Says Mr Hong: "I think the government is doing a lot to make sure funds are reaching the small and medium-sized enterprises (SMEs). It's the mindset of people that makes them refuse to reach out and get funding.

"Some people don't like the idea (of adopting new technology) because it involves a lot of re-training. That's where the bottleneck is because when the transition period comes, it involves a lot of work, and people don't want to do it."

It does not help that finding the right hire continues to be an issue for the company, a common refrain from the industry.

"The government is pushing us to hire Singaporeans but the fact of the matter is that Singaporeans are hard to find, especially in the retail and services industry," says Mr Hong.

To get around this, Mr Hong has been a strong supporter of the hiring of older workers, although he admits this is not without its problems.

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