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.

He cites an example: "Some of the seniors, when they come into the company, they are working as part-timers so we have to fit into their programme rather than they fitting into our programme!"

It also requires a change in mindset as older workers may not necessarily be as quick as a younger worker, particularly in physically strenuous jobs.

That being said, Mr Hong was game enough to hire senior workers for his delivery department, a move which has benefited the company.

"Yes, the productivity level for older workers is slightly lower than for the younger ones, but they can do their jobs. As I always tell my delivery supervisor, you need to rework your expectations. You can't expect them to work as fast as the younger ones."

It is also a win-win situation for the company since the hiring of these Singaporeans increases the company's hiring quota for foreign workers.

Still, more can be done to encourage companies to hire older workers.

"It would be nice if we can have certain grants - I know there are some in the market - but perhaps grants targeted specifically at helping companies acquire technologies to help seniors improve their productivity," says Mr Hong.

Not one to overlook the importance of retaining experienced staff, Mr Hong goes the extra mile to ensure his staff are happy.

He says: "Most of the time, I'll take it on myself to make sure our staff are comfortable, and ensure that they want to work. I'm not the sort of person who manages staff by giving them a lot of goodies or spending money on them . . . (Sometimes) I'm a counsellor, too, for staff who have problems. When they come to me, I'll counsel them.

"These are little things that the staff appreciate . . . If you look at the reasons why people leave your company, the first reason is not the pay. When they decided to join your company, they've already decided that okay, this is a pay that I want. The No 1 reason for people leaving is that they don't have enough training, and they don't feel like they belong to the company."

Going forward, the company is looking to implement more bonding activities for the staff.

According to Mr Hong, his delivery staff can shift up to 10 pallets of goods a day, which works out to about five tonnes.

He says: "After a while, if people are not taken care of, they might leave the company because the job is tiring. That's why I must come up with programmes to retain and better manage the staff."