BEFORE digitalisation became the hot topic it is today, Kara Marketing (M) Sdn Bhd already knew they needed the help of technology to get their operations in order and to get further ahead of the competition.
But implementing a good digital system is a big undertaking that spans many years – there’s always something that can be further improved, notes company director, Susanto Lee.
Lee and his team have been incorporating the use of systems like SAP and e-human resources since 2007 as a means of increasing efficiency and reducing cost.
“Back then, photostating documents alone cost us RM6,000 to RM10,000 a month, ” he recalls.
With the help of electronic systems, the company has significantly reduced its use of paper.
But it is not just about saving on administration costs. As the company grows bigger, Lee points out that they will need a comprehensive system to manage their huge network of distributors and customers and gather accurate and timely data to make sound business decisions.
The coconut products supplier started out as a small outfit in 1999 with two to three workers distributing Kara coconut cream in Malaysia and China. Today, it employs some 250 people and manages a network of more than 10,000 distributors and retailers.
It has also diversified its product base and currently distributes other food, cosmetics and skincare brands.
“Half of doing business is about getting the right information. So we need technology for this, ” says Lee.
Lee believes the company’s progress with technology has helped it grow 30% annually over the last 20 years. In fact, it enjoyed a 50% growth last year, amidst a challenging market.
He hopes growth will remain on this trajectory and is aiming for turnover to hit RM1bil by 2026.
After many years of fine-tuning its operations and digitising its back-end office, Kara is now looking at efforts to digitalise its distributor network and establish a more efficient end-to-end system.
According to Kara deputy general manager of domestic sales and marketing Ooi Say Keong, getting visibility of its distributors’ sales was a challenge.
“What we don’t have is the flow-in data from the distributors. Everything we get from the distributors is outdated. We are weak in decision making because of this.
“So the challenge was there was no visibility of data. Distributors have their own systems and data sets. And all these are not consolidated. So we needed something to connect Kara and the distributors. We need a tool to gather all the data in real time, which is fundamental for us to improve, ” he says.
Lee akins the process of finding a technology partner to a marriage; it can be time consuming and must be done right for the solution to last a long time.
“Getting the right technology is important. It is not only about the cost, but also the timing and the backlog (data) that you have. So when we choose all our systems, we also need time to study them, ” he shares.
Kara essentially saw the need for a distribution management system (DMS) about three to five years ago. Lee notes that such a solution was costly but when it became evident that it was a necessary investment, they started to look at options.
The company finally settled on Accenture’s NewsPage DMS in late 2019.
But just as it was about to embark on implementing the system, rollout plans were affected by the movement control order (MCO).
“During the pandemic, we decided to just go on with it. We invested quite a lot on this, I think it cost us more than RM1mil for this one system.
“Why did Kara decide to pay so much money during this time? Actually, I think this pandemic has brought technology closer for us. If we don’t have the DMS now, we can’t be sure about the accuracy of the sales data that comes in and this information only comes in one and a half months later.
“When it comes in so late, we might be making the wrong decisions because our information is already out of date, ” explains Lee.
Accenture NewsPage Lead managing director Serene Neo points out that previously, digitalisation efforts were mainly the domain of the big boys. It was, after all, a costly affair.
But as countries are also recognising the need for SMEs to go digital, there are more enablers and policy support to help smaller players make the transition.
Besides, with cloud technology, the implementation of digital systems for SMEs are a lot faster, cheaper and more flexible.
“Kara has been on a technology journey to be more efficient. They started with back-office digitalisation, and what we are now working on with them is a route-to-market solution. This is more of the front office. It focuses on how the product can reach the customers.
“So we look at how we can digitalise their distributors, salesmen and retailers. This is important as a next step to further digitalise Kara, to use tools to make sure that they continue to grow the business and find opportunities, ” says Neo.
Notably, there are prerequisites to ensuring a smooth rollout.
Just putting in a solution will not work if the company does not make changes, she adds. And one of the important changes needed is the cleaning up of data sets, including reclassifying customers and products and ensuring that input data is sorted and standardised. This will enable effective analysis.
Neo also highlights that change management is needed for a company to effectively embrace a new way of working to maximise the benefits of digitalisation.
Lee hopes to complete the rollout of the DMS for its network nationwide by 2023.
Apart from digitalising its distributor network, Kara also embarked on an exercise to better connect with its producers in Indonesia to ensure a more efficient planning and production flow that would better support customers’ demands.
Direct to consumers
While a good system is necessary, Lee emphasises that good quality products and pricing remains key for a business to grow and be profitable.
The company has set up its own R&D team to continuously improve on its products and to develop new offerings for the market.
Lee hopes that Kara would someday be able to develop a product that could support its own manufacturing operations in Malaysia. This would help its ambitions towards an initial public offering sometime down the road.
Lee also intends to widen its customer base by going directly to consumers. At the moment, its business is mainly business-to-business.
Last year, it launched its e-commerce platform, Karta Supermall, to sell a variety of essential goods – not just its own products.
“I saw an opportunity and a trend moving towards e-malls. It was big 10 years ago, in terms of news, but not really numbers.
“We are, essentially, a trader. We get products from manufacturers and sell them through our distributor. So I thought, why not go direct to consumers. I believe this will be the change in business model 10 years from now. So this is an opportunity for us to also move in that direction, ” he says.
Lee has big plans for its platform. He notes that orders have increased from about 10 orders per day from its launch to about 200 orders per day.
Its e-commerce operations work like an online mall, whereby the company keeps ready stock from multiple producers.
Lee is looking at growing Karta into one of the largest e-commerce platforms in Malaysia in three years’ time and intends to open warehouses in every state within five years to support the online mall.
“This is quite an ambitious project for us, ” he admits, noting that this will help grow consumer business to 20% of sales.