1. Sermsuk
Public Company Limited

2. Company Background

3.  Founded in 1952 and the head office was located in
Bangkok
 Operate 5 factories  1) Patumtani 2) Chonburi
3) Nakornratchasrima 4)Nakornsawan 5) Surattani
 In 2011, Serm Suk became a subsidiary of Thai Beverage
Logistics company

4. Products and Services

5. Pepsi-Cola International Ltd., New York
 Must obtain the supply of concentrate from Pepsi-Cola Trading Company
 Must maintain the product quality according to Pepsi standards
 Manufacture and distribute:
1) Crystal drinking water and soda
2) Lipton Ice Tea (returnable bottles) for Pepsi Lipton International Ltd
3) Tropicana Twister (returnable bottles) for Pepsi-Cola (Thai) Trading Co., Ltd.
4) Gatorade Sport Drink under license from Strokely-Van Camp Inc. USA.
Manufacturing and Distribution
Pepsi, Pepsi Max, Pepsi
Twist, Mirinda, Seven-
Up

6. • In November, 2012, Serm Suk Plc (SSC) introduced “Est”, its own cola
drink
• First cola brand in Thailand
• Suffix  “great-est, new-est or cool-est"

7. ROLE PLAYING

8. • Red Carabao for Carabao Tawandang Co., Ltd.
• Oishi ready-to-drink green tea for Oishi Trading Co., Ltd.
• Lipton ready-to-drink tea in cans and PET bottles
• Tropicana Twister ready-to-drink orange flavoured fruit juice
(non-returnble bottles) for Pepsi-Cola (Thai) Trading Co., Ltd
Distributor

9. Soft drink DrinkingWater Juice SportDrink Energy drink Tea
- Est
- Pepsi
- Mirinda
- Seven-up
- Crystal
- Crystal Soda
Tropicana
Twister
Gatorade Red Carabao -Lipton
ice tea
- Oishi
green tea
Product line

10. Financial Overview

11. Source: Serm suk’s

12. Estimated Market share of soft drink (38 Billion)
Including Cola and colored drinks (Fanta/Mirinda)

13. Expected Market Share

14. EST
Pepsi
Coke
Big Cola
Others

15. Inbound Process

16. Raw Materials
• Ingredients
• Packaging materials

17. Non Alcohol Beverages
• Raw materials are
– Water
– Concentration
– Sugar, and fructose

18. Concentration
• Cola and other flavor drinks
– Switzerland
• Many sources
– Brazil
• One of the best cola ingredients
• Comes in barrel with a specific amount
– Ship
• Sermsuk have their personal sugar
supplier

19. Packaging Materials
• Raw materials are
– Bottles
– Can
– Bottle Cap

20. Bottles
• Glass bottle
• PET bottle

21. Glass bottle
• Returnable bottle
– Domestic supplier
• Thaiglass
– Foreign supplier
• Vietnam
• China

22. PET bottle
• 4-5 Suppliers
– Domestic supplier
• PET pack
• PET form
– Domestic supplier
• Depends on product types
– What drink?
– What size?

23. Bottle cap
• Crown Seal Public Company Limited

24. Choosing the suppliers
• Do not rely on one supplier
• Location
• Relationship
• Reliable
• Cost

25. Warehousing

26. Overview of Warehouse Strategies
• Just-in-time
• No big warehouses
• “Small distribution centers”
– No dead stock

27. PET
1 litre
Cool
Hand
250 ml
PET
455 ml
PET
480 ml
Can
325 ml
12 ounces in
returnable
bottle glass
Outputs
7 SKU’s
Post-mix dispenser

28. Inventory Management
• FIFO
• Push strategy
Raw
Material
Work-in-
Process
Finished
Goods

29. Raw Material Management
• Just-in-time
– reach the manufacturing facility shortly before they are required
– stock levels are minimized
– Warehouse costs are therefore reduced
– less cash is tied up in stock
– Suppliers take responsibility
– depends on punctuality
• penalties for late delivery
– delegation of responsibility
• make the production department’s job easier.

30. Finished Good Management
• Staging areas
– At the end of production line
– Keep products for no more than 3 days

31. Storage Design
• Cases
– Maximum space utilization
• Full heighted permitted by warehouse dimensions
• Forklifts
– Receiving
– Storing
– Picking
• Loading process
– Manual by drivers

32. Manufacturing Process

33. Water from natural
resources
Clarifying the water Filtering, Sterilizing, de-
chlorinating
Sugar to be
dissolved
Cola concentrates Proportioner to
mix the ingredient

34. Carbonating the
mixed bevarages
Filling at 4°C Sealing the caps
Manually picking
out defects
Finished products
into cases

35. • Diew add manufacturing vdo here

36. Outbound Process

37. • Near Just-in-Time. Little Inventory, Few Dead
stocks
• Motor as the main type of transportation
Sales Truck and Large transport truck
• Two business model : Two types of
distribution channel
Traditional Trade and Modern Trade

38. Distribute
Processes
Factory
Small
Warehouse
Sale Truck
Distributes
Customers
Returned
Used Bottle
by Sale
Trucks
Traditional Trade

39. Modern Trade
• Large trucks
Sermsuk’s
Plant
• Third Party
Logistics
Warehouse
Owned by
Major retailers
Modern Retails

40. Large Truck is used to distribute
goods from Plant to distribution
centers of Major Retailers
For examples, Tesco, Tops, BigC
The warehouse
management, however, is the
retailers’ responsibilities.
Serm Suk only receives orders from
Retailers.
Tesco’s temporary Distribution
Center at BITEC during the flood

41. Traditional Trade Model
• The Strength of Serm Suk distribution interestingly lies in Traditional
method
• From Serm Suk plant, products are sent to each warehouses for each
area, then distributed through sale trucks to each end-consumers, small
business entity like small restaurant or food stalls on the street, deep in
the soi.

42. Traditional Trade Model
• The drivers are also the sale person who
contracts, delivers, and keeps information.
• Two persons in a sale truck: drivers and a helper
• Experiences are very important to operation:
route, familiarity and relationship with customers
are hard to be imitated by other distributors
• They are given commission for the sales made.

43. Traditional Trade Model
• Most inventories are kept by the small business entity. It is not kept in
large warehouses
• That includes the racks and the used bottles
Bottles waiting to be picked up by Sale Trucks

44. Demand Forecasting
• Serm Suk will not know the demand of the major retailers’ customers, but will
know the units ordered by each retailer.
• For Traditional Trade channel, each factory will be responsible for its region.
The method most often used is to calculate the data backward.
• From the driver/salesperson’s record, the units sold from each
truck, consolidated, will be used to plan the demand, adjusted with seasonal
demand, promotion requirement, and past data.
• Combining the data, the demand can be forecasted for each region. The data
will then be consolidated into demand for product, and thus the production size
can be calculated

45. Contrasting two business model
• Modern Trade: Low margin, pays in credits with long
maturity time.
• Traditional Trade: Low cost, charge lower price and earn
cash.
– Efficiency: Driver is also salesman; approach end users and knows
actual demand.

46. Reverse Logistic: Return Bottle
• Sermsuk’s strength
• Takes 21 days for each bottle to return. Over 72 millions
bottle in the cycle.

47. Reverse Logistic: Return Bottle
• Each truck carries spare bottle for any replacement. Mostly
for UHT products eg. Oishi green tea.
• Pepsi labeled bottle belong to Sermsuk, takes 1 year to take
it out.

48. Customer Profile

49. • Aim to have largest share of cola market in
Thailand
• Focus on the “traditional” market
• Focus on both businesses carrying product and the
final consumer

50. • Greatest strength is distribution network
• Target market reflects this
• Strong relationship with traditional stores
– Reliable shipments to difficult to reach areas

51. • Also distributes to modern stores
– Tesco Lotus
– 7-Eleven – there is an Est Cola SKU exclusive to 7-
Eleven
• Not where Serm Suk gets greatest sales
• Purpose is for displaying product
– Brand Awareness

52. • Most likely consumers will be “traditional” Thais
– Refers to low-income, often rural people
• Not likely to travel far to shop, will purchase Est
Cola at local stores, shops, and restaurants
• Use of glass bottles
– Some insist upon drinking from glass bottle
– Pepsi is abandoning use of returnable glass bottles

53. Major Issues And Possible Solutions

54. • Issue 1: Loss of Control
• Traditional approach for distribution
• One helper and one driver/salesman
• Takes charge of route, pick up time, etc
• They know demand which is communicated back to headquarters – reliance
• 30+ years of experience
• Cost of hiring and training, expected to start right away
• Cost of lost sales
• Solutions: Route management system, linear programming, time
management, etc

55. • Issue 2: Lack of Bottles
• Machines, capacity plus human resource
• Not enough bottles, millions in circulation
• 1 bottle, 21 in cycle
• No centralized return center, go to each shop
• Forget to pick up bottles, bottles mixing with other crates
• Driver help separate bottles, average stop time increase
• High cost of collection
• Solution: Import from other countries (may add to cost)

56. • Issue 3: Rusting Crow Caps, Cola backlog
• Crow caps rust, unsuitable to drink
• Less popular mom and pop shops where cola is kept at the back and ignored
• Sometimes kept for months – related to rusting
• Health concerns – nausea, vomiting, liver damage
• Solutions: Use oxygen absorbing caps (overall cost), For ignored colas (45 days
shelf life) – increase shelf life by using refrigerated trucks (partial solution)
• Other Issues:
– Cost disruptions : Pepsi wants back in the game,
– Going through route of modern market segment
– Ready to pay high premium, increase overall cost

57. Thank you for your attention