THE SIAM Cement Plc (SCG) is embarking on a strategic transformation that incorporates a greater focus on retail consumers in addition to its mainstay cement and petrochemical product manufacturing.
The corporate giant says the change is driven by the technological revolution that has impacted the company’s businesses, especially its cement and buildings materials lines.
Roongrote Rangsiyopash, SCG president and chief executive officer, said that, under the transformation programme, SCG will shift towards a much closer relationship with end-consumers and become a service-oriented company.
“With such a revolution, especially the emergence of digital technology, it is difficult for me to picture what the end of our transformation process will look like,” he said.
Roongrote said that different companies have different ways of undertaking transformation. But the objective is the same – to satisfy the customers.
He said that SCG has about 3 per cent of the total market for construction materials in the Asean region.
“If we continue to do the same as we have done in the past, it will be quite difficult for us to maintain growth and market share. However, there are more than 90 per cent of market opportunities that remain unmet. We always ask ourselves, if we (SCG) disappear tomorrow, our customers will stay alive,” said Roongrote, adding that SCG places great stress on wanting to be a company that is really needed by its customers.
“We cannot avoid the need to have a gradual increase in revenue contribution from servicing businesses that are set to satisfy our customers, particularly from cement and construction materials, as well as petrochemical products, for which we are turning to a focus on value creation for customers,” said Roongrote.
In July, SCG Retail Holding Co Ltd, SCG’s subsidiary for business cement-building materials, became a strategic shareholder in Indonesia’s PT Catur Sentosa Tbk Adiprana via a rights issue. The move will accelerate the growth of Mitra10, a brand of modern home centres for building materials in Indonesia.
“Indonesia is a huge potential market with a population of more than 260 million and more than 70 home centres available in the market. For Mitra10, we have 27 home centres in Indonesia, and we want to open between three and five new branches every year,” said Roongrote.
For Thailand, he said, SCG recently announced a partnership with Boonthavorn, a leading and large-scale home decorating retailer to enhance its retail business and power distribution network. The partnership will unveil a new home retailer brand that provides customers with a variety of designs of interior and exterior decorating products with full and integrated high-quality services from consultation and design to installation.
“Under the partnership, SCG will help Boonthavorn to service their customers via the company’s strong dealer network, especially in the provinces,” said Roongrote.
He said that the agent or wholesale system would be changed dramatically to a so-called “fulfilment system”, which is defined as the steps involved in receiving, processing and delivering orders to end customers. Under the new system, individual dealers will tend to manage supply chain and customer-service activities in their owned territory.
Roongrote said that, as an example of the new trends, the development of the automobile industry is undergoing a shift towards electric and smart vehicles and that requires the vehicles to be lighter. As a leading manufacturer of parts made from petrochemical materials for such vehicles, SCG will be able to better serve auto makers in this innovative field.
“We need to make a significant change every year, and to achieve a major makeover successfully in the next four to five years,” said Roongrote of the petrochemical business, which includes the production of materials ranging from upstream monomers to downstream polymers including polyethylene and polypropylene. “As an ordinary manufacturer in the past, we only moved our organisation to become a lean structure as the most effective way to raise efficiency.
“We were concerned only to not cause any problems for the environment in order to be a good corporate citizen in society. However, for today’s business circumstances, such environmental friendly practices are not enough. All stakeholders, especially our customers, expect us to do better to sustain the business and our society in the long run. We need to use our valuable resources more effectively, as well as to eliminate and recycle any waste that occurs in our manufacturing process.”
He added that today business organisations think more about adjusting themselves to the new challenges by bringing the principle of the circular-economy to their management process and communicating this to customers.
“For SCG, we want to cut the amount of single-use plastic in our manufacturing process by half in the next four to five years. We will develop our recycling technologies and allocate bigger investments in such green innovation initiatives,” said Roongrote.
He said that SCG has adopted the circular economy practice at its headquarters in Bangsue, which is on a 134-rai plot and employs about 8,000 staff.
“We have turned our headquarters into a smart campus, where people are encouraged to use products of the highest utility and value at all times as well as to manage waste effectively,” he said.
“We would like to have a pilot project being done by the private sector to enhance the sustainable development initiative with greater management and control of waste, not for the company ourselves but for creating a better society.”