PTT TO SPEND BT1 BN ON SUPPLY-CHAIN MANAGEMENT

       PTT will spend Bt1 billion over the next three years to install a supply-chain management (SCM) system that will oversee logistics for all of its business units, suppliers and customers.
       "Our SCM will emphasise real-time information, thus increasing our efficiency. This will support PTT's quest to become one of the top 100 companies on the Fortune list within five years," said president and CEO Prasert Bunsumpun.
       He said the system would manage production and shipment to customers, decreasing operating costs and increasing customer satisfaction in the process.
       Driving the investment will be the successful SCM of its polymer operations, which involve subsidiaries PTT Chemical, PTT Polymer Marketing, PTT ICT Solutions, PTT Polymer Logistics and Bangkok Polyethylene.
       This will be expanded during the three-year period to include the petrochemical, oil and natural-gas operations.
       Prajya Phinyawat, president for refining operations at PTT, said SCM would reduce annual business expenses by Bt300 to Bt400 million.
       PTT Chemical president Veerasak Kositpaisal said that even though an SCM system for polymer operations would cost Bt100 million, it would break even within a year.
       Transportation costs would drop to US$50 (1,700) per tonne, or only 5 per cent of total cost.
       Within two years, the system would be applied to other petrochemical products for an additional cost of Bt100 million.
       Veerasak said logistics costs amounted to 19 per cent of gross domestic product at present, making Thailand less competitive than other countries. Spending on logistics is thus important for the PTT Group, particularly in the petrochemical industry, where more than half of output is exported.
       He said the export ratio would rise following installation of the SCM system, particularly after PTT Chemical's capacity expanded by 1 million tonnes late this year as scheduled.
       "Comparatively, PTT's chemical business competes well with naphtha-based plants abroad, which account for more than half of all chemical plants. However, we're less competitive with Middle East factories, whose products will hit the market late this year. SCM will thus be expanded to cover other segments to reduce management costs," Veerasak said.
       He also believes PTT Chemical's financial results will improve further. The company posted a second-quarter net profit of Bt2.1 billion, against a net loss of Bt400 million in the first quarter. He attributed the improvement to measures to counter the economic crisis that were implemented late last year, involving cost and cash management as well as SCM.
       However, he admitted some risk factors remained in the second half, due to new supply from the Middle East.