A different strategy

WHILE most companies are opting to be a one-stop centre by consolidating everything under one roof, Kleenso Resources Sdn Bhd managing director Lee Teck Meng is looking to strategically outsource his operations so that he can focus on what he is good at – marketing.

Lee explains that this could increase its efficiency and reduce logistics cost.

“We may partner with different people to manufacture different products. We don’t need to do everything on our own. We can use their production lines. Sometimes they are even more efficient than us.

“This way, we can leverage our capital. We don’t need to invest on more production lines, labour, machinery, vehicles and space,” he says.

Lee notes that some of its existing partners who are doing the bottling and labelling works for Kleenso Resources have already enquired about the possibility of such a partnership.

Outsourcing could also potentially help Kleenso Resources grow faster overseas.

Lee says the company is in the midst of teaching its partner in Cambodia to produce its products locally. Once its partner picks up on the processes, Kleenso Resources would only need to ship its raw materials over – which are lighter and take up less space compared to finished products – and have them mixed, bottled, labelled, packed and distributed in Cambodia.

Lee’s strategy is inspired by a seminar he attended in 2000 where he learned about the growth of China’s Mengniu Dairy.

The dairy products and icecream manufacturer saw phenomenal growth where it went from being a new company to one of the largest dairy products producers in China in under two years. Lee notes that the company achieved this with no cows and production lines to its name in the early days. Mengniu Dairy grew on the strength of its marketing campaigns.

He believes the same strategy can work for Kleenso Resources. Over the next few years, Lee wants to continue focusing on marketing to boost Kleenso’s presence in the market.

The company allocates about 5% of its revenue each year to marketing efforts, which is substantial for an SME.

Lee will be employing more sales personnel to push its brand forward.

“All we have to do is control the quality of the products. If we can simplify the process, we can outsource it, even the warehousing.

“Then we can focus our time and money on marketing and distribution. We need to take some opportunity cost. Focus on what you can handle,” he adds.

Lee is not worried about his partners taking off with his formulations. He has planned it such that no one party knows the full process or materials that go into making a product.

He also diversifies his source of business. No one customer contributes more than 10% of its revenue.

For this, Lee thinks he is going in the right direction with his business and is optimistic about the position he has taken for Kleenso Resources.