Staying on top of the value chain
Mega Global is the market leader in canned sardines in the Philippines. It is one of the 10 winners of the 1st Mansmith Innovation Awards and the first in business model innovation.
In this interview, Mega Global president William Tiu Lim shares with us why they had to pay attention to the entire value chain of the company, starting from the shift from fishing to canning in their business model.
Q: You innovated in both the upstream (early part of the value chain) as well as the downstream part of the value chain. How do you decide which part of the value chain to change? Which major innovation in the value chain do you think made the biggest impact?
A: Our company came from very humble beginnings. We started with a small fishing operation, supplying directly to the local canners. In doing this, we’ve noticed that while we were yielding more and more quantity of fish, we were getting less income in terms of value due to the pricing from canners. Seeing that the current business model was not very sustainable, we decided to explore productions. I think this move had the biggest impact on our business as it made us self-reliant and gave us better control of the quality, quantity and price of our final product.
It has a cause and effect relationship. It is because of the requirement of the downstream where quality of the product is needed that we had to make certain changes in our upstream. On the other hand, no matter how good the product is, it will not work if we cannot translate to sales and marketing.
Our quest to enter the export business was also a factor behind producing quality products. The innovation has to start with the fishing side. Everything has to be with high-quality standard.
Q: You have launched many firsts in the industry that made certain practices of others irrelevant. Can you share with us what your company started doing and stopped doing and what were the insights behind these moves?
A: We’ve started making big investments in the fish preservation technology to be able to achieve the highest quality of products for our brand. Despite taking us almost 10 years, this technology has allowed us to transfer the fish we caught to the insulated fish bins filled with zero-degree chilled sea water, and eventually to the canning plant with no manual handling, thereby preserving the freshness of the fish.
We started using this technology across all our boats and in the plants, requiring us to completely change our logistic operations for raw materials which was very costly. But over time, the benefits of higher quality, lower manpower expenses and faster logistics eventually gave us better results and outweighed the investment we initially shelled out.
Ever since we started building our own brand and taking charge of the entire production process, we have never stopped innovating our catching to canning operations.
What we’ve stopped doing is being complacent. We constantly look for ways to better our offering such as improving the packaging of our products for the convenience of our consumers. We pioneered the easy-open lids in cans and easy-tear pouches to show that even with the tiniest detail, we want to add value to our brand and for our consumers.
Q: Your activities are like a clear line-of-sight, with one innovation after another. For instance, with various distribution centers, you decided to launch many other products to tap this easy market access. Can you share with us the sequence of these innovations?
A: After establishing our brand and building awareness of Mega Global’s presence among our key markets, we started building internal capabilities to be able to explore the possibility of launching new products.
In terms of sequence, the first step is (1) Brand-building and then we also developed our (2) Trade Distribution Process. After those things, (3) Household Penetration, (4) Product Line Expansion and (5) Leveraging scale and existing routes.
Since we’ve strategically established nationwide networking for Mega Global with the sole purpose of expansion or addition of new product lines, it only follows to add new products using our distribution system.
Q: What advice would you give business owners in innovating their business model? What do you recommend they do first especially with their value chain, if that is an area that can be leveraged for an innovation?
A: The best advice I can give, based on our experience as a company, is this: Be the very best in what you do or offer and never stop improving your product and how you present it to your target market.
You can do this by really getting to know what exactly your consumers need and going above what they expect through innovations. However, you also have to focus on key product developments and executions to make sure your brand stands out among all the products out there.
Once you’ve achieved this and perfected your product or service, that’s when you can go even further and explore other opportunities for your company. Self-reliance is particularly important as well. Sometimes, it won’t be part of your core competency but it’s worth exploring because doing so will give you better quality, quantity and price.
Remember to always focus on innovations that will make your plan/ product/ process more efficient. One key aspect you can look at is digital transformation for the whole business whether in processes, sales and/or marketing.
Some tips on business process innovations that are worth exploring:
- Software on the sales side for sales data collection to help easily analyze sales growth per area (tools to improve sales and marketing)
- SAP data analysis system to analyze area by area basis in terms of sales and distribution
- Digital marketing to complement traditional marketing methods, helping to reach more consumers, especially during pandemic (ex: e-commerce, offering convenience in purchase to consumers.)
Josiah Go is the course creator of the 55-video Business Model Course available at http://www.continuum-edu.com, the first in the Philippines and in Asia. Lim will be speaking at the 1st Business Model Conference on Jan. 19-20, 2021 and at the 1st Mansmith Innovation Summit and Awards on March 3-4, 2021.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.