Thu | Nov 23, 2017

New tech platform for CPJ - Expansion plans drive investment in logistics

Published:Sunday | November 5, 2017 | 12:00 AMAvia Collinder
David Lowe, CEO of Caribbean Producers Jamaica Limited.

A one-day lockdown of Caribbean Producers Jamaica's (CPJ) facilities near the end of October was for a systems upgrade.

The distribution and manufacturing company, based in Montego Bay, is adding a new technology platform to improve on its supply chain and logistics management functions.

Chief Executive Officer David Lowe said that the current upgrade was first part of three phases. CPJ is spending US$1.5 million overall in the project, which Lowe said was necessitated by the fact that the business continues to grow, both in its home market of Jamaica, as well as offshore.

"Therefore, our investment in technology is not only strategic, but necessary to remain efficient and manage costs as we continue to grow," he said. "The deployment of new technology will enhance a number of functional areas of our business model."

The logistics platform is a 24-month project due for completion next year. The wider expansion programme also kicked off last year and will wrap up in 2019. Overall, Caribbean Producers is spending US$2.7 million annually on the projects, over a span of three years, according to Lowe.

CPJ supplies tourism operators in Jamaica and the Eastern Caribbean, with more than 3,000 items, including goods manu-factured in the company's food and beverage plants.

Lowe said the company's business model relies heavily on logistics management

"Our logistics platform operates across multiple geographic locations outside of Jamaica," he said. "We are really a logistics company first, followed by distribution and manufacturing in that order." The technology is meant to maximise the company's capacity to "buy on a large scale and deliver", the CEO noted.

With the systems upgrade, Caribbean Producers expects to see "significant improvement in synergies and management information which will enhance our ability to respond to market conditions along with procure-ment and supply chain decisions," Lowe added.

Simultaneously, he noted, the business is undergoing restructuring and expansion. It includes focus on recruitment and development of talent to lead growth initiatives and drive innovation.

"The focus is to enable the business to continue to evolve with best practice capabilities Our people, products and processes are within scope. This has contributed to the improved financial results over the last financial year," Lowe said.

Caribbean Producers is planning to expand its manufacturing capacity for CPJ-branded products. Some of those products include CPJ bacon, sausages, burgers and fresh pork.

Also, starting next year, Caribbean Producers will add 60,000 square feet to its distribution centre in Montego Bay, effectively growing that operating space more than a third from its current 160,000 square feet.

As the company expands, it is "exploring regional opportunities" to grow its markets, Lowe said.

Caribbean Producers currently has no manufacturing operations outside Jamaica, but plans to expand production offshore. However, Lowe said the deal that could make that happen is just at the due diligence stage.

The company's products are distributed to Barbados, Antigua, Grenada, St Martin and smaller islands, facilitated by a distribution hub in St Lucia.

Altogether, he said, the capital expenditure plans will focus on efficiency and cost reduction, enhanced management information systems, greater productive and manufacturing capacity, and supply chain enhancements.

For the financial year ended June 2017, Caribbean Producers made net profit of US$2.59 million on sales of US$98 million. Performance improved relative to 2016 when the company made a profit if $1.05 million from sales of US$94 million. Profit grew by a healthy 147 per cent year over year.

Lowe said the restructuring of the company's debt in the past fiscal year has allowed the company to increase its free cash flow, putting CPJ in a better position to take on new debt for new projects.

avia.collinder@gleanerjm.com