Brick and Mortar to a Digital Company

Helping yourself first before helping others has surely worked for KAT Technologies in the distribution realm, as the company now trains its eyes for newer market opportunities

What started out as finding for a solution to solve its own operational challenges, ended up being a game changer for KAT Technologies Sdn Bhd. A go-to supply chain management, distribution specialist and best-in-class distribution solution provider in Malaysia, KAT Technologies was established in 1994 as a physical distributor of products.

It has since evolved over the years thanks to its ability to address and solve its own distribution challenges. Now,  the company assists others with its distribution processes. The company offers best-in-class distribution solutions and services, which are not only efficient but cost-effective too.

Says Founder of KAT Technologies Sdn Bhd and Executive Chairman for the KAT Group of Companies, Datuk Ir. (Dr) Khairol Anuar Mohamad Tawi: “As a distributor, we understand really well the need to make sure every single piece of stock is accounted for in the system. That was the challenge for many. To manage this for ourselves, we have developed internally our own capability to understand and account for every single piece of stock at hand because they are so precious to us. You simply cannot afford to lose a single piece of stock.

“When we look at the market there was no such solution;  we had to develop a platform for ourselves. Over a period of time, we developed this system and showcased this system to the market.”

Needless to say, this solution hit the mark and KAT Technologies quickly became inundated with accolades and praises and soon enough, the customers came knocking. And why not?

KAT Technologies created a blockchain system, way before it become popular in today’s industry. “You are looking at it. What we do is blockchain, but we didn’t call it blockchain back then. Can you imagine that? Every piece of stock is accounted for in the system and that we developed it internally,” says Khairol Anuar.

For the uninitiated, blockchain is aptly described by Don & Alex Tapscott, authors Blockchain Revolution (2016), as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Simply put, it is a mechanism that brings accountability to transactions, with no room for human or machine error.  When given the consent of parties involved, it can help  guarantee the validity of transactions across all distributed system of registers.

Thus, KAT Technologies found a sweet business spot amongst its operations and now serving customers across various markets.

Taking Stocks Seriously 

Speaking about its award-winning distribution processes, KAT Technologies prides itself as a supply chain, distribution and logistics specialist, as well as a pioneering company for the distribution of mobile prepaid when such services were first introduced in Malaysia in 1999.

True to its innovative methods and aggressive drive to continuously challenge the conventional logistics and supply chain methods, the KAT Group of Companies is unmatched in ensuring the most efficient and effective distribution of the products of its clients in the designated markets. It is such levels of commitment that has enabled KAT Technologies to be an award-winning, best-in-class distributor.

In fact, it is able to merge the latest in applications technology and strategic planning with the drive of a highly technical professional team. The development has led to the production of various advanced products and solutions.

One of them being the award-winning KATsys, a sophisticated software system that led KAT Group to become the best retail and supply chain management company in Asia Pacific.

“In 2013, we won The Star Outstanding Business Awards for Innovation. Again in 2014, we took home another SOBA award for Entrepreneur of the Year. That’s because we scaled the business from half a million Ringgit when we started, to more than RM800 million a year in the space of 15 years. It is worth looking at how we were able to grow the business,” says Khairol Anuar.

Handling precious stocks early on for principles,  including Celcom, Telekom, Altel, XOX and Philippine Telecoms, KAT Technologies then went on to win other prepaid players in the telecommunications industry.

“We have thousands of stock keeping units (SKUs) and that was the challenge – to ensure every piece of inventory is recorded and their sales perfectly reconciled at the close of each work day.

We also won another award in 2014 from SMECorp for Best Innovation in services. Our standard operation procedures (SOP) and services are all tailored to ensure that when these cards are delivered to the market, whatever we deliver is what was demanded by the dealer.

“One of the challenges for traders and distributors is the ability to predict what kind of stock you should have at any particular location. If you have the wrong stock combination, you are keeping stock for nothing or even worse, you don’t have the right stock to sell. You will just end up with a stock-out or stock over situation, both of which are not ideal as it  shows that you are not managing your financials correctly or efficiently. Our system is specifically designed to track and manage the requirements of every depot, which is ideal for all clients, distributors and traders,” he adds.

“The system tells us the buying patterns in these locations. There shouldn’t be a situation where our depot is overstocked or understocked. Thus, we always have the right inventory at all times,” he further explains.

Having this figured out early on, KAT Technologies then went on to offer the solution to the fast moving consumer goods (FMCG) space – a market sector with growth potential in need of efficient and effective distribution solutions.

Growing Expertise

With the goal of becoming the sector leader in the distribution trade, KAT Technologies is committed to delivering the best outcomes for its clients. This includes providing quality solutions and ensures its principal’s products are distributed in a highly efficient manner.

For Khairol Anuar, the best way to achieve this is to go digital, pushing the company to grow its portfolio of offerings to complement its existing KATsys solutions, effectively making it into an end-to-end system.

“Previously, when our guys went out to do sales, they had to bring an inventory book. Now, everything is on a mobile. Our dealers are also equipped with an integrated
Point-of-Sales (POS) solution that sports a mobile mode as well.

“Traditionally, people use a static POS terminal that are known to cause productivity delays. If you have a mobile POS terminal, it will help you become more productive,” says Khairol Anuar.

This brings us to the acquisition of MobiPay, one of the companies responsible for improving and modernising retail outlets under the government programme “Transformasi Kedai Runcit” or TUKAR. Owner operated or “Mom and Pop” shops were encouraged to modernise to better manage their inventories, accounts, and receivables more efficiently and effectively. One of the solutions they were encouraged to adopt was the solution called MobiPOS from the company MobiPay.

“When we acquired MobiPay, this effectively completed our end-to-end system for distribution. We have KATsys sitting at the back-end to monitor how the sales are combing the market while understanding and tracking the kind of stock required. Now, we also have a front-end system, which in many ways has turned into a salesforce automation system,” he shares.

He also believes that with such complementary systems everyone along the value chain has transparency in their business operations – from handling and keeping stocks, right down to which products are selling well. No more second guessing means traders can also manage their capital better, with automation.

In short, MobiPay’s POS System is used to manage inventory, monitor your store sales, generate sales report and more. It will surely help simplify and grow your business to another level.

From there, KAT Technologies then went on to create what it calls the P2U Wallet – prepaid-to-you wallet. Made for Android smartphones, the app eases the process of reloading air-time credit for customers.  A number of companies are already providing their air-time reload service via this application such as Celcom, Maxis, Digi, Merchantrade and much more.

“This solution effectively allows our dealers to not only sell prepaid cards, but also be involved in other small businesses such as selling courier packages (like for Pos Malaysia). It is a new concept of wallet. When people talk about mobile payments, it is about using that money to buy stuff. However, our solution is different. Our dealers can use our electronic cash system to provide similar services to the public. We are also testing its ability to receive remittance,” adds Khairol Anuar.

 

Opportunities Beyond

Having solidified its position in telecommunications, namely the mobile prepaid industry, and pursuing other industries such as FMCG, KAT Technologies then decided it needed an aggressive expansion plan to go international.

According to KAT Technologies, its vision is: “Beyond building our reputation as a leading company operating regionally today, our vision is to be the preferred business partner to our principals in the international distribution trade by 2020.”

Lofty as it may seem, KAT Technologies is already executing its growth plans. Having sought the help of MDEC (Malaysia Digital Economy Corporation), the company is charting its path carefully under the Global Acceleration Innovation Network (GAIN) programme. This initiative hopes to catalyse the expansion of potential local technology SMEs to become global players through market access; leadership and capability development; brand visibility; and scale-up capital.

“We used to be a brick-and-mortar business, but we are transforming it to suit the changes in logistical requirements within the digital distribution space. If we do not transform, we will just die,” states Khairol Anuar.

“Most of the tech companies in Malaysia face the challenge of market access and are not making their product/company visible to the marketplace. If you look at tech companies of the west, they are very good marketers. I think, the country needs to become more competitive since we have a lot of good products/services here, yet we are incapable of marketing ourselves,” he opines further.

“As a company, we must also do something to make ourselves visible. In this case, timing is everything. My value is that I do not want to sell something that I am not happy with. After winning numerous awards and accolades, I believed my product is good enough to be marketed around the world and that we were ready for commercialisation. Only when selected and approached by MDEC for GAIN, I knew every button was in place. I believe if we take care of the little things in managing the company, the big things will take care of itself.”

Having worked with the government agency since January this year, KAT Technologies has been exposed to various programmes organised by MDEC to help the company understand the market landscape and where would its competition come from. This is in addition to exposing Khairol Anuar to conferences as a panellist and sharing his thoughts as an industry leader to see the technological changes and direction of the field the company is present in.

“We traditionally have been a company surviving on trading – buying and selling prepaid cards. This is a

brick-and-mortar business. Thanks to our new digital capabilities, we have become increasingly active online. You would be surprised how many of the big boys do not have this and will not admit their lack of capabilities,” shares Khairol Anuar, as he believes there are huge opportunities to be had here for local SMEs. It will be mostly dependent on lowering the entry barrier, specifically in the areas of technology adoption and financing.

On expanding its wings internationally, the next step would be to grow regionally in ASEAN. “If we can understand that well, I do not think we need to go very far to conquer markets in Europe or America. For those regions, the best way to address them is probably to employ business partners, agents, distributors and resellers to work on those markets. A lot of this is possible once you get a winning client testimonial. From there, it’s a matter of waiting for the next order to come,” he believes.

While market expansion abroad is on the cards, there are a good many things also brewing for KAT Technologies at home. This includes the company looking to list after demonstrating its market resilience, having a proven track record and offering winning solutions over the last 18 years.

“We plan to go for an IPO before 2020. We know how to do two things well – how to help people distribute products and carry out distribution processes with our tool, KATsys. This tool is what I want the industry to see and make it the must-have application. We need to differentiate and take our capabilities a few notches up. Like how it’s unthinkable now to work without Microsoft Office, I aspire for KATsys to occupy this space one day. Can we be there? Well, that is the next big thing for the company,” concludes Khairol Anuar.

With such calculated moves by KAT Technologies, under the guidance of MDEC’s GAIN programme, Business Today is sure the company will see its aspirations come true before 2020.


This is the Cover Story for Business Today’s November 2017 issue

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