SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, Henrik Batallones revisits the unique supply chain challenges present in Puerto Princesa, our destination city for the recently concluded Supply Chain Immersion, and Palawan as a whole.
A big city masquerading as a small town
PUERTO PRINCESA–The capital of Palawan is a big city masquerading as a small town.
Sure, it is an important hub not just for tourists who come for the island’s beaches, mountains and wildlife, but also for businesses who deliver goods through its airport and seaport. But this isn’t immediately obvious.
Perhaps it’s the skyline, or lack thereof. The downtown location of the Puerto Princesa International Airport means you don’t see tall buildings in the center of commerce. Going through its major thoroughfares feels like passing through the poblacion of a provincial town.
Perhaps it’s the nature that surrounds it. It may be called the Ecotourism Center of the Philippines because it serves as a take-off point for Palawan’s beaches, mountains and mangroves, not to mention the UNESCO-recognized Subterranean River, but Puerto Princesa itself is surrounded by green. You go out of one of the many restaurants along Rizal Avenue Extension, for instance, and you may forget that you’re in the city, thinking instead that you’re in a resort, because of the thick forest just across the road. Ironically, it can get really hot – and it’s not just the heat wave currently enveloping the Philippines.
Perhaps it’s the commercial activity it hosts. Puerto Princesa hosts many retail brands that we in Manila may not be familiar with. Sure, there are the expected fast food chains and major retailers, but you’re more likely to see local brands like Drugman or the (apparently suddenly) ubiquitous Crispy King. And then there are the many small businesses catering to locals and tourists alike, from restaurants and bars along Baywalk, to local groceries and sari-sari stores dotting the city’s neighborhoods. In addition, while Palaweños like to have fun, the night economy here is less significant compared to other cities with a more sizable population of young professionals (particularly those in the BPO industry) and students.
Puerto Princesa is our destination for this year’s Supply Chain Immersion, and it’s not just because of its sights. The city plays host to many supply chain challenges, and also, supply chain opportunities. The vast majority of the province’s goods have to be shipped in from Manila and other major cities, most of which are received in Puerto Princesa. While there are regular sea and air routes, the relative isolation of the province means there is still some difficulty in bringing in these products, meaning higher risk and higher costs.
And while Puerto Princesa is home to the majority of Palawan’s population, these goods have to also travel to the rest of the island – the country’s largest, over 500 kilometers long. Recent years have seen improved road networks, although the rough terrain, especially towards the north – leading to El Nido and Coron, two major tourist destinations – still poses some difficulties. A significant trade imbalance means most trucks return to Puerto Princesa empty, driving up costs further.
I imagine this is partly why major retail brands have only established a presence in the city in recent years. The likes of Jollibee, for example, would need to maximize the cost of shipping its products to the province by having a certain number of stores there. (Luckily for them, there are their other brands like Chowking and Greenwich to consolidate with.) Usual distribution strategies do not necessarily work. This is perhaps why local brands such as Haim Chicken thrive here: they have cracked the code, being more familiar with the province’s nuances than those based outside of it.
Puerto Princesa – and Palawan as a whole – offers us reminders of the local nature of best-in-class supply chains. There are no one-size-fits-all solutions, and there are no off-the-shelf solutions. One starts cracking the code by understanding the nuances of your potential customers, and adopting to their needs. If you’re a department store – whether SM or one of the many local retailers downtown – how do you cater to customers who avidly use e-commerce, despite the long delivery times, because its fashions are up-to-date and its discounts are plentiful? If you’re a manufacturer, do you lean on major retailers alone to distribute your products, or do you turn to a distributor who can put you in the province’s many sari-sari stores?
Of course, these complexities are not impossible to address. Perhaps they seem that way because of the long distance from corporate headquarters, but while the solutions differ, the starting points do not. As with everything these days, collaboration is vital. That means manufacturers, distributors and solution providers have to trust each other enough – enough to recognize the value of identifying these common goals and solving them together.
As you have mentioned, no two supply chains are alike. I believed Palawan is being positioned as a tourist destination, as you said “It may be called the Ecotourism Center of the Philippines…” thus manufacturers and brand owners are not as keen on setting up their businesses.
As a eco-tourist destination the challenges for supply chain practitioners is the flow of food supplies.
I wish you all the best in your Supply Chain Immersion activity.