The COVID-19 pandemic has had a mixed impact on Lae-based manufacturer, KK Kingston. Chief Executive Michael Kingston reflects on how the company has handled a ‘black swan’ event that was impossible to anticipate.

Inside a K K Kingston laboratory. Credit: Rocky Roe

In the past year, Lae-based manufacturer KK Kingston – a leading supplier of plastic and paper products, industrial chemicals, cooking oil and household consumer goods – has had to deal with soaring demand for some products and plummeting demand for others.

‘It has been a very challenging year for us,’ admitted CEO Michael Kingston to Business Advantage PNG. ‘No-one could have predicted such a thing.

‘In some ways, there has been a silver lining for us, in that the products we make for cleaning, sanitation and disinfection have been in very high demand. However, it was all unforecast demand, so there was a period there when demand spiked quickly, and we were unable to respond quickly.

‘In March 2020, we received more orders for hand sanitiser in one week than we had in the previous seven years.’

‘We copped a lot of customer backlash and frustration because of that. It is pretty hard to explain to customers that you can’t fill their orders on time because of excessive demand. In March 2020, we received more orders for hand sanitiser in one week than we had in the previous seven years. No-one can plan for that. We managed to work within our limits and make everything happen. But it was a challenging period.’

Kingston says the waiting time for some raw materials for the hand sanitation products ballooned out to months, so the company pivoted to reformulation and sourcing supply locally.

‘We used the formulation publicly provided by the WHO (World Health Organisation). We used 100 per cent raw materials, and we could get it to market quite quickly. That helped us to respond.’

Response

Credit: KK Kingston hand sanitiser gel. Credit: KK Kingston via Fcebook

While demand for cleaning products and sanitisers jumped sharply, it hurt the rest of the business, says Kingston. He describes the company’s response to the crisis as ‘reactionary’.

‘It was not part of our strategic thinking. We hadn’t anticipated anything like this occurring. We had no plans in place to deal with a pandemic before it occurred. We acted based on information we could gather from online sources and the national health authorities.’

Kingston says the approach to stock management had two dimensions.

‘For products where there was a sudden kick in demand, we had to adjust our formulation in some cases and, in other cases, increase stock orders.

‘We do sell face masks, and we do sell trigger sprays. It was impossible to buy these things. They were everyday items for us, but suddenly with the pandemic, the lead times blew out by six months. It was madness.’

KK Kingston’s Michael Kingston

‘For those products where demand was adversely affected, we had to do the opposite. We had to talk to suppliers about deferring shipments and cancelling orders. We tried to minimise the amount of working capital tied up in inventory that we did not need

Reset?

Although the adjustment was ‘painful’, Kingston says the company did not have to seek outside assistance.

‘We managed to work within our limits and make everything happen. But it was a challenging period.

‘One of the most frustrating things was trying to source some of the raw materials in very high demand everywhere globally. We do sell face masks, and we do sell trigger sprays. It was impossible to buy these things. They were everyday items for us, but suddenly with the pandemic, the lead times blew out by six months. It was madness.’

Kingston believes the crisis is not yet over, arguing that the talk of a ‘great reset’ is premature: ‘I’d like to be wrong, but I don’t believe there is a reset just yet.’

He expects that most of 2021 will be very similar to 2020.

‘The availability of vaccines is one thing,’ he observes. ‘The logistics of rolling it out to vaccinate the majority of the Papua New Guinea population is quite another.’