FLOUR POWER: ALWIN ARIFIN
When PT Sriboga Flour Mill discovered a setback in its operations, President-Director Alwin Arifin found another way to make his flour mill a stronger contender in the Indonesian market.
There are two things Alwin Arifin attributes as the reasons why he was fortunate in founding Sriboga Flour Mill (SFM).
“There was an opportunity and I made the right decision at the right time. These two are very rare,” he shares with The CEO Magazine.
“I think it was a gut feeling, not based on my skills or influence from anybody else. I feel blessed that I was guided to make the right decisions, considering I dropped out of college at a young age.”
“I found it really hard to concentrate on my studies when I was at Boston University and Pepperdine University in California. My mind was busy with other interests.
The importance of having role models
After leaving university, Alwin returned to Jakarta where his father, Bustanil Arifin, took him under his wing to learn about business.
Bustanil was Minister of Cooperatives and Head of Government of Indonesia Food Logistics Agency.
Alwin says “I followed him everywhere; when he had a meeting or was travelling around Indonesia for business,” .
“I was inspired by his leadership, how quickly he made decisions and how he interacted with customers and employees. My father would say: ‘The more you give, the more you get’.”
Alwin’s mother, Suhardani Arifin, was another role model who shaped her son’s entrepreneurial skills.
She started a simple dairy farm that grew to produce yoghurt, cheese and milk, now popularly known as Yummy, a leading dairy brand in Indonesia.
“Today, my management team has a few people with MBAs from the world’s top business schools.”
Alwin himself finished his Owners President Management (OPM), a business management program at Harvard Business School in 2015.
I learned from my father and mother. Now I have a couple of MBAs from the top schools in the world.
SFM began as a flour distributor for a leading flour mill producer in Indonesia.
“At the time, it was a monopolistic market so when we distributed to customers, we heard many complaints about quality, not price,” Alwin says. “I told them the flour is produced by somebody else, so I can’t do anything.”
Following this, Alwin was inspired to establish a new mill that produced high-quality flour. Alwin knew the mill had to be on a port as all of Indonesia’s wheat is imported.
“For company efficiency, the mill had to be on the waterfront to reduce transport and logistics costs. We built the flour mill in Semarang, central Java – the only port available then,” he explains.
“We were handicapped because the water depth at our port wasn’t deep enough. We couldn’t bring in a big ship, like a Panamax.”
“As our port’s berthing draft is only nine metres, we could only bring in handy-sized vessels, so the costs were higher.”
Success is a journey, not a destination
But this didn’t stop Alwin from finding other ways to strengthen his business. “In total, 80% of the flour mill’s cost is wheat,” he says.
“We cannot do anything about that, but we can focus on product quality.” So, Alwin invested in the latest flour milling technology.
“We bought a flour mixing plant that allows consistency and customisation,” he says. “We can now make different qualities and quantities. No other flour mill had that flexibility back then.”
This technology focus went even further, with SFM developing a new type of flour –super white with extra-fine granulation. “Now we can make flour that’s very fine, like Japanese flour.” Alwin continues.
“Indonesians like soft, white Japanese bread more than Western bread, which is harder and a darker colour. We purchased the machine, expanded and bought another one to meet high demands for premium flour.”
With the flour mill’s success, Alwin diversified into restaurants; acquiring Pizza Hut and Japan-based Marugame Udon.
“Now we have around 400 Pizza Hut outlets and 40 Marugame Udon outlets,” he adds. “The combined sales revenue of the restaurants is much higher than the mill.”
Other successful developments under the Sriboga brand include Sriboga Bakeries Integra, which manufactures Japanese bread crumbs and owns retail bread brand Roti Le Gitt, as well as Food Solutions Asia, which produces premixes and functional flour products for the food industry.
And like the CBH Group, Sriboga is progressive in expanding its downstream businesses.
CBH Australia is one of SFM’s several wheat suppliers.
Moreover, Alwin says SFM has a very low turnover rate, as well as strong camaraderie between the upper management and workers on the ground.
“Of the 700 employees, 300 of them are labourers,” says Alwin. “But their food is the same as the CEO’s.”
“When you make a profit you have to share it with the community.”
With SFM now operating for more than 20 years, Alwin plans to make it public. “I think success is a journey, not a destination,” Alwin says.
“There are many successful private companies, but it can be a volatile path. I have experienced this myself.
Credit: CEO Magazine