Helping SMEs build capabilities and improve productivity for sustainable growth
Small and medium enterprises (SMEs) play a critical role in Singapore’s economy, contributing almost 50 per cent of GDP and employing some two million people. Rising costs, a tight labour supply, and a small domestic market are just some of the issues which SMEs face in a changing business environment. With this in mind, Minister of State for Trade & Industry Mr Teo Ser Luck commissioned a review of the SME sector to refine the government’s development strategies in order to find long-term solutions for the sustainable growth of SMEs. The review, which started in 2012, was carried out jointly by SPRING Singapore and International Enterprise (IE) Singapore and supported by the Ministry of Trade & Industry.
Since the start of the review, a number of areas have been addressed, including simplifying and streamlining the support schemes available to SMEs, expanding the capabilities and resources of the Enterprise Development Centres into one-stop SME Centres, increasing the outreach to small enterprises and introducing new initiatives under the Partnership for Capability Transformation (PACT).
In May and June, progress was made on the Collaborative Industry Projects (CIP) and the SME Talent Programme (STP) fronts. Read on to find out more about the latest developments under CIP, STP and PACT, and how they aim to drive Singapore’s SMEs to new heights.
Bringing Productivity to the Kitchen
Like most businesses, SMEs in the service industry are feeling the effects of a tight labour market. Restaurants, for instance, have to find every possible productivity advantage. At the same time, food manufacturers in Singapore need to tackle the challenge of insufficient scale, which isn’t easy to achieve in a small domestic market.
To address these issues, the Restaurant Association of Singapore (RAS), Singapore Food Manufacturers Association (SFMA), Singapore Manufacturing Federation (SMF) and Singapore Chinese Chamber of Commerce & Industry (SCCCI) issued a joint call for collaboration under a SPRING-supported Collaborative Industry Project (CIP) to encourage F&B companies to outsource the preparation of food items which are not core offering in the menu to food manufacturers. This is the first CIP project to be initiated.
Mr Sunny Koh, Chairman of SMF’s Memberships & Industry Groups Committee, notes that “workforce shortage, higher labour costs, higher staff turnover, higher rental and higher food ingredient costs” are some of the reasons for the food services and food manufacturing industries to work more closely together. Through such a collaboration, restaurants can focus on producing specialty dishes and minimise food preparation at the outlets, which will allow them to “maximise the available facilities and manpower – a win-win situation for both parties”.
Highlighting the advantages for food manufacturers, Mr Wong Mong Hong, President of the SFMA, explains, “Besides increasing volume and revenue, this initiative will also help food manufacturers to expedite their automation plans. For instance, food manufacturers will have to upgrade their skills to meet the requirements of restaurants which require more sophisticated products.”
“This CIP is meant to help alleviate the manpower crunch and increase productivity in restaurant operations,” adds the RAS President, Mr Andrew Tjioe. “By outsourcing food processes done internally to external manufacturers who have spare production capacity, restaurant owners can direct the manpower from these functions to focus on their key products.”
Attracting Talent to SMEs
Recruiting young talent can be a challenge for SMEs, particularly when they are competing against more established, big-name multinational companies. Yet, ensuring a steady flow of fresh talent is critical to the future success of SMEs.
SPRING’s SME Talent Programme aims to make it more attractive for Polytechnic and Institute of Technical Education (ITE) students to join SMEs upon graduation, by offering a study award covering the tuition fees, allowance, a sign-on bonus and job opportunities. SPRING will partner the Trade Associations and Chambers (TACs) to manage this programme. Equipped with a strong understanding of their respective industries, the TACs play a key role in profiling career opportunities in their industries and facilitate interviews to match the candidates to the SMEs.
Mr Ang Yuit, Executive Director of the Association of Small and Medium Enterprises (ASME), says, “The STP helps SMEs to attract bright students by sponsoring study awards, which helps to build a pipeline of young talents who are trained to work in their organisations.”
One of the first companies to take part in the STP is Commonwealth Capital, which manages brands such as Pastamania and Swissbake. Commonwealth’s Head of Group Human Resources Ms Doris Bay says, “We’re growing fast, and a constant flow of youthful dynamism will give us an edge. We welcome the STP as a key platform to help us to achieve this.”
“By working closely with SPRING and the Restaurant Association of Singapore, the STP offers an unparalleled opportunity to reach out to and attract students at the ITE and polytechnic levels to join our industry,” adds Mr Andrew Khoo, Director, Food Services Division at ABR Holdings, which manages several brands including Swensen’s, Yogen Fruz and Oishi Pizza. “If implemented well, this programme will put SMEs like us in good stead in the coming years as we continue to grow our business.”
While SMEs clearly stand to benefit from the programme, it is important to note that as employers, SMEs also offer a unique set of opportunities to recent graduates, such as opportunities to take on greater responsibility and more challenging and often multi-faceted roles.
“SMEs tend to operate in a dynamic environment, so those joining such organisations have to take on different roles and adapt to a spectrum of scenarios,” explains Mr Chan Lee Mun, Principal and CEO, Nanyang Polytechnic. “We train our students to be highly adaptable, which helps them thrive in such an environment. Their learning is also accelerated because they get to learn several new skills within a short time.”
Mr Bruce Poh, CEO of ITE, adds, “The STP is an attractive scheme in more than one way. Besides the sign-on bonus offered, SMEs in various sectors will offer our students unique learning opportunities.”
Upgrading Through Partnerships
Started by EDB in 2011 for the manufacturing sector, PACT was enhanced in 2013 to cover more industry sectors and additional areas beyond supplier upgrading, to encourage collaboration between large enterprises and SMEs. For SMEs that want to upgrade but may lack the capabilities to do so, the enhanced PACT will provide the opportunity for them to do so by learning from or working with MNCs and large local enterprises.
The enhanced PACT, which SPRING co-administers with EDB, offers three different models for this collaboration, which aim is to deliver win-win outcomes for both parties. First is partners development. This could take the form of supplier
qualification and capability upgrading, where large companies help to upgrade the capabilities of new and existing SME suppliers so that they are better able to work with large companies. Local department store Metro followed this model to train 10 SME suppliers on a new mobile point of sales system to better integrate them into Metro’s operations.
The second model involves knowledge transfer, where large companies share their know-how or capabilities with local SMEs. An example of this is German precision engineering firm TRUMPF, which conducted a one-week workshop on its lean manufacturing process for 10 executives from five manufacturing companies in Singapore.
The last model involves co-innovation, in which large companies can provide testbeds for new SME technologies and become their potential reference customers. This will allow SMEs to refine their products and build up a business track record for growth. PUB followed this model by inviting SMEs to test-bed their water treatment technologies alongside existing treatment processes in PUB’s facilities.
The two latest initiatives under PACT are offered by the Housing Development Board, to develop lift surveillance and elderly monitoring systems, and the Singapore Civil Defence Force, to develop technology for electronic fire hydrant test kits. These projects will give SMEs the opportunity to work closely with these two organisations to better understand and meet their needs, while also developing their own capabilities and track record.
The SMEs benefit from such collaborations because they can get valuable, real-time feedback and guidance from a potential customer, right from the product development stage. SMEs interested to embark on these initiatives can visit www.spring.gov.sg/pact for more information.
Reproduced with permission from SPRINGnews July 2013 Issue. Published by SPRING Singapore
