Roundtable panellists:
Christie Chu, head, Emerging Business and Commercial Banking Cash, Global Commercial Banking, OCBC Bank
Lim Seng Kong, managing director, Singtel Enterprise Business at Group Enterprise
Derek How, partner, RSM Singapore
Kwan Chong Wah, co-founder & CEO, The Acorn Group
Soh Leng Wan, assistant CEO, Enterprise Singapore
Jonathan Yuen, partner, Rajah & Tann Singapore
Moderator: Yong Jun Yuan, Journalist, The Business Times
How should small and medium-sized enterprises (SMEs) navigate unexpected challenges as global trade and supply chains remain in a state of flux?
Derek How: The pandemic has certainly hit global trade and disrupted supply chains across the globe at an unprecedented speed and scale. SMEs are not spared as businesses are affected by the acute restrictions and lockdowns and many businesses struggle to procure basic products and materials.
While companies have been forced to react and adapt to address the current challenges, they also need to start making changes, if they have not done so, to get ready for the new normal. There will likely be permanent changes in global trade and supply chains as life gradually returns to "normal".
At a minimum, SMEs should do two things. First, they should source for multiple suppliers instead of relying on one or two suppliers. Look to growing manufacturing hubs like Vietnam, India or Mexico for alternative sources of supplies. Companies can avoid losing business or clients from potential supply chain disruptions with a diversified pool of suppliers.
Second, companies should focus on cash flow management. Cash is king. They need to have effective cash-flow forecasting. Knowing how long the company can last in the event of any supply chain disruption or how long it takes to convert current inventories to cash will help the company cope with uncertainties and emerge stronger.
Kwan Chong Wah: My recurring concern is, have we done enough? Is our post-pandemic business model and operational structure very similar to what it was pre-pandemic?
Has our cost gone up with no corresponding increase in the price we could charge? Is there no foreseeable increase in revenue sources or streams?
If honest answers to these questions are "yes", then we have wasted a good crisis. For, there is no better time to make changes than during a crisis - changes that would otherwise meet with awkward resistance when times are good and that would keep the company lean, agile and adaptable in this state of flux. It is still not too late to do something about it.
Soh Leng Wan: It is now a need, and not an option, for SMEs to build resilient supply chains. Start by identifying vulnerabilities in your supply chain - identify your reliance on specific customers, suppliers, geographic markets and review your action plans if these are disrupted.
Diversifying your networks, putting in place a robust inventory management system are some ways to help mitigate risks.
With more companies looking into diversifying their supply chains, there will be new demand to tap into.
For example, in the manufacturing industry, manufacturers and distributors could be seeking more component manufacturers and electronics distributors as suppliers/partners. SMEs should take the chance to go for such opportunities.
What should businesses look out for as they update their business continuity plans (BCPs) amid an endemic Covid-19?
Christie Chu: The pandemic caught everyone off guard, but some businesses were more prepared than others because they had been investing in digitalising their buy, sell and operate models even before the crisis hit.
As SMEs embark on their digitalisation journeys, it is important to keep these experiences in mind. Plan not just for the immediate future, but with the long-term in mind, and make strategic investments to ensure that business models are resilient and relevant for the future economy.
Derek How: Companies can consider four key areas as they update their BCPs. First, it should be a top priority for all companies to look after the health and well-being of employees. BCPs should include the safety measures to be put in place in a pandemic or endemic situation.
Second, they should reshape business plans for continuity purposes. It is critical to review existing business plans and revise them accordingly.
For example, companies can conduct assessments with multiple scenarios to understand the potential impact and revise their business plans to ensure they can continue to function.
Last, companies should adopt more open communication. It is imperative to establish a communications plan that provides employees, customers, suppliers and other stakeholders with regular updates.
Lim Seng Kong: Faced with the unprecedented challenges of the pandemic and prevailing economic climate, some SMEs had difficulties keeping their businesses going as they dealt with rent, salaries and workforce health and safety amid an evolving Covid-19 situation.
However, it is very encouraging to see that many SMEs have since taken their first steps in making investments to embrace digitalisation and procure digital solutions and tools to help grow their business.
Many businesses have seen and experienced the benefit of going digital in the last year. Of the 10,000 SMEs whom we have provided basic advisory to, more than 1,000 have adopted at least one digital solution as they see it as an essential as economies begin to treat Covid-19 as endemic.
As different countries continue to deal with the pandemic in different ways, how should SMEs resume their overseas expansion plans?
Jonathan Yuen: With or without Covid-19, SMEs have always needed to expand beyond Singapore's shores. As more countries move towards a "living-with-Covid-19" phase and start to open up, SMEs that have diligently done their market research, kept in close touch with their regional markets and are ready to hit the ground running will be able to seize opportunities and grow market share faster than those who have taken a wait-and-see attitude.
Soh Leng Wan: The pandemic has led to new modes of market entry. A hybrid approach of business engagement is also likely the way forward via virtual meetings or virtual missions, coupled with trips (albeit less frequent) and engagements by trusted partners.
SMEs should leverage in-market partnerships. Finding the right partner is crucial for companies to learn and assess the business potential unique to each market and confidently establish their presence overseas.
Businesses can also explore digital platforms and test out markets through e-commerce channels before setting up a physical presence. But while this makes market entry easier, competition is stiff.
SMEs can approach Enterprise Singapore for market insights and available support for internationalisation and participate in our virtual missions and business-matching roundtables.
Kwan Chong Wah: As we transition to an endemic Covid-19, Singapore would be deemed "Covid-safest" or most "Covid-convenient" in this region.
Business people from the region and beyond would prefer to huddle here or could only congregate here due to the travel restrictions across different neighbouring countries. Likewise, MICE events would be making a comeback.
Smarting from the disruptions due to lockdowns and restricted travels, more businesses would be looking to set up their regional HQs or hubs or rep offices here as part of their continuity plans.
All these are already happening despite the pandemic, but it is reasonable to say that the pandemic has been catalytic. This means the "overseas" is coming to us.
For SMEs who have, presumably for good reasons, yet to explore or venture abroad, this is a window of opportunity not to be missed.
We need to quickly figure out how we can plug into this macro-trend. How can we value-add to businesses seeking exposure in this region? How can we play a bridging role? How can we contribute to their value chain?
What are some trends that businesses can leverage as we move into a post-pandemic world?
Soh Leng Wan: The pandemic has accelerated the adoption of digitalisation and e-commerce. SMEs can do more to leverage on business intelligence through data capture and analytics.
For example, Markono worked with the Institute of Technical Education to instal sensors on their printing machines, enabling them to extract real-time data and remotely monitor their manufacturing shop floor productivity.
Business-to-consumer businesses can analyse consumer behaviour to adjust their sales and marketing plans.
Climate change and sustainability issues are also top of mind for many governments, Singapore included.
There will be new demand for solutions across the green economy, such as renewable energy, low-carbon technologies, sustainable packaging, green infrastructure and more.
Christie Chu: The rise of e-commerce began a few years ago and the pandemic hastened its adoption. Such platforms are important for businesses to leverage, especially given Singapore's small market, and we are indeed seeing more entrepreneurs who start selling overseas from day one.
Businesses with a more traditional operating model would have a harder time adjusting to this new mode of buying and selling, but it is a necessary transition.
The sustainability movement and post-pandemic "build back better" agenda presents opportunities too. Increasingly, more SMEs recognise that sustainability is a competitive advantage as their customers, many of whom are larger corporates, want to work with SMEs that have sustainability credentials.
Jonathan Yuen: I see two clear trends with significant legal and operational consequences. First, remote working is here to stay, for better or for worse. Talent will become even more mobile and businesses can leverage this phenomenon to expand their workforce to potentially anyone with a laptop and a WiFi connection.
Second, in tandem with remote working will be the continued rise of the "just-in-time" or gig knowledge worker. Businesses can leverage this growing class of workers to better manage overhead costs and reduce excess capacity, but as employment laws continue to evolve to define and protect these workers, businesses need to be cautious in how to use and manage these types of workers.
How can businesses incorporate more environmental, social and governance (ESG) initiatives to buffer themselves against the lingering effects of the pandemic?
Christie Chu: Projects that can be undertaken by SMEs across industries include the "greening" of their operations by improving energy efficiency, reducing waste, or improving wastewater management, for instance.
There are also SMEs, whom we refer to as "pure play" SMEs, that are eco-innovators and agents of change, bringing green products and solutions to the market.
Support for such projects in the form of sustainable financing is available and that helps to nudge some SMEs - who might have been otherwise on the fence - in the right direction.
Derek How: Many questioned whether in a climate of crisis, ESG should still be a priority for businesses. In reality, ESG encompasses all risks to long-term sustainable value, and the pandemic has amplified the need for companies to look at non-financial risks more closely.
In fact, the pandemic has underscored the importance of human capital. Companies should learn from the crisis and review and improve on human capital policies.
The health and well-being of people is absolutely critical to the future success of any company. Building business resilience is key and it starts with people.
Companies should also reassess key risks to focus on from this crisis, including non-financial risks and ESG areas. This requires companies to think on a longer term basis and in the process, foster greater collaboration with stakeholders which can lead to greater innovation.
Jonathan Yuen: Businesses should really focus on reviewing their human resource (HR) policies, in particular those relating to the hiring of foreigners and the promotion of local employees to ensure that they are operating in line with prevailing and upcoming employment law standards.
This type of review is part of the "social" portion of ESG initiatives and will be critical in helping employers buffer against not just the effects of the pandemic in dealing with a more mobile and legally aware workforce, but also from the government's recent decision to enshrine the Tripartite Alliance for Fair and Progressive Employment Practices guidelines into law.
Employers who do not take proactive steps to ensure that their HR policies are in line with the law will soon face expanded powers of investigation, enforcement and punishment from the Ministry of Manpower.
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