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More SMEs turning to tech to boost productivity and efficiency

SINGAPORE — With the labour market tightening and the challenging business environment expected to persist, SMEs will increasingly leverage on technology to improve manpower and processes in order to drive productivity and sustain growth.

More SMEs turning to tech to boost productivity and efficiency

Siam Coconut’s use of technology is reflective of the growing trend among small- and medium- enterprises (SMEs) in Singapore that are moving to digitise business operations.

SINGAPORE — For over a decade, staff at Siam Coconut Pte Ltd, a local Thai ingredient and grocery distributor, would manually wrap the coconuts at their company store in Aljunied, before they were distributed to customers.

But two years ago, the company invested in an automated shrink wrap machine to package the products, cutting down the manpower required for the work from five employees to two — to man the machine. This allowed Siam Coconut to redeploy staff to other areas such as marketing.

Its switch to automation and digitisation also saw the firm replace paper invoices with digital ones six years ago. Previously, its drivers would issue physical invoices to customers when they dropped off their supplies, and employees would spend three days collating invoices at the end of every month.

Now, the drivers issue invoices to customers through an Android software on their mobile phones, which syncs the information to a central server in the office. The company can tally the total number of invoices issued within a day.

Siam Coconut’s use of technology is reflective of the growing trend among small- and medium-sized enterprises (SMEs) in Singapore to digitise business operations.

With the labour market tightening and the challenging business environment expected to persist, SMEs will increasingly leverage on technology to improve manpower and processes in order to drive productivity and sustain growth. This was one of the key findings of the 2018 SME Development Survey conducted by business intelligence and credit analytics company DP Information Group.

The annual survey, which is supported by the Singapore Business Federation (SBF) and Enterprise Singapore, released on Wednesday (Dec 5) found that 70 per cent of the 2,557 local SMEs surveyed were looking to initiate digital transformation in their companies to increase revenues.

In addition, SMEs viewed Information and Communication Technology (ICT) as key to creating business opportunities as it would help increase revenue, improve manpower efficiency, manage operating costs and provide useful insights.

Mr James Gothard, general manager of credit services and strategy (Southeast Asia) of Experian — the parent group of DP Information Group, said the findings showed that Singapore SMEs were responding proactively to the more competitive business environment. “They see a need to increase productivity with changes to their business and manpower processes, and they see ICT as a key enabler in these efforts.”

According to the survey, SMEs were adopting technology in these areas: Digital ordering and payment system, E-commerce, workforce management and reporting, procurement solution, fleet management system, and physical security management.

As in the previous year, cash flow remained a concern for SMEs, as 15 per cent of those surveyed said they expected turnover growth to decline in 2018 — a 4 percentage point increase from 2017.

A third (34 per cent) of the SMEs surveyed expected finance-related challenges from external factors, especially in the area of customers defaulting on payments.

The trade war between the United States and China might have hit the global economy, but 81 per cent of SMEs said that they were not affected, citing Free Trade Agreements signed by Singapore as having cushioned its impact on them.

Respondents also highlighted areas where the Government could provide more support to boost recruitment and maximise productivity, with 67 per cent hopeful that programmes by statutory board Workforce Singapore will focus on enhancing and introducing new skills to workers.

Mr Ho Meng Kit, chief executive officer of SBF, said that as SMEs continue to restructure and transform, the federation will help them build capabilities to achieve inclusive and quality-driven growth.

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