Resource management challenges: How SMEs can use data analytics to optimise operations while controlling cost

STOCKS of Telfast, a type of antihistamine, runs out most quickly at one of The Medical Group's clinics in Chinatown. That was among the many insights the company discovered after it switched to cloud accounting and was able to track in real-time the number of Telfast tablets dispensed daily across its 7 clinics.

Information that allows The Medical Group to keep track of their inventory on-the-fly has helped the business to better manage its medication supplies across clinics, says Singapore Corporate Services (SCS) managing director Alan Chang, citing an example of how using data analytics enable small and medium-sized enterprises (SMEs) to better manage their inventories and resources. The Medical Group is a client of SCS, a certified public accountant firm.

With easy-to-use cloud accounting tools like Xero, which also comes with data analytics features, SMEs can keep an eye on their finances and monitor how their businesses are doing in real-time and from anywhere. These tools also allow business owners to spot trends or repeated events from the data stored. For example, an e-commerce company might notice that they sell more items during the holiday season, or that one product is consistently more popular than others.

"A company can only scale when it understands how these data or patterns behave, allowing its owners to make informed decisions, create more efficient processes and scale the business," Chang explains.

Data-driven insights drawn from its clinics' patient inflow patterns throughout the day, staff salaries, and hours worked have helped The Medical Group in optimising their operating hours and designing efficient shift schedules for locum doctors.

SCS also helped the client with the integration of a compatible inventory management system that is also on the Xero network, ensuring smooth data transfer and synchronisation across systems, from the clinic management system to both the accounting and inventory management systems. It allows The Medical Group to continuously monitor their current stock levels in comparison to what they have sold in real time.

A NEWSLETTER FOR YOU

Friday, 8.30 am

SGSME

Get updates on Singapore's SME community, along with profiles, news and tips.

Sign Up

This not only eliminates redundancies such as repetitive manual verification of remaining stocks, but also helps the company to reduce manual checks on financial data such as sales figures required in preparing the financial reports of the company. As manual processes are reduced due to the accounting and inventory management systems being integrated, fewer employees are required to prepare the financial reports, and now have more time to focus on other important tasks.

"Without real-time data, it will be tougher to improve processes such as purchasing and hiring. However, with the right set of data, companies gain accurate and up-to-date information about their costs, expenses and revenue, allowing businesses to grow more efficiently," says Chang.

Versatile tool for different sectors

Instead of tracking inventories of medical supplies and pharmaceuticals, food and beverage (F&B) businesses like 3 Embers collect data on food supplies, menu orders and prices of dishes, to help them make better informed decisions on what goes on the menu and what dishes are popular among customers. It is a caterer for MICE (meetings, incentives, conferences, and exhibitions) events.

By integrating 3 Embers' suppliers and order data into a single platform - detailing prices of purchased ingredients, the quantities of ingredients bought and food wastage produced - SCS can then draw on the insights to advise the client on where the company is incurring unnecessary costs, and if it is overspending on certain ingredients in a particular month.

Manpower is another significant cost for many SMEs, and understanding its impact on cash flow is crucial for effective financial management. In the past, Teo Yeow Siang, co-founder and chef at 3 Embers, would hire nearly 150 temporary staff when the company's catering service was booked for major events.

However, after studying the data collected in the last three years in consultation with SCS, he has learnt that the cost of hiring temporary staff cannot exceed a certain percentage of the total labour costs. Going over this limit could strain the company's resources and negatively impact cash flow.

Teo praises the SCS team for its professionalism and dedication throughout his company's digital transformation journey. He explains that 3 Embers does not have an in-house accountant and relies solely on SCS' Accounting Outsourced Service expertise.

"SCS invests considerable effort in understanding our business, aligning their solutions and strategies with our objectives. By doing so, it allows us to prioritise our core operations, such as maintaining the quality of our products and services, thereby maximising our revenue," adds Teo.

How data analytics affect business decisions

SCS, as an all-in-one digital corporate services firm, has also reaped the benefits of using data analytics.

"Analysing over 12 months of data can help me with deciding which service, out of six or seven that we provide, that I should focus on as I better understand the margins of each service," Chang says, referring to metrics such as net profit margins and operating margins.

Real-time data enables SCS to pinpoint peak periods. Armed with this knowledge, Chang can guide his sales team and focus on marketing efforts, such as timely reminders to clients about tax seasons and how SCS can assist.

He can also monitor the effectiveness of his marketing strategy and make adjustments when required. If the data shows otherwise, SCS can switch things up, whether to focus on branding, content creation or even pursue digital marketing over traditional marketing strategies.

"Without data, such as marketing expenditure, being tracked to output, I will not know how much I have spent on each item, the return on investment and its impact on the business. You could end up spending a lot of money without getting the right return on investment," says Chang.

SCS is seeing more requests from clients beyond basic bookkeeping. Its data analysis and consulting services help clients to monitor business trends so they can update their business strategies quickly, rather than react passively.

"There are a lot of decisions that business owners will need for them to make strategic decisions and evaluate the performance of their project teams," Chang adds. "This holds true to businesses across all industries."

Learn more about how you can scale your business with Singapore Corporate Services.