SMEs should seize ‘window of opportunities’ in digital and green economies, supply chain movement: panel

WITH the reopening of Singapore’s economy, small and medium-sized enterprises (SMEs) should seize the “window of opportunities” in the post-pandemic era, especially in the digital economy, green economy, and supply chain movement, said panellists at a forum.

“In the last 2-and-a-half years, SMEs have shown great tenacity and resiliency in adapting, transforming and really rising to the occasion,” said Minister of State for Trade and Industry Low Yen Ling, one of 4 speakers at the SME Future Trends webinar, jointly organised by The Business Times and DHL Express Singapore.

Although 2022 has seen an “unprecedented confluence” of challenges, from heightened inflation and global inflationary pressures to geopolitical uncertainty, SMEs should still see the glass as “half-full” and take the chance to future-proof themselves in the new normal, panellists noted.

During the hour-long session moderated by BT’s deputy news editor Lee U-Wen, they discussed 3 key areas to help SMEs gear up for growth and build resilience as the world emerges from the pandemic.

Digital economy

Logistics company DHL Express Singapore decided to accelerate their digitalisation efforts during the pandemic – a period of disruption where everyone was “out of their comfort zones”, said Christopher Ong, its managing director.

This included getting more customers to pay the firm digitally through contactless deliveries, as well as using automated guided vehicles in their hubs in place of forklifts. By the third quarter of 2020, DHL’s delivery volumes had already returned to pre-pandemic levels. It has also seen “peak” season volumes in the last 18 months, Ong said.

More micro-enterprises in Singapore have stepped up to go digital in the last 2 years, said Low. She noted that more than 86 per cent of HDB shops offer e-payments today, and over 60 per cent have digitalised, either through e-commerce or livestreaming.

“There are always opportunities in a crisis … given that Singapore has pressed on to open up, and other economies are lifting their border restrictions, there is this window of opportunity – but we must be responsive,” she said.

For Vick Aggarwala, president and chief executive officer (CEO) of Supreme Components International (SCI), this trend of deglobalisation should push SMEs towards internationalisation.

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“It’s an opportunity for SMEs to reach out to their customers using technology or the internet. Everybody’s trying to protect their own markets, so you need to be physically or indirectly there to reach out to customers internationally,” he said.

Aggarwala credits half of SCI’s “extraordinary” growth in the last few years to the early adoption of technology by his sales employees. SCI is a franchised distributor of electronic and LED components.

“IT tools, which were developed 6 to 7 years ago, came in very handy during the lockdowns … we were able to reach out to large customers all night through the power of the internet,” he said, adding that SMEs should adopt digitalisation “vigoriously”.

Supply chain movement

Supply chain disruption can be an opportunity by itself, said Low, adding that the weight of the global economy has been shifting towards Asia, in particular South-east Asia.

Companies are now looking for alternative sourcing locations to diversify their risk – and Singapore can be a strong base for supply chain capabilities, supply chain operations and supply chain innovation solutions, she noted.

“At the height of Covid-19 in 2020, we saw countries instituting export bans, but we showed that we were committed to persevering and remaining open,” she said.

Agreeing, DHL’s Ong said that SMEs should capitalise on this opportunity, which comes on the heels of a “significant movement” of distribution centres choosing to locate themselves in Singapore in the last 2 years.

“When certain markets in North Asia closed due to the pandemic, our customers had no choice but to fulfill out of Singapore, so we started to move a lot of things in and out of the country as a result,” he said.

Businesses should consistently challenge the assumptions of their environment and be open to their foundations changing across time, said Loke Wai San, chairman of electronic-services provider AEM Holdings. He is also the founder and CEO of buyout firm Novo Tellus Capital Partners.

For instance, Loke noted that China’s dual-circulation strategy – which seeks to spur the nation’s domestic demand and cater to export markets at the same time – is an opportunity for Singapore companies to rethink how they can similarly engage in a dual-circulation model of their own.

“As leaders, we will make some side bets. (It’s) the willingness to take some risks and understand that not all bets will work out, but those that work out, will pay well,” he said. “Be informed, really understand your customers, and understand that this disruption in supply chain is a great opportunity.”

Green economy

By now, SMEs should understand that sustainability is not a cost; instead, it will help them in their long-term competitiveness, said Low.

She highlighted the S$180 million Enterprise Sustainability Programme that was launched in October 2021 to support SMEs in building capabilities and capturing new opportunities.

It is also important to support companies on the ecosystem level – not just in “piecemeal” projects they are undertaking, but in certification, green loans as well as training, she added.

In Loke’s view, companies should think beyond competing in terms of cost, quality and availability, but instead compete through technology, innovation and sustainability. The ability to do so will be key to differentiating the next generation of “supply chain champions” in their sectors, he added.

Ong, meanwhile, noted the need for SMEs to change the perception that sustainability means higher costs. While the launch of DHL’s electric vehicles (EVs) was initially perceived by his finance team as a big investment, the company reaped the gains when the daily operating costs for EVs “plunged dramatically” amid rising fuel prices.

He said: “Know your footprint. Know what you spend on, your electricity – are there better ways of utilising your energy, or are you able to switch to different technologies that can actually save you (on costs) in the long run?”