SBF-DP SME Index: Businesses seek to transform
Singapore SMEs are looking to invest in business transformation despite expectations of a soft economic environment outlook
Despite being a leading food company in Singapore with a 30-year track record, Lim Kee Food Manufacturing realised a few years ago that it needed a better way to measure its performance if it wanted to continue growing. A more efficient performance tracking system would help ensure that the entire organisation would be aligned in achieving their common goals.
With the help of Enterprise Singapore’s Business Excellence framework, Lim Kee last year implemented detailed targets — from sales targets to manufacturing efficiency — that it could monitor through a digital dashboard, offering greater visibility and transparency to management.
“We wanted to align the entire company, which meant having key performance indicators for every department. By being able to measure our performance regularly, we could facilitate continuous improvement,” said Lim Kee’s managing director Ang He Siong. While it’s still early days, the company believes that the clarity provided by its measurement system will boost performance over the longer term. Looking ahead, he added that Lim Kee will continue to transform its operations to deal with an evolving competitive environment.
More Singapore SMEs like Lim Kee are looking to invest in business transformation despite expectations of a softer economic environment in the next six months, a recent survey showed. The SBF-DP SME Index slipped from 50.7 to 50.4 this quarter, indicating an easing of business sentiment and increased caution among SMEs. This is the fourth consecutive quarter with a lowering in the reading.
However, the index also showed an increase in capital investment expectations across all sectors, except business services. The overall figure increased marginally from 5.16 last quarter to 5.18 this quarter. In a statement, the Singapore Business Federation (SBF) and DP Information Group (DP Info) said that this could reflect a growing focus by SMEs on business transformation with a view on investing for the long-term.
SBF CEO Mr Ho Meng Kit urged SMEs to persist with their transformation efforts to sharpen quality and improve productivity, even as uncertainty from geo-economic and geopolitical conflicts weigh on their confidence. “This will help them stay ahead of increasing global competition and keep pace with industry changes,” he said.
Meanwhile, Ms Janet Ang, Chairman of the SBF Digitalisation Committee, said that more local enterprises had to take action in digitalising their operations or risk losing out in an increasingly plugged-in economy.
“The challenge now is for business owners to take action and invest in the solutions and training required to go digital. Despite being aware, many SMEs are still hesitant because the leadership may not be tech-savvy, coupled with a general fear of digitalisation,” she said in a recent interview with BizQ.
Going abroad for growth
Amid softening global demand and uncertainties related to the US-China trade dispute, Mr Ho is still confident that there are opportunities for Singapore companies to venture overseas for growth.
“SBF continues to actively engage our companies to make effective use of Singapore’s extensive network of Free Trade Agreements (FTAs) and will keep up our momentum of business transformation activities, such as training and providing members with overseas business opportunities through business missions and global trade fairs like the China International Export Expo 2019,” he said.
The SBF-DP SME Index measures the business sentiment of SMEs for the next six months (April 2019 to September 2019). The Index comprises inputs from SMEs on their expectations in seven key areas – Turnover, Profitability, Business Expansion, CapitalInvestment, Hiring, Capacity Utilisation, and Access to Financing. It is based on a survey of more than 3,600 SMEs conducted between 14 January and 1 March, 2019.
Outlook for 2Q2019 – 3Q2019F (April 2019 to September 2019)