Speech at 13th ECR Asia Pacific Conference & Exhibition
Mr Tan Chuan-Jin, Minister of State for Ministry of National Development , Ministry of Manpower, The Ritz-Carlton, Millenia Singapore
Mr Alex von Behr, Mr Anthony Rose, Co-Chairs of ECR Asia Pacific Council
Mr Tng Ah Yiam, Mr Alain Ong, Co-Chairs of ECR Singapore Council
Ladies and Gentlemen
- Good morning and a warm welcome to everyone, especially our overseas speakers and delegates. This is the third time that the Efficient Consumer Response, or ECR, Asia Pacific Conference & Exhibition, is held in Singapore, and we are very happy to host it. I understand that this conference showcases the latest developments in ECR to help meet the needs of the growing Fast Moving Consumer Goods, or FMCG industry, in the Asia Pacific.
ECR and its implications for the FMCG sector
- Developments in the Asia Pacific region are unfolding rapidly and consumers are becoming more conscious of international market trends. Today, consumers like you and I have more sophisticated tastes and can make selections from a wide range of products and services. We also expect high levels of customer service at the same time. These demands inevitably translate into the need for FMCG companies to focus on ensuring an efficient and responsive attitude towards customers and consumers.
- Based on the principles of collaborative management to optimise supply chain operations, FMCG companies are adopting ECR best practices to capitalise on opportunities presented in the form of higher customer demands. I understand that ECR practices have already been adopted in over 40 countries internationally, including Singapore. ECR is a voluntary initiative by suppliers and retailers to fulfil the needs of consumers, in a better, faster and less costly fashion. Companies which adopt ECR benefit from higher levels of customer satisfaction and increased profits.
- At the heart of what ECR does is really about boosting productivity. As many of you are aware, the National Productivity and Continuing Education Council was set up in 2010, bringing together representatives from the business community, the labour movement, and the Government, to spearhead the drive to raise our national productivity. This can be achieved by improving skills and enterprise productivity, and developing a comprehensive system for continuing education and training, to achieve a productivity growth of two to three per cent per annum in this decade. A major effort is needed in the way we restructure the way we do business in this economy.
- ECR plays a big part in ramping up productivity and reducing wastage throughout the whole supply chain; beginning from the manufacturers and the FMCG community and ending at the consumers at the retail outlets. Specialised skill sets are required as we move up the value chain. As our workers equip themselves with relevant skills through training and upgrading, their wages can be increased in a more sustainable way.
Cold-chain management standards and training to boost productivity
- One area in which ECR Singapore is involved in is the development and implementation of Cold Chain Management Standards in Singapore with the support from SPRING and the Agri-Food & Veterinary Authority of Singapore (AVA), which has borne fruits in more ways than one.
- Take milk and dairy products as an example. Looking at the whole value chain - from farmers and warehouses to retailers- there are more than 10 players involved. The ECR project, dubbed the CP95, saw every player in this value chain playing their part in ensuring that the temperature range is kept under control. This has lengthened the shelf life of the products from 18 to 24 days. In terms of industry benefits, the providers enjoy longer shelf life for their products and the consumers can be guaranteed product freshness. Under this process, suppliers reaped an estimated annual savings of $260,000 per year. The same can be said for vegetables where savings per year are about $10 million per year; while for chilled pork, the savings are even greater – at an astounding $17 million per year on average. All these are possible largely because of developments and standards set for cold-chain management.
- Workers who are part of the cold-chain cycle are now more highly skilled, efficient and productive. They underwent relevant training courses and are equipped with the Certificate in Cold Chain Management Training.
- The implementation of such standards improves supply chains' efficiencies, thereby reducing wastage and achieving higher productivity levels. Consumers are also more confident of the product quality. More importantly, there is no compromise in the quality and safety of these foods.
- Therefore, I am pleased to note that these standards are being cascaded across Asia Pacific region through ECR Asia Pacific.
Economic benefits enjoyed from higher productivity levels
- The NTUC FairPrice ISO Pilot Project illustrates the economic benefits that are associated with adopting standardisations. SPRING Singapore conducted a study in end-2010 which analysed the impact of adopting cold-chain management standards, pallet standardisation and barcode standardisations on NTUC FairPrice to determine the benefits of standardisations in a quantitative manner. It was found that using these standards resulted in a total of $13.6 million over a 10-year period for NTUC FairPrice. Notably, the greatest gains stemmed from using an automated sorting system which increased productivity as staff became faster and better at their job functions.
- Such a project highlights the need for ECR processes to continue being implemented by companies, especially those in the FMCG sector. ECR is a business facilitation model that we in Singapore are very proud to support.
- In time to come, we hope to emulate what ECR has done for the Western European grocery industry. Studies have estimated a potential operating cost reduction of 4.8% with a further 0.9% derived from inventory reduction, making a combined potential reduction of 5.7% of consumer prices.
- In summary, ECR is critical to improving our lives and it makes business sense for our suppliers and retailers as it focuses on reducing wastage and delivering high value to customers. Whether you are a consumer at the end of the cycle, waiting to purchase your goods, or at the other end of the continuum as manufacturers or retailers, adopting ECR is an important underscore to remain productive and profitable in the long run.
- Finally, I would like to commend the organisers for bringing the ECR Asia Pacific Conference & Exhibition to Singapore. On this note, I wish you all a pleasant and fruitful day ahead.
- Thank you.