Speech at LED Symposium 2018
Mrs Josephine Teo, Minister for Manpower, The Ritz-Carlton Singapore
- Welcome to the Lean Enterprise Development, or LED, Symposium 2018.
- 3rd symposium since the programme started in October 2015.
- We have made good progress. In three years, the LED Scheme has helped many companies get started on their first attempts to become more manpower-lean.
o We did this by making readily available ready-to-go solutions that have been proven effective in raising productivity.
o These include solutions for inventory management, enterprise resource planning, online bookings and payments – many of which are also found in our gallery showcase.
o With these options, businesses got practical help. Productivity was no longer a mystery, no longer a risky investment.
The LED Scheme was also helpful to businesses that have experienced the benefits of lean initiatives and wanted to go further.
o They come from all sectors of the economy.
o And range in size from less than 10 employees to more than 1,000 employees.
- All in, more than 11,000 companies have taken up the support provided by the LED Scheme and transformed themselves - congratulations and well done!
While many companies are now actively transforming, we still come across concerns expressed by those in traditional businesses, that it is hard for them to become more manpower-lean.
Therefore, I challenged the team that has been working hard on LED outreach - WSG, ESG, IMDA, STB, BCA and NTUC’s e2i.
o I wanted to know if there are traditional businesses among the LED participants.
o I wanted to see for myself the challenges they faced and how they overcame them.
- I’m very happy to report that we found good examples. At today’s symposium, I want to share with you what I learnt through these visits.
TRADITIONAL BUSINESSES RE-INVENTING FOR GROWTH
Tan Seng Kee Foods re-makes noodles for local and global consumers
One of my visits took me to a factory in Bedok occupied by Tan Seng Kee Foods “TSK”
o Actually, you may have tasted TSK’s products many times. The company started out as a humble noodle supplier to a few hawkers way back in 1936, nearly 8 decades ago.
o 15 years ago, the founder’s grandchildren – Raymond and Annie - took over the day-to-day running of the business.
o Raymond and Annie are not just hardworking. They are proud of the family’s heritage and also passionate in wanting to build a legacy.
A few years ago, although the business had grown, they saw new market opportunities.
- Within Singapore, Raymond noticed that many longstanding and valued B2B customers like hotels and food outlets would deploy staff who spent hours, manually portioning the fresh noodles.
o This is because all the noodles were delivered in bags of 3 to 6kg, but actually the chefs needed them in much smaller portions of 100 or 200 grams.
o TSK wanted to help customers save manpower by delivering noodles in smaller sizes.
o The challenge was whether they could do this at scale, more efficiently than their customers.
o But the TSK factory was not designed to make small quantities in bulk.
o The noodles also tend to clump together and get entangled during production.
o They therefore needed to go upstream, to apportion at the start rather than at the end of the production process.
o With the help of Enterprise Singapore, TSK redesigned their factory and production, using technologies to automate the weighing and portioning of Kway Teow.
o With this improvement, TSK has won new customers and expanded its reach.
o Having solved the problem for the Kway Teow line, TSK hopes to do the same with the yellow noodle line.
Beyond Singapore, Raymond and Annie saw an opportunity for international exports of freshly-made noodles.
o The instant noodle market is a multi-million-dollar industry worldwide.
o However, as all noodle-makers will know, fresh noodles become mouldy in about 3 days, so how to supply or export fresh noodles and capitalise on the worldwide demand?
o TSK started a R&D project to extend the shelf-life of fresh noodles.
o After 5 years and multiple attempts, they became the first noodle manufacturer in Singapore to extend fresh noodles shelf-life from 3 days to 6 months.
o Their instant or ready-to-cook series even come with local-flavoured paste like Laksa and Chili Crab, uniquely made in Singapore.
o The next time you go for a holiday and want to standby something familiar from home, why not consider one of TSK’s instant fresh noodle products?
Transtar Travel drives passengers into a whole new experience
My second example - Transtar Travel is another family business operating at Golden Mile tower.
o It provides coach services to major cities in Malaysia and Thailand.
This is a highly competitive business with slim margins.
o For many years, coach services were much cheaper than flying, even though they look a lot longer.
o But this cost advantage disappeared when budget airlines appeared.
Transtar decided they needed a new strategy, which is to compete on service by making the coach experience much more pleasant.
o They introduced solitaire suites on buses with cabin crew and meal services.
o There is also on-board entertainment.
o For a fraction of the cost of business class on airlines, travellers could enjoy comparable comfort.
- The journey has also been made safer
o Transtar installed a Driver Fatigue Monitoring System.
o Should drivers get distracted on the roads, e.g. take their eyes off the road and yawn, the system will alert them through a robotic voice message, instructing the driver to focus on the road.
o This goes the extra mile in ensuring passengers’ safety, especially for long-haul coach services that runs throughout the night.
The customer experience however starts even before you get into the bus.
o Transtar has gone digital with their services.
o Tickets can now be purchased and issued online, making it a fuss-free process for commuters to search for bus routes, make payment, and check-in online.
o If a bus is running late, Transtar is also able to track its exact location and estimate the duration of delay.
o They can then inform customers rather than leaving them impatient and dissatisfied, not knowing when the bus will come.
The deployment of technology has also allowed workers to be more productive.
o Admin and paper work have been greatly reduced for employees who used to manage call centres as well as sales and payment.
o Spare manpower in Transtar is now re-skilled and re-deployed to enhance services, build customer relationships, and grow the top line.
- The brothers who run Transtar - Elson and Sebastian - told me they are grateful to have the opportunity to transform a traditional business into a digital-enabled industry leader.
o It started with a visit to the SME Centre operated by our Trade Associations and Chambers partners.
o If anyone here feels inspired by their example but is unsure where to start, consider visiting any of the 11 SME centres in Singapore.
SK scales-up for customised demand and rejuvenates retail with manpower-lean strategies
- My third example may also be familiar to you. Older Singaporeans will remember goldsmith shops in our heartland. When SK Jewellery came on the scene, they set a new standard for the industry.
o Starting from a humble store in Bedok 15 years ago, SK has grown to a network of about 40 stores in Singapore and expanded into overseas markets.
o It has done so through product and process innovations in a manpower lean way.
- One example was in ring engraving:
o Already a successful jeweller, SK saw the potential to further differentiate itself by offering customised rings with engravings.
o However, it was difficult to find skilled craftsmen for this traditional trade.
o And once an error occurred, the whole ring had to be re-polished before starting the engraving process again.
o To overcome this hurdle, SK invested in a new laser engraving machine in 2010.
o This expanded the range of options for consumers who can now engrave signatures, photographs and even fingerprints on their chosen rings.
o More importantly, it allowed SK to scale up and internationalise their ring engraving services.
o SK can now easily upload customer’s preferred text or image and the machine etches the object on the ring with precision and accuracy, reducing the time taken to complete an engraving job by at least 50%, with minimal error rate.
Another example was how they adjusted their retail store design to support more manpower lean growth:
o In the past, a retail store required at least 4 to 6 staff standing behind each showcase to attend to customer’s needs.
o Today, with a showcase island in the middle of the store, it only requires half the manpower.
o This has resulted in higher sales per square foot, and higher sales per staff.
VISION IS KEY FOR TRANSFORMATION
- Friend and colleagues, I have shared three examples but in fact there are many more traditional businesses that are transforming.
- They are setting new standards in their industries and winning new customers as a result. Their achievements make us wonder:
o Is there something they share in common that we can learn from?
o What is their secret to success?
- Actually, there is success but there is no secret
o These traditional businesses understood that running the business the same way year after year will not get them better results.
o They knew that to grow the business, they must transform. In fact, the more they hope to grow, the bigger the transformation they must bring about.
- But transformation is a big word. How does one start?
- The example of TSK, Transtar and SK Jewellery show that transformation is not about mindlessly cutting manpower or cutting cost in every area.
Rather, it is about having a vision or an idea for where your company can go to improve customer service and be better than the competitors.
- It is also about being determined to overcome constraints.
All three were traditional businesses but did not believe their business had reached a dead-end.
o Instead, they believed there were new markets to conquer, and new ways to solve old problems like shortage of manpower.
Put another way, to transform, a business has to see a future that is better than today, and take concrete steps to create that future.
Let me conclude.
- Friends and colleagues, in the last few years, our businesses have worked hard to improve productivity and become more manpower-lean in the way they grow.
The LED Scheme has supported over 11,000 of these businesses in their efforts.
o Together with other initiatives to promote industry and business transformation, the LED Scheme has contributed to Singapore’s annualised productivity growth of 2.6% over the last two years.
o In the same period, GDP saw an annualised growth of 3.0% whereas total employment saw an annualised growth of 0.4%.
o This means that most of the GDP growth was productivity-driven rather than manpower-driven.
o Compared to earlier periods when more of the growth was due to additional manpower being added to economy, this kind of growth is more sustainable.
o Productivity-driven growth has also underpinned annualised real wage growth of 4.0% and 5.4% at the median and P20 levels respectively.
- These achievements benefit businesses and workers. They are due to the collective efforts of the businesses, trade associations and chambers, as well agencies working behind the scenes.
The agencies have lined up a cast of excellent speakers today, and many interesting exhibits in the gallery. I hope you will be inspired and similarly start your own journey of transformation.
If ever you feel hesitant, remember the examples today. They show that transformation is possible and it is rewarding. Your business too, can transform and grow!
- Have a fruitful day ahead!