SMEs urged to leverage on strong SCM practices

Singapore - The latest UPS Asia Business Monitor (ABM) 2009 found that SMEs can leverage on strong supply chain management (SCM) practices in the local market to stay ahead of the competition.

The survey found that despite the current downturn, small-to-medium enterprise (SME) in Singapore can maximise business opportunities with the help of the local government and choice business partners.

Now in its fifth year, the annual ABM report focuses on the challenges and issues facing SMEs in Asia Pacific. Last year, the ABM found that supply chain management among SMEs across Asia Pacific was still at an infancy stage.

This year the ABM report found that SMEs in Singapore anticipate bleak economic growth and have began directing their focus on three areas for long-term growth - Exploring new markets (24%), moving to higher value-added products and services (21%) and strengthening the workforce with a good pool of talent (21%).

"This year's ABM results showed that despite the challenging economic environment, SMEs in Singapore are in good stead to see their businesses through this difficult period should they be nimble in reviewing their internal processes and quick to seize opportunity around them," said Gillian Sim, MD of UPS Singapore.

However, the survey found that 54% of participants predict the global economy could make a recovery by 2010, with a further 63% of these attributing it to adequate support from the local government.

As a response, UPS offered four recommendations to help SMEs stay relevant and compete with SMEs in other parts of the world.

First, local SMEs can embrace globalisation and leverage on Free Trade Agreements (FTAs). 68% of local SMEs acknowledge the importance and positive impact of globalisation, while 24% believed that the exploration of new markets is the single best growth opportunity in this current downturn, UPS said.

Secondly, UPS said SMEs can capitalise on China's increasing dominance in the global marketplace. 75% of SMEs currently view China's increasing dominance as a boost to their business. These SMEs view China's success as a key driver in the region, foresees in increase in exports to the mainland and are seeking to leverage on low cost Chinese products.

61% of SMEs surveyed saw increasing cost as the second largest concern today. As such, SMEs could also implement effective cost management strategies and move to higher value-added services and product.  

According to UPS, SMEs should look to manage their cost by actively reviewing overall resource allocation, including the complete supply chain to better manage their business.

Lastly, local SMEs can turn to government initiatives such as the Job Credit Scheme introduced the Singapore government to help preserve jobs in the downturn.

"The Singapore government and the global trade service partners such as supply chain providers have been proactive in their initiatives to help SMEs, actively educating and providing tools to navigate out the recession," said Sim.