Navigating The Next Normal – what Singapore companies can do to thrive in a post-pandemic world
IndSights Research
Delivering industry insights based on rigorous research to shape government policies for the benefit of SG companies.
COVID-19 has?plunged the global economy into possibly one of the deepest recessions since World War II,?disrupting nearly every industry after the virus outbreak was declared a global health crisis in 2020. Within days, companies in almost every sector of the economy struggled with falling consumer demands and rising operational disruptions as governments scrambled to impose travel restrictions to safeguard public health. Fortunately, business activities across various industries began to pick up as the world progressively emerges from the pandemic from 2022 onwards.
However, just as the economy is thought to be out of the woods, it is dangerously on the brink of yet another recession. In addition to the economic damage brought forth by COVID-19, the Russia-Ukraine war has worsened economic prospects and raised?stagflation risks. Further fuelling concerns of a gloomy outlook were supply chain disruptions,?growing protectionism among trade partners?which intensified inflationary pressures, and the United States Federal Reserve’s?aggressive tightening of monetary policies?to combat inflation. Given these factors, Singapore’s gross domestic product (GDP) forecast was reduced to?three to four percent?in 2022.
Amidst rising geopolitical tensions and growing economic uncertainties, what can Singapore companies do to thrive in 2023 and beyond? In this article, we explore three important business aspects that company leaders can consider.
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1. Embark on a digital transformation journey
COVID-19 has dramatically sped up digital adoption among businesses and consumers, leading to a proliferation of digital products and services. In Southeast Asia, the digital economy is expected to increase?from US$100 billion in 2020 to more than US$360 billion by 2025.?Based on a study by Microsoft and market research firm IDC Asia pacific, almost?three in four Singapore companies have accelerated digitalisation?since the start of the pandemic. For instance, in the food and beverage (F&B) industry, businesses implemented self-service kiosks which enabled customers to send orders directly to the kitchen without the help of a waiter. Such digital transformation strategies enabled F&B owners to re-plan their workforce to focus on core business functions. “Previously we would require one or two staff to be at the point-of-sales system, but with the implementation of the kiosk, staff could be redeployed and retrained in other functions, especially in the back of house for the delivery orders,” explained Ms Anna Lim, co-founder of The Soup Spoon.
A recent pilot survey conducted by IndSights Research among 150 small and medium-sized enterprises (SME) also found that 65 percent of them saw a positive impact on their revenue through digitalisation efforts. This finding corresponds with the feedback we received during industry chats with company leaders, who shared that digital solutions, such as digital marketing tools, have helped to expand their market presence online during the pandemic, driving revenue growth.
In summary, digitalisation can enable companies to become operationally agile, boosting productivity and efficiency to help them stay focused on their core businesses. To remain competitive in a digital economy, it is crucial for business leaders to consider what is right for their companies before implementing digital solutions tailored to their business needs.
READ ALSO:?Business resources for digitalisation
2. Create a resilient supply chain
The pandemic has also brought to fore the significance of supply chain resilience across the world. From materials sourcing to last-mile delivery, nearly every part of the global supply chain was?disrupted?by travel restrictions, port closures, factory shutdowns, container shortages, reduced air cargo capacities, labour crunch, and more. These factors created barriers to the flow of goods, causing supply chain bottlenecks, and increasing logistics costs. According to a?report?by the Business Continuity Institute, 39 percent of companies shared that supply chain disruptions had major (18 percent), serious (16 percent), or catastrophic (5 percent) impact on their business. Although the global supply chain is expected to improve with time, recovery is hindered by the Russia-Ukraine conflict which has?complicated?logistics challenges and increased inflationary pressures.
Companies should urgently reassess their supply chain resilience by adopting pre-emptive strategies to weather unforeseen disruptions, such as geopolitical conflicts, meteorological factors, health crisis, and economic shocks. To stay agile, business leaders can consider the following approaches to create a more resilient supply chain.
Diversify supply chains
To drive supply chain resilience, companies should consider diversifying their sources of supply as a key business strategy. Simply put, the more supply options a company has, the less likely it is to become overly reliant on one source, and the less vulnerable it is to supply chain disruptions.
The latest?global food supply crunch?is a good example of the value of supply chain diversification. India, the second largest wheat producer in the world, was thrown into the spotlight when the Russia-Ukraine war disrupted global grain exports. Countries that used to import wheat from Russia and Ukraine decided to turn to India to fill the void. However, to?protect domestic supply, India announced a wheat export ban on 13 May 2022.
Closer to home,?Malaysia halted 3.6 million of whole chicken exports?on 1 June 2022 to safeguard domestic food security. According to Malaysia, the country was short on chicken supply due to labour crunch, extreme weather, and high cost of animal feed. As Singapore imports about?one-third?of its chicken supply from Malaysia, news of the ban sent chicken prices soaring here. Fortunately, Singapore managed to successfully stabilise its chicken supply by switching to chicken products imported from other countries, such as Australia, Thailand, Brazil, and the United States.
As more countries adopt a protectionist approach to safeguard national interests, it is more imperative than ever for business leaders to build supply chain resilience through diversification.
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Use data analytics tools to boost supply chain visibility
Companies can also enhance supply chain resilience by implementing data analytics tools to gain real-time visibility of their inventories and identify trends ahead of time. According to a?Supply Chain Big Data Analytics Market?report by Modor Intelligence, the data analytics market is projected to reach USD 9.28 billion by 2026.?To reap the benefits of data analytics, business leaders must first obtain an end-to-end transparency of their supply chains, including the movement of goods, who manages these goods, and what kind of data is captured. Following which, they can work with their?upstream and downstream?partners to exchange real-time data and analytics via collaborative platforms to create cost-effective solutions that address supply chain disruptions.
For example, manufacturers and retailers can tag their inventories with bar codes, closely monitored by a Global Positioning System, to enable companies to track the quantities and locations of these inventories in real-time. From the data gleaned, company leaders can identify which part of the supply chain has been disrupted and when they should formulate new strategies, such as redeploying inventories, to reduce operation costs and keep up with delivery schedules.
In summary, data analytics tools can help company leaders better mitigate supply chain disruptions ahead of time. Instead of fighting disruptions each time they take place, leaders can pre-empt potential issues and fine-tune business strategies in advance, resulting in a more resilient supply chain in the long term.
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3. Embrace the future of work
Hybrid work arrangements are here to stay
The effects of COVID-19 have significantly reshaped the global workforce and cemented the importance of technology. When stay-home-orders were issued by governments at the start of the pandemic, employees everywhere rushed home to clear their kitchen counters and dining tables to make room for laptops, computer screens, and keyboards, while employers scrambled to deploy digital tools to help workers preserve the productivity they once had while working in the office.
In the post-pandemic world, work-from-home (WFH) arrangements seemed to have gained traction among workers in Singapore. A?study?by IndSights Research in 2021 found that 87 percent of Singapore companies implemented hybrid work arrangements to varying extents, and employees were supportive of the move. Such sentiment is strengthened by findings from a biannual survey conducted by Randstad, a human resources solutions agency, which revealed that?two in five employees in Singapore would not accept a job?that does not come with the flexibility to WFH.
As remote working becomes increasingly normalised globally, the onus is on companies to adapt by providing employees with the right digital collaboration tools to maintain productivity. It is also essential for business leaders to allocate sufficient resources to enhance their company’s cybersecurity to support remote work arrangements. Additionally, business leaders should also adopt?remote management styles?to build teams and keep employees engaged.
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Technology has changed the nature of jobs
The acceleration of technology adoption during the pandemic has also reinvented the nature of jobs across industries. From retail and food services to healthcare and logistics sectors, many companies have sought to automate labour-intensive processes through technology. In a recent survey by IndSights Research,?34 percent of companies in Singapore used at least one type of digital platform service, and seven in 10 adopted an average of four digital technologies for their business operations.
To keep up with the pace of digitalisation, employees must continue to upskill themselves, while companies should allocate sufficient budget for staff training to increase the level of digital readiness among workers.
Talent is an essential building block behind the success of every company, and investment in staff development is a prerequisite for a company to have a fighting chance of thriving in an uncertain future. Hence, it is more urgent than ever for business leaders to ensure that employees are equipped with adequate resources and skillsets to remain competitive in an evolving business landscape.
READ ALSO:?The future of work
Conclusion
As companies gear up to capture opportunities in the post-pandemic economy, it is important to note that economic growth will be uneven across industries. Despite Singapore’s robust economic recovery led by the manufacturing sector, companies in the services industries, such as F&B, hotel, and retail,?continue to struggle. Although Singapore’s?economy is expected to progressively improve with the easing of travel restrictions?in Southeast Asia, possible emergence of new COVID-19 variants may potentially backtrack recovery progress.
Given that inflation is estimated to?moderate in 2023,?while supply chain disruptions are projected to persist?beyond 2024, company leaders should review their business targets and manage their expectations about revenue growth within the next three to five years.
Against the backdrop of an increasingly digital society, companies must continue to stay relevant by being up to date about the latest trends and technologies in their industries. It is also important for business leaders to reimagine the future, re-plan strategies, and adopt an entrepreneurial mindset to prepare for and thrive in the next wave of growth.
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This article is contributed by?Cheng Ee Shan, Senior Executive (Engagement), IndSights Research.