Mr Lim Hng Kiang at the Food Services Productivity Conference 2012

SPEECH BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY, AT THE FOOD SERVICES PRODUCTIVITY CONFERENCE 2012 ON FRIDAY, 16 NOVEMBER 2012, 9.10 AM, SINGAPORE EXPO, MAX ATRIA

Mr Andrew Tjioe,

President,

Restaurant Association of Singapore

Distinguished Guests,

Ladies and Gentlemen,

Good Morning.

1.            I am delighted to join you here today at the Food Services Productivity Conference jointly organised by the Restaurant Association of Singapore (RAS) and SPRING Singapore.

Industry is a Key Driver of Economy

2.         The food services sector in Singapore employs around 100,000 workers. It contributes around 1 per cent of our GDP. Its nominal value-added has grown at a healthy compounded annual growth rate of 8 per cent from 2007 to 2011. Over the same period, the industry recorded a corresponding 6 per cent growth in manpower

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. From both a social and economic standpoint, this may not be sustainable. We expect slower growth over the next decade. It is critical that future growth be sustained by innovation and productivity improvements.

Challenges and Opportunities

3.         As we all know, on the global front, the economic volatility has altered the business outlook and caused businesses to become increasingly cautious in their expansion plans. As an open economy, Singapore will not be spared from swings in the global business climate and their impact on consumer demand. We have to continue to strengthen our foundation, such as workforce and business processes, which will also prepare us to seize growth opportunities that lie ahead despite the difficult global climate.

4.            At the industry level, competition is already intense, and business costs will continue their upward trend. Currently, food companies are grappling with tightened foreign manpower supply, with the knowledge that it is not tenable to continue relying on this source of labour. To help the industry meet these challenges and in order to boost productivity, the Government committed S$75 million in a five-year Food Services Productivity Plan. This was launched in April last year. The plan encompasses multiple strategies and initiatives for productivity growth.

Updates and Progress

5.         I am happy to note that the productivity plan has gained some traction. As of last month, over S$13 million have been committed to support more than 190 companies in various projects. These include work process re-design, kitchen automation, service upgrading, and product or concept innovation. In addition, industry-wide initiatives were also spearheaded to help companies better utilise manpower. Let me share with you two such initiatives.

The Part-Time Pool Programme

6.         Last year, SPRING conducted a food services industry benchmarking study. The study revealed that developed countries, such as the United States, United Kingdom and France, have a comparatively higher proportion of part-timers in their workforce. Conversely, our local companies tend to employ a high proportion of full-time staff, even though we know that the food services business typically has large fluctuations in customer traffic throughout the day. The concept of maintaining a smaller full-time team, and bringing in part-timers during peak hours, would translate into lower fixed labour cost. This will also give us more flexibility in manpower scheduling.

7.         To complement the industry workforce, SPRING piloted the Part-time Pool Programme last year. As a result, almost 2,500 part-timers were deployed to more than 100 participating companies in the food services and retail sectors. Companies have given feedback on the programme, and it has since been enhanced with the appointment of more service providers to reach out to more businesses and increase the pool of part-timers. I understand that RAS is also working with the Singapore Workforce Development Agency (or WDA) to roll out WSQ training programmes to level up the service quality and capabilities of these part-timers.

8.         While it is encouraging to note that companies are now more willing to hire part-timers, this cannot be the magic bullet that will solve all manpower woes. To succeed, companies must be prepared to change their approach in manpower hiring policies. They also need to adopt other complementary tools, such as flexible manpower scheduling. This is to optimise both part-time and full-time resources by pegging the number of service staff needed at each outlet according to the sales and timing. At the same time, companies should continue to simplify processes, both at the front and the back end. They must be prepared to adopt continuous on-the-job training to maintain service standards, especially among the part-timers.  

E-Procurement Portal

9.        Another industry initiative that has borne fruit is the e-procurement portal. Started in April this year, RAS, supported by the Singapore Food Manufacturer’s Association, announced the development of a pilot e-procurement portal. The portal will automate, integrate and optimise the often manual and paper-based procurement processes. By cutting the time needed to process purchase and delivery orders, as well as other administrative work, companies will be able to task their administrative staff to handle higher value-added work. The e-procurement portal also has an online bidding system that allows best-sourcing. Let me commend the 33 restaurateurs and food manufacturers, who have come on board this pilot project. As first movers, you will be able to improve your supply chain efficiency and competitiveness, and achieve cost savings. For those companies who are still considering, I would like to encourage you to seize the opportunity and tap on this initiative to enjoy the benefits.

Key Areas of Improvement at the Enterprise Level

10.       These industry initiatives can only help to address part of the problem. The rest still lies in the hands of the individual business owners. To achieve sustainable growth, food services companies have to improve their productivity in three key areas, namely (i) in your workforce management and development, (ii) in achieving operational excellence, and (iii) in enhancing customer experience. Let me highlight some international and local best practices to illustrate these areas.

(A)       Workforce Management and Development

11.       Workforce management and development is about optimising the workforce to achieve higher labour productivity. An example of a local company that has invested heavily in workforce development is Han's. In 2007, the company overhauled its human resource development function and trained its staff extensively in customer service, operations, food hygiene and even language training. It also leveraged on technology to improve employees’ efficiency and enhance their sense of belonging. These efforts have paid off with the group recording a 20 per cent increase in sales per employee over the past five years. The company has indeed walked the talk by passing on the increase in profitability to its employees, with a corresponding 28 per cent raise in their salaries.

(B)       Operational Excellence – Process Re-design and Automation

12.       Besides workforce management, productivity improvements can also be gained through workflow process re-design and tapping on technology and automation. An example is our home-grown Udders Ice Cream, which uses highly customised equipment to automate the process of ice-cream making. Udders has evolved from hand pasteurising to automatic machine pasteurising. Through automation, the company was able to expand from five to seven outlets, without having to increase its existing six staff in the central kitchen. Quality and consistency were also ensured in its variety of ice-cream products.

(C)       Innovation for Differentiated Customer Experience

13.       Improved productivity can also be achieved from concept innovation to create a differentiated customer experience, such as in the case of Jumbo. Just recently, Jumbo shared on its Customer-Centric Initiative (CCI) journey. It transformed itself by tapping on technology and workflow redesign to give customers a new experience. For example, the self-help queue management system outside Jumbo’s JPot outlet in Tampines has effectively reduced customer queuing time by 85 per cent. Customers are also able to do self-ordering through a wireless system. This investment in technology has reduced customer waiting time for orders by about 50 per cent and saved the company around eight man hours per day in order-taking. It also reported a 30 per cent increase in the number of compliments they received from their customers.

Announcement of LEAD 2 for RAS

14.       Ladies and gentlemen, achieving all of the above is not an overnight endeavour. It requires the participation and collaboration of the industry partners and stakeholders. I’m glad that RAS has stepped forward and set itself the role to be a catalyst to help upgrade the food services industry.

15.       Over the years, RAS has implemented many initiatives to enhance capabilities and build resilience in the local food services industry. In particular, the Association has supported the implementation of the 5S housekeeping methodology

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for close to 90 outlets.

16.       On the international front, RAS has been actively helping to build Singapore into a leading culinary city. Of notable mention is the hosting of the World Championship of Chinese Cuisine, held in conjunction with the Singapore International Restaurants Show 2012. The cuisine championship is highly regarded as the “Olympics of Chinese Cuisine”.

17.       Today, I am pleased to announce that RAS will continue to lead the food services industry in capabilities upgrading, productivity improvement and industry engagement. The Association has embarked on its second Local Enterprise and Association Development (or LEAD) programme, which will end in December 2014.

18.       Under the three-year LEAD project, RAS will continue its efforts to drive productivity improvements in the food services industry, by reaching out to the industry to drive participation in productivity initiatives. I commend RAS for its efforts and commitment, and look forward to its steering of its members and the industry through business transformation. I encourage all of you to join hands and work with RAS. I would like to encourage RAS to continue to champion more industry upgrading efforts and work with other companies in the food chain and the government agencies to bring the industry forward. 

The Way Ahead

Setting Up of the Productivity Centre for the Services Clusters

19.       Ladies and gentlemen, the government is committed to help you in your business transformation. One of the ways we do this is to build and develop industry-specific productivity expertise. For this, a productivity centre for the services clusters, starting with the retail and food services sectors, will be launched next year. This centre will provide consultancy services for productivity diagnosis and improvement projects. It will also train and develop productivity consultants and managers to hasten the adoption and implementation of productivity initiatives. The centre will bring together expertise from leading productivity centres overseas, such as Japan and Taiwan, for knowledge transfer. The centre will also level up the productivity capabilities of the local services cluster, especially the retail and food services sectors.

20.       While the government is willing to lend a helping hand, companies must recognize that it is no longer business as usual. Significant improvements need more transformational changes in the way business is done. And this includes serious rethinking of the business model. For example, there is really no need for every restaurant to prepare and cook every dish on its menu from scratch. With so many items on every menu, it would be inefficient as there will not be sufficient economies of scale. One idea that can be considered is to focus and cook the specialty items on site and outsource the non-core items to other food manufacturers, or bigger restaurants with central kitchen facilities. These bigger players in the food value chain can then produce them more efficiently and keep the food quality consistent. And there is no need to worry that every dumpling that you eat in different restaurants will taste the same, as the items can be customised accordingly. I therefore, urge the food manufacturers, the big and small restaurateurs and the relevant associations to come together to create more innovative and productive ways to change our business models.

Conclusion

21.       Ladies and gentlemen, this Food Services Productivity Conference, featuring renowned local and international industry specialists, thought leaders and experts, is an ideal platform for us to share experiences and best practices. I am sure you will gain valuable insights and ideas that can be applied to your businesses, and on this note, I wish you all a fruitful time at the conference today.

22.       Thank you.

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Source: DOS, 2011e

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The 5S methodology helps to keep the kitchen/workspace clean and tidy and allow things to be kept and retrieved efficiently, reduce storage space and keep stock to minimum (no over-ordering, less wastage). ‘5S’ stands for Structure, System, Sanitise, Standardise and Self-discipline.