Speech by MOS Teo Ser Luck at the Singapore Retail Industry Conference 2014 at Suntec Singapore International Convention & Exhibition Centre

Mrs Wong Sioe Hong, Vice President, Singapore Retailers Association,

Distinguished guests,

Ladies and gentlemen,

Good morning. I am pleased to join you at the 23rd Singapore Retail Industry Conference (SRIC). For the last 22 years, the Singapore Retailers Association (SRA) had been organising the conference. This year, the conference is jointly organised by SRA and the Singapore Productivity Centre (SPC). This is testament to the strengthening partnership between SRA and SPC, and I look forward to more of such partnerships in the future. This year’s conference is also special as it is part of the inaugural National Productivity Month, a national-level initiative to showcase and share ideas, methods and perspectives on how companies can improve productivity.

Retailers need to constantly adapt to remain competitive

The retail industry is an important pillar of Singapore’s economy, generating over $30 billion in operating receipts. However, it is also a challenging and highly competitive industry, with rapidly changing consumer preferences and a large influx of new entrants to the retail space. The digital revolution has also changed the retail landscape and opened up new opportunities as well as challenges for retailers. According to the 2014 Euromonitor Report on Internet Retailing in Singapore, Singaporeans have increased their internet spending by 12% from 2012 to 2013 to generate value sales of S$960 million .  The pace of technological change is so fast that what is considered a game-changer today can become the norm in just a few years.

Our tightening foreign worker policies have also added to the challenges faced by retailers. We know that these measures are painful, but we cannot deny that they are necessary. Singapore is a small land-scarce country, and we cannot continue to rely on increasing the size of our workforce to generate economic growth. We have to press on with making the difficult but essential shift to productivity-led growth across our economic sectors. To remain competitive, our companies have to become more productive. This is key for companies as it allows them to fully utilise their limited resources and achieve more with less.

The government has devoted much effort to improve productivity in the retail sector. SPRING Singapore, for example, launched the Retail Productivity Plan in 2011 which focused on encouraging technology adoption, upgrading human resource management capabilities, and promoting the adoption of customer-centric approaches. Since then, we have seen good results. Over 620 retailers have been supported in various productivity upgrading initiatives and over 38,000 workers have been assisted through seminars, workshops, study missions and business leadership programmes. We have also made progress in promoting customer centricity. Since the Innovation & Capability Voucher (ICV) scheme was enhanced in March this year, approximately 210 SMEs have upgraded their point of sales systems and 64 SMEs have improved their shop layout and design to provide their customers with a better shopping experience.

Productivity gains can be achieved in many ways. Two weeks ago, I attended the SRA Ball and spoke about how our retailers are actively upgrading their manpower capabilities to stay ahead of the competition. Today, I would like to focus more on the role of technology in unlocking productivity, and the importance of a productivity culture at the workplace.

Technology and process efficiency

Technology has a role to play in helping companies redesign their business processes to become more efficient. American quality management guru Philip Crosby once said that “all work is a process.” Many a time, there are inefficiencies in a company’s processes, and if we can eliminate these inefficiencies, we can increase productivity significantly.

An example of a company which has done so is Poh Heng Jewellery. With SPRING’s support, Poh Heng has improved its stock-taking process through the use of RFID technology. You can imagine how tedious it is to perform stock-taking for more than half a million items across Poh Heng’s 15 outlets twice a day. With RFID technology, stock-taking is now done in 15 minutes instead of an hour. As a result, the employees’ time is better used to provide quality customer service.

Technology and collaboration

Technology does not have to be confined within the four walls of a single company. Companies can also work with one another to identify common pain points, and leverage technological solutions to improve productivity for all.

Johnson & Johnson, for example, partnered Frontwave Pte Ltd, a local SME, to create an integrated supplier system between Johnson & Johnson and its retailers. Retailers can now place orders for contact lenses more quickly and with less hassle, improving operational efficiency by at least 5 per cent. It is estimated that approximately 250 stores will benefit from this system.

Importance of having a culture of continuous improvement

To improve productivity in a sustainable manner, companies need to embrace a mindset of productivity. Companies need to cultivate a culture of continuous improvement, reducing inefficiencies and value adding on the job, so that they are able to always innovate, transform themselves, and stay ahead of the competition. Indeed, these are the main concepts underpinning the “lean” philosophy, a management philosophy that Toyota is renowned for.

I am happy to note that the Singapore Productivity Centre will be rolling out a series of programmes to help retail companies apply the “lean” philosophy. There will be workshops to learn more about “lean” concepts and tools, as well as dedicated assistance to facilitate the adoption of “lean” practices. There will also be study trips to learn how companies overseas have adopted this concept. I would like to encourage companies to find out more and leverage SPC’s expertise in your productivity journey.

Conclusion

Productivity is a continuous journey and more needs to be done. The government will continue to work with companies to raise productivity. I hope that this conference will give you greater insights on how to do so and also inspire you to rise to the challenge.

I wish you a fruitful day ahead. Thank you.