Speeches

Professor Cham Tao Soon
Chairman, SQA Governing Council,

Distinguished Guests,

Ladies and Gentlemen,

1   Good Evening. It is my pleasure to join you for the 2010 Business Excellence Awards Dinner.

Singapore’s economic performance and the productivity challenge

2   Singapore’s economy has rebounded strongly from last year’s recession, underpinned by exceptional growth in the first half of the year. Manufacturing activity recovered strongly. Tourist arrivals hit record numbers in recent months. Overall, the labour market has shown a marked improvement. For 2010 as a whole, the economy is on track to achieve an overall growth of 13 to 15 percent.

3   Although the recovery is the strongest we have ever seen, in the coming quarters, we expect the economy to slow down in tandem with the uncertain progress in the advanced economies. High unemployment and fiscal constraints in the US and several European countries will continue to weigh on domestic demand in the major industrial economies. This in turn will affect our manufacturing and trade-dependent services sectors.

4   The tentative global recovery and the lingering uncertainties remind us that we must rely on skills, innovation, and productivity to sustain our own growth momentum in the medium to long term. The challenge then is for our companies to add more value to the products and services they provide, and to enlarge the markets they serve where possible. This can be accomplished by raising efficiency and effectiveness – the key elements of productivity.

5   Enterprises must improve their processes – through clever use of labour-saving technology, and through innovation, and through investing to train and develop their people. They must be ready to expand overseas, seek out new opportunities, and diversify into new, promising industries. Only then can they move up the value chain, be more competitive in the global marketplace, and improve their top-line and bottom-line.

BE framework as a productivity improvement tool

6   One of the first steps for organisations to raise their productivity is to strengthen their management practices and capabilities. A Stanford and London School of Economics study of more than 5,000 organisations across the United States, Europe, Australia and Asia found that improvements in an organisation’s management practices can result in as much as a 57 percent increase in labour productivity . The first Singapore Competitiveness Report by the Lee Kuan Yew School of Public Policy also highlighted management capabilities as a key driver of productivity improvements at the organisational level.

7   In Singapore, the business excellence framework helps organisations to raise productivity by priming them to adopt a total approach to managing their organisations. It is a holistic framework that covers leadership, planning, information, people, processes, customers and results – key elements of well-managed organisations. The framework establishes the connection between what an organisation does and the results it is capable of achieving. It is used to structure a systematic review of any organisation, permitting comparisons to be made among similar or very different kinds of organisations. It is also used to define what capabilities and resources are necessary to deliver the organisation’s strategic objectives.

Organisations of Excellence – Blazing the Trail in Productivity

8   Which organisations then benefit most from adopting the business excellence framework? Any organisation, regardless of size, complexity, and sector, can use the framework and derive value from it. In fact there are about 800 organisations in Singapore certified to business excellence standards. They come from diverse sectors ranging from education, precision engineering, electronics, transport engineering, professional services, retail, and hospitality to the public sector.

9   A National University of Singapore study found that, on average, the productivity of Singapore Quality Class organisations, as measured by value-added per employee, was about 21 percent higher than their industry counterparts’. For Singapore Quality Award winners the result was even higher, at about 35 percent.

10   I would like to mention two such organisations that achieved productivity improvements through the business excellence framework.

11   Avi-Tech Electronics is a home-grown company that specialises in burn-in solutions for the semiconductor industry. They won the Singapore Quality Award in 2008. The business excellence framework has helped Avi-Tech to build a strong culture of innovation. For example. Avi-Tech has built on their strength in manufacturing systems integration to move into systems integration for the emerging Life Sciences sector. It is thus no surprise that Avi-Tech‘s productivity is about two-thirds higher than those of similar companies in the same industry.

12   Another local company, Bestcoat Contract Services Pte Ltd, is a provider of waterproofing products and services. It started its business excellence journey in 2004, putting in place a robust business planning process with a comprehensive performance management system and to develop the capabilities of its people. These improvements have led to significant productivity improvements. Bestcoat’s productivity was on average 32 percent higher than its industry counterparts.

Enhanced SMART

13   While many SMEs are aware of the importance of pursuing excellence, many are unable to embark on this strategy because of limited resources. Some SMEs may also find the business excellence framework overwhelming. Recognising this, the SME Management Action for Results (or SMART) initiative was introduced in 2007 to encourage SMEs to embark on the business excellence journey. Thus far, 157 SMEs have benefited from the SMART programme.

14   One such SME is Jingang Electric Heaters Pte Ltd, a manufacturer of high quality industrial heaters. Jingang used the SMART roadmap to put in place a structured product design process and adopt technology to help product development. As a result, Jingang’s productivity increased by 10 percent.

15   I am pleased to announce that the SMART initiative will be enhanced to sharpen the identification of capability gaps where specific solutions are available. It will also incorporate a productivity diagnosis using the Integrated Management of Productivity Activities (IMPACT) assessment. The assessment will help SMEs to identify their strengths and weaknesses, areas for improvement, and take steps to improve productivity. SPRING will provide more details on the enhancements in due course.

SME Customer Service & Marketing Toolkits

16   SMEs also face capability gaps in customer service and marketing. Better customer service and more effective marketing practices would attract new customers, improve customer loyalty and encourage higher spending per customer. This can translate into higher sales and value-added per employee. According to the 2010 SME Development Survey, 47 percent of the SMEs surveyed had identified improving customer service as the top business strategy to be adopted. In addition, the survey also revealed a growing sophistication in the way SMEs interact with customers, with many SMEs intending to strengthen their brand image through better marketing practices.

17 & nbsp; To help SMEs improve their performance, I am pleased that SPRING has developed two new toolkits in the areas of customer service and marketing. The customer service toolkit will focus on key dimensions of service excellence such as service leadership, building a team committed to service, developing a service culture, strengthening customer relationships and deploying service standards.

18   The marketing toolkit will help SMEs implement effective systems and processes in areas such as marketing assessments and plans, branding, advertising, digital marketing and conversion of leads to sales. Both toolkits will help SMEs increase their sales or top-line productivity and capture greater value.

Conclusion

19   I am happy to note that we have among us tonight many organisations that are pursuing business excellence earnestly, using the business excellence framework to help them navigate and forge ahead in their journey of excellence.

20   Tonight, we will honour the winners of this year’s Business Excellence Awards. They are shining examples of how Singapore organisations can, through visionary leadership and a relentless focus on excellence, deliver value to their shareholders. I congratulate them for their outstanding achievements as they join the ranks of organisations of excellence. I am sure they will be an inspiration to others as they embark on the excellence journey.

Thank you, and have an enjoyable evening networking.