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19 May 2020 Updated 29 May 2020

Digitalisation drives growth, agility for logistics firms

The Business Times Leila Lai

With digitalisation of its logistics operations, communications, transport management and invoicing systems, Masindo staff now plan and arrange jobs online, and drivers retrieve job instructions on their mobile devices. 
With digitalisation of its logistics operations, communications, transport management and invoicing systems, Masindo staff now plan and arrange jobs online, and drivers retrieve job instructions on their mobile devices.

COMPANIES in the logistics business manage some of the most hands-on jobs in Singapore's economy, as their staff stock warehouses and ply the road to deliver goods. But that has not stopped small and mid-sized enterprises (SMEs) in the sector from digitalising elements of their supply chain and business operations.

In addition to yielding cost and efficiency savings, these changes have helped the companies stay nimble in crises like the Covid-19 outbreak.

For instance, nearly all of the backend staff at Masindo Logistic, which transports goods mainly for the retail and semiconductor sectors, are working from home during the circuit breaker period, thanks to fully digitalised operations systems. Drivers mark their attendance remotely, without reporting to the office at the start and end of each day.

Food and beverage distributor Lim Siang Huat (LSH) leveraged its e-store to sell its products directly to more customers during the pandemic. This has helped recover some of the revenue lost as hotel and restaurant clients scale back their operations.

For both companies, the digitalisation journey started years ago - in the 1980s for LSH when it adopted computer accounting software to replace the manual calculations and handwritten records common back then.

More recently in 2003, it invested in an enterprise resource planning system that has given its business more visibility, helping it to make more timely operational and management decisions, said CEO Jack Lim.

Just before the "circuit breaker" period, it started a project to manage its ever-growing inventory of halal products and their certificates, with help from the Centre of Innovation for Supply Chain Management (COI-SCM) at Republic Polytechnic.

"Hotels and restaurants that need to maintain their halal certifications need us to provide this information for the products they purchase from us," said Mr Lim. "Verifying the products and retrieving the certificates was a huge challenge that continued to grow because every certificate has a different expiry date and our products are always growing."

COI-SCM helped LSH set up a halal certifications hub using a no-code app, and the SME successfully tested and implemented the system during the circuit breaker. It is now easier to store, monitor and retrieve LSH's halal product records, said Mr Lim.

Masindo managing director Eugene Heng started revamping his company's logistics operations system in 2013 to reduce paperwork and data entry. Over the years, he digitalised Masindo's communications, transport management and invoicing systems too. Masindo staff now plan and arrange jobs online, and drivers retrieve job instructions on their mobile devices.

Having all the job details centralised online makes it possible to address customer enquiries promptly with fewer errors. And with its operations and invoice systems linked, the company can send electronic invoices that save automatically in customers' records.

Mr Heng notes that digitalisation can be a significant investment, and change is often met with resistance from staff. Masindo has invested "a few hundred thousand dollars" in digitalising over 80 per cent of its business processes since 2013, and sets a budget of S$50,000 to S$100,000 each year to improve its systems.

But the modernised systems have helped Masindo attract younger employees, as well as secure contracts with larger multinational corporations (MNCs).

"MNCs are looking not just for a service, but for what you have in your company that can grow together with them," said Mr Heng. "I hope that in the next three to five years, more logistics companies will use this kind of software, because it will help the whole industry move forward and get more business from MNCs."

LSH's Mr Lim estimates that his company has spent about S$500,000 on digitalisation in the last few years, but he adds that SMEs do not have to spend lavishly on digitalisation from the start. "There are many tiers of accessibility, a lot of off-the-shelf tech and no-coding apps that are very relevant. Going for the most expensive solution is not necessarily the right move."

Consulting help centres like COI-SCM is an ideal way to get started, Mr Lim said. When LSH wanted to forecast and maintain optimal inventory levels at a time of rapid expansion, COI-SCM helped to identify processes that could be improved and existing systems that could be leveraged to improve operations. This project did not involve any major expenditure for LSH.

COI-SCM, one of 10 Centres of Innovation set up by Enterprise Singapore (ESG) in partnership with local polytechnics and research institutes, offers consultancy and capability building services in areas like warehouse design planning, inventory management, automation and engineering, and transport optimisation. It also provides technology solutions, some developed in-house, and capability training solutions that help SMEs take ownership of their digitalisation journey by teaching them about best practices in the industry.

"Instead of just providing consultancy to companies, it's important for the companies to have the capabilities themselves to be able to sustain their improvements," said Peter Wee, a senior manager at COI-SCM.

ESG supported the development of a Logistics Industry Digital Plan that guides SMEs in adopting digital solutions and training, and offers grants to those that need financial support.

Lee Meilian, director for transport and logistics at ESG, said SMEs need to quickly adapt and digitalise amid the current pandemic in order to get through this period. 

"Digitalisation will play an even more important role now, especially in integrating daily work activities," Ms Lee said. "(SMEs) can work with us to look at the relevant assistance for both the immediate and long term."

Digitalisation can also create opportunities for business expansion. Last year, LSH started collaborating with Country Foods, a subsidiary of SATS Food Services, to share delivery information and optimise their resources. If both have deliveries for customers in the same mall, they will consolidate the deliveries for one company to handle in a single trip.

"We have at least 30 per cent improvement in efficiency because every truck is filled to the max," said Mr Lim. "We now have excess capacity to grow our business without getting more trucks. It's a partnership where we can do more with the same resources."

 Moovaz, a startup that provides cross-border relocation services, is tapping its wealth of customer data to provide more value-added services.
Moovaz, a startup that provides cross-border relocation services, is tapping its wealth of customer data to provide more value-added services.  

Moovaz, a startup that provides cross-border relocation services, has the advantage of having gone digital from the start, and is now tapping its wealth of customer data to provide more value-added services, said CEO and co-founder Lee Junxian.

In line with its motto of "Life well moved", it wants to help customers not just move their personal effects, but also handle tasks like selecting property in a new country, setting up new bank accounts and finding schools for their children.

"The opportunity for us is that we have already collected so much data in a structured manner," said Mr Lee. "We don't have to leverage specifically on supply chain applications; we can evolve to something else because we have digitalised."

He urges companies to reorganise and revamp their business during this downtime. "It's cheaper to disrupt yourself than to let someone else disrupt you. You have to bite the bullet and overhaul, because the question is not if, but when. One year later, you may be forced to do the same thing, but it will be more painful."

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.