Companies have a lot to gain by working in partnership with one another. Take Tan Tock Seng Hospital, for example. Faced with hiring challenges, it worked with a local SME to develop new technology that would require fewer staff to move hospital beds between wards. Not only did the hospital benefit from the improved productivity, it helped local engineering company, HOPE Technik, to come up with an innovative solution that is gaining international interest.
Collaboration is a business strategy that all SMEs should embrace if they want to survive in today’s fiercely competitive business environment. Since 2013, SPRING Singapore has been encouraging businesses to work together to overcome their business challenges through two programmes – the Partnerships for Capability Transformation (PACT) initiative and the Collaborative Industry Projects (CIP) initiative. These schemes have benefited close to 800 local enterprises in just over a year.
Fostering Win-Win Partnerships
The PACT initiative recognises the advantages of win-win collaborations between large organisations and their SME partners. Large organisations can help SMEs gain new capabilities through knowledge and technology transfer, and at the same time they can experience higher productivity from a stronger supplier base.
As Mr Fung Mok Wing, Director of SPRING Singapore’s Partnerships for Capability Transformation Office, explains, “Partnerships succeed in the long run when both parties work together to satisfy each other’s needs. PACT encourages large organisations and SMEs to work together to build better track records, access more business opportunities and undertake focused upgrading.”
PACT supports SMEs through three types of partnerships: capability upgrading, knowledge transfer and co-innovation.
Under the PACT initiative, ST Kinetics, one of Asia’s leading defence contractors, trained 11 SMEs to upgrade their technology and processes using the Kaizen methodology – an approach focused on eliminating waste, improving productivity and achieving continuous improvement. As a result, ST Kinetics will have greater access to high quality products, while its SME suppliers will reap increased revenues through new business deals.
The sharing of best practices and industry know-how can produce mutually beneficial outcomes for both partners. For instance, the food service arm of Unilever, one of the world’s leading consumer goods companies, has been educating chefs working in the local food and beverage (F&B) industry about how to plan their menus to maximise profits and optimise kitchen operations. This transfer of knowledge benefits SMEs in the F&B sector and indirectly raises awareness of Unilever’s food products at the same time.
Through co-innovation, SMEs and large organisations work together to develop and test new products and processes that will increase their competitiveness. Hewlett Packard (HP), for example, worked with two SMEs to develop environmentally friendly packaging for its ink cartridges. The new packaging helped HP to improve its manufacturing process, and it enabled local suppliers Superpak and Mega Plus Technology to come up with a new product that provided the same level of protection as the existing packaging.
SMEs involved in approved PACT projects are eligible for up to 70 per cent funding support for qualifying development costs. Large organisations are also eligible for funding of the costs incurred in working with SMEs and employing a PACT manager – a dedicated resource who plans and implements PACT projects.
Solving Industry-wide Problems
It’s not only partnerships with large organisations that can benefit local enterprises. With SMEs making up 99% of all companies in Singapore, it also makes sense for SMEs to work together to improve productivity. Through the CIP initiative, SPRING works with industry players and partners to identify industry-specific productivity challenges, and encourages companies to forge partnerships to propose solutions to overcome these problems. Take the F&B industry for example. Dian Xiao Er, Han’s, Nam Nam, Skinny Pizza and Swensen’s recently joined forces to outsource their food preparation processes for non-core items on their menu, such as cutting vegetables and preparing basic ingredients such as sauces and marinades.
“This project has reduced the time required for SMEs to source and prepare food ingredients, and more importantly, it has brought about new business opportunities for food manufacturers,” says Ms Samantha Su, Director of Capabilities Development at SPRING.
In the print industry, SPRING worked with three solution providers to develop a management information system to help SMEs plan and track their jobs. Mediafive and Mui Kee Press are two print SMEs that have adopted this system. With the integration of machines they can better estimate the costs of each job and monitor the flow of work.
“Through the CIP initiative, we hope to encourage SMEs to combine their strengths to innovate and offer greater value propositions to their customers, or to develop feasible solutions that address common pain points,” Ms Su adds. “SMEs can collaborate with like-minded enterprises from the same industry or even across different complementary industries. In doing so they will benefit from potential new business models, improved processes or higher outputs.”
Approved CIP projects may be eligible for up to 70% funding for development and adoption costs. Companies interested in participating in the CIP or PACT initiative can drop in to one of the five SME Centres around the island. Make an appointment by calling +65 6898 1800 or visiting the website at firstname.lastname@example.org.