Surviving supply chain shocks caused by Covid-19 pandemic

Mr Johnson Tay, director of operations at Sin Mui Heng Food Industries, in a 2019 file photo. The food manufacturer's management was quick to realise that the only source of income during the outbreak would be from direct consumers so it continued or
Mr Johnson Tay, director of operations at Sin Mui Heng Food Industries, in a 2019 file photo.ST PHOTO: ZHANG XUAN

Many businesses, including those in Singapore, were caught out and have had to adapt quickly

One of the most striking impacts of the Covid-19 outbreak is the harsh way it has exposed the weaknesses in supply chains for businesses around the world.

Many were caught out amid panic buying of daily necessities, such as toilet paper, the unexpected demand surges for baking products and some food items, and most tragic of all, the scarcity of life-saving drugs, ventilators, masks and personal protective equipment.

Despite decades spent fine-tuning supply chains, most companies found themselves struggling to fulfil their needs for raw materials or finished products.

Traditional methods for managing supply chain risk rely on knowing how any potential event can disrupt a firm's operations.

But it is a different story for low-probability, high-impact events, because historical data on these rare events is limited or non-existent.

That meant many companies were not prepared for the turmoil Covid-19 would cause.

Even operationally savvy firms scrambled as one country after another locked down their economies to contain the disease.

New technologies, such as artificial intelligence, 5G and the Internet of Things, may dramatically improve visibility across end-to-end supply chains and help absorb similar crises in the future, but more pertinent lessons have already been learnt.

Most businesses now realise how important their relationships with their employees, suppliers and customers will continue to be.

Here is how a few companies across Singapore's business sectors survived the disarray caused by the pandemic:


SMH Food Industries

Sin Mui Heng (SMH) Food Industries, which makes chilled and frozen dim sum, encountered a few blips in recent months.

Sourcing for raw materials from overseas, such as packaging materials and personal protective equipment, was a challenge for the Singapore firm.

Exporting food products, such as dim sum and pau, to the Middle East also met with some issues due to Covid-19 restrictions, said SMH's director of operations Johnson Tay and director of business development Evan Tay in a joint reply.

RESPONDING QUICKLY

We dished out whatever we could in the shortest time. These included direct factory sales, work-from-home dim sum packages, marketing to consumers via Facebook, Instagram; and we got ourselves listed on more online stores.

SMH'S DIRECTOR OF OPERATIONS JOHNSON TAY AND DIRECTOR OF BUSINESS DEVELOPMENT EVAN TAY

The food manufacturer started exporting its halal dim sum to Europe and the Middle East in 1997.

To get around the roadblocks, SMH decided to produce more machine-made products mainly for retail sale instead.

"This means cutting down on labour-intensive lines which produce handmade items that are for hotels and restaurants," said Mr Tay and Ms Tay.

The management was quick to realise that the only source of income during the outbreak would be from direct consumers, they added.

SMH thus continued organising promotions and even pushed out new product lines in supermarkets.

It also ramped up the number of delivery trips to stores.

Staff chipped in as well. Those who were managing the hotel and restaurant sector volunteered to become merchandisers in supermarkets to help with stock-taking and replenishing of empty shelves.

"As a result, our April sales from supermarkets were the highest in our 60-year history," said Mr Tay and Ms Tay.

"We have since diverted and are concentrating all our resources to produce supermarket ranges and online ranges of products."

 
 
 

Meanwhile, SMH looked for solutions on the export front.

In order to ship products to the Middle East, the firm carved out alternative shipment channels, said Mr Tay and Ms Tay.

SMH also worked with its distributor in the United Arab Emirates, with the support of Enterprise Singapore, to send the food products to Kuwait via trucks instead of the usual approach of using sea freight.

"We had to consider factors such as costs and timing as we turned to trucking, as (it) tends to be more expensive compared with sea freight."

This pandemic has forced SMH to learn new skills within a short time, noted Mr Tay and Ms Tay.

"We dished out whatever we could in the shortest time. These included direct factory sales, work-from-home dim sum packages, marketing to consumers via Facebook, Instagram; and we got ourselves listed on more online stores," they said.

The diversification of supply chains was also another lesson learnt, and SMH now plans to embark on a digital business transformation.


Royal Insignia



Craftsmen at Royal Insignia working while maintaining a safe distance. Non-manufacturing employees telecommute from home. PHOTO: ROYAL INSIGNIA

As the pandemic gathered pace and spread from China to Europe earlier this year, Royal Insignia was hit hard.

The maker of bespoke medals, luxury gifts and jewellery had to grapple with the closures of suppliers' factories due to lockdown measures in various parts of the world, such as China and Italy, said general manager Lin Yiqun.

"This led to severe disruption in our manufacturing delivery timeline as we procured some of the raw materials and semi-finished parts from these suppliers," he recalled.

There were manpower issues to deal with as well.

MITIGATE RISK WITH ALTERNATIVES

It is important to have alternative sources of supplies to mitigate the risk of supply chain disruption. It is also important to constantly innovate by leveraging new technology to improve our craft.

ROYAL INSIGNIA GENERAL MANAGER LIN YIQUN

As factories were closed in China, the firm had to move its entire manufacturing process to Singapore, but some of its key production supervisors had travelled to China for Chinese New Year and could not return for work as travel restrictions were imposed.

But Royal Insignia took things in its stride. It started working with local suppliers to procure materials and try to fabricate semi-finished products on its own.

It tapped digital tools, such as YouTube marketing, search engine marketing and display ads, to reach clients and markets.

In 2017, the firm was one of the first small and medium-sized enterprises (SMEs) to turn to online marketing through the SME Go Digital programme run by Enterprise Singapore. The early move paid off during the pandemic as the firm was still able to promote itself on digital platforms and generate new inquiries for more sales without any disruption, said Mr Lin.

Even prior to the circuit breaker measures, the firm was able to implement safe distancing measures at its manufacturing and office facility, and telecommuting from home for non-manufacturing employees.

Manufacturing staff have staggered working hours and split-team arrangements. The firm also tapped Singapore Business Federation's ManpowerConnect scheme to manage manpower needs.

It also assisted staff who were returning from overseas with their leave of absence and stay-home notice requirements. Expenses were fully subsidised by Royal Insignia, added Mr Lin.

 
 

Future plans now include shifting manufacturing processes to Singapore. "We have skilled manpower here and that will also make us less reliant on our overseas suppliers," said Mr Lin, noting that the pandemic has sharpened the need to diversify its supply sources.

"Often SMEs like us always go for the most price-competitive supplier," he said. "It is important to have alternative sources of supplies to mitigate the risk of supply chain disruption. It is also important to constantly innovate by leveraging new technology to improve our craft."

The firm has a programme in place to bring in a Russian enamellist to train the local craftsmen in enamelling, and to guide local designers to design products with enamelled elements.

"In addition, we have made use of machines and technology to fabricate more parts during the circuit breaker period," he said.

With its suppliers in China resuming operations, Royal Insignia is working with them to manage the production delays due to the circuit breaker in the past weeks.

Mr Lin said: "We will need to work closely with both overseas and local manufacturing to make up for the time delay due to the extended circuit breaker in Singapore."


3M Singapore

 LIANHE ZAOBAO Despite additional restrictions mandated by different governments in the region, 3M's manufacturi

Despite additional restrictions mandated by different governments in the region, 3M’s manufacturing operations for disposable respirators in Asia have been running 24/7 since late January, says Mr Trevor Bilicke, vice-president for manufacturing and supply chain in Asia-Pacific for the industrial giant. PHOTO: 3M

Many of the United States-based industrial giant's products are essential in fighting Covid-19 around the world.

Its plants in Woodlands and Tuas manufacture respirators, polymer-processing additives and adhesives among a host of other products.

3M Singapore was founded in 1966 and now serves a diverse set of industries from healthcare to electronics.

MAINTAINING OPERATIONS

We have activated multiple rapid response teams to coordinate strategies to maintain supply chain operations, protect our people and ensure business continuity in Singapore and the region.

MR TREVOR BILICKE, vice-president for manufacturing and supply chain in Asia-Pacific at 3M.

To ensure global supply chains can continue to operate, 3M's crisis action team is meeting daily, said Mr Trevor Bilicke, vice-president for manufacturing and supply chain in Asia-Pacific at 3M.

"The situation we are facing changes daily - sometimes hourly.

"We have activated multiple rapid response teams to coordinate strategies to maintain supply chain operations, protect our people and ensure business continuity in Singapore and the region," he said.

3M's global network has helped the company to obtain raw materials and packaging materials for its plants when needed.

Since February, the company has managed its supplies in a 30/60/90-day planning cycle, said Mr Bilicke.

"We have also accelerated new internal and external supply qualifications to help alleviate issues where demand far exceeds supply or where there are export restrictions," he added.

When neighbouring Malaysia instituted a movement control order in March, 3M worked with the Singapore Government to provide accommodation and other support to Malaysian workers who used to commute to the Republic daily for work. This helped to minimise the impact to manufacturing operations here, said Mr Bilicke.

Meanwhile, 3M's production employees have increased overtime work, with government approval.

 
 

"We have also hired more contingent workers in order to sustain running our operations 24/7," he added. "We will continuously increase productivity to maximise production of disposable respirators to help protect healthcare workers."

These changes were made with safety in mind. Many employees are now working remotely.

At the plants, for example, changes made include stringent cleaning and medical screening, staggering shifts and reorganising how work is done to increase social distancing, said Mr Bilicke, adding that despite the additional restrictions mandated by different governments in the region, 3M's manufacturing operations for disposable respirators in Asia have been running 24/7 since late January.


Micron Technology

 LIANHE ZAOBAO Despite additional restrictions mandated by different governments in the region, 3M's manufacturi

Micron Technology took steps to protect its supply of raw materials when the first case of coronavirus emerged in China in January.PHOTO: LIANHE ZAOBAO

When the first case of Covid-19 emerged in China back in January, Micron Technology already kicked into action, first by taking steps to protect its supply of raw materials.

The world's leading producer of data memory and storage technologies and solutions also increased the flexibility of its supply chains to ensure it could deliver orders to customers on time, said Mr Chen Kok Sing, corporate vice-president and Singapore country manager of Micron.

The Nasdaq-listed company based in Boise, Idaho, has since increased its focus on multi-sourcing of parts to reduce supplier-dependence risk, he added.

REDUCING SUPPLY RISKS

We have increased our on-hand inventory of raw materials and stored more on our sites to minimise the impact of any logistics delays.

MR CHEN KOK SING, corporate vice-president and Singapore country manager of Micron Technology.

"We have increased our on-hand inventory of raw materials and stored more on our sites to minimise the impact of any logistics delays," said Mr Chen.

"We also added assembly and test capacity... to provide redundant manufacturing capability in multiple regions."

Aside from logistics delays, there have been no other issues with products reaching customers, he noted.

Here in Singapore, Micron was allowed to continue production during the circuit breaker period in April and last month as semiconductor manufacturing is designated an essential service.

However, adjustments had to be made to ensure work was carried out safely.

Besides allowing some staff to telecommute, Micron divided its Singapore staff into three teams.

The first group comprises the most critical people who need to work on site. They are further divided into smaller groups to ensure safe distancing at the workplace.

The second group rotates between working on site and at home on a weekly basis.

 
 

The third group worked at home during the entire circuit breaker period, and will continue do so until further notice.

Safe distancing measures at the facility includes distancing of 1m at lift areas and cafeterias. Work stations have also been separated with a distance of 2m between them.

"In addition, we continue to conduct safety campaigns for on-site team members," said Mr Chen.

Covid-19 may well lead to some permanent changes to the way Micron manages its relations.

"The Covid-19 pandemic has shown us that to maintain business continuity, leaders need to communicate with clarity and timeliness, and take effective actions to protect the teams and communities in which they operate," said Mr Chen.

 
A version of this article appeared in the print edition of The Straits Times on June 15, 2020, with the headline 'Surviving supply chain shocks caused by Covid-19 pandemic'. Print Edition | Subscribe