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Singapore as Collaborative Manufacturing Services Hub

Dr Kaizad Heerjee , Assistant Chief Executive, Online Development, IDA Singapore - Speech SCI Seminar/Workshop, Jurong Country Club ...

Dr Kaizad Heerjee , Assistant Chief Executive, Online Development, IDA Singapore - Speech
SCI Seminar/Workshop, Jurong Country Club

Singapore, 26 October 2001

Good Afternoon,

Mr. Edwin Khew, Vice-President of the Singapore Confederation of Industries,
Confederation members,
Distinguished Guests,
Ladies and Gentlemen.

I would like to thank the Singapore Confederation of Industries for giving me this opportunity to address you this afternoon. The theme for this seminar is most timely, as it highlights the need for Singapore companies to take a serious look at the various Internet Technologies, and explore how you can harness its power to e-transform your business and remain competitive in this new information economy.

Singapore as a Collaborating Manufacturing Services Hub

In today's globally competitive business environment, companies are under relentless pressure to provide innovative products, in shorter time cycles, at reduced cost, and with improved quality. As multinational companies transfer their labor-intensive manufacturing operations to other lower-cost manufacturing economies in Asia, Singapore manufacturers and suppliers must continue to scale the value ladder in order to retain their competitive edge. Failing to do so could mean that multinational corporations may eventually transfer key business functions such as procurement, product development and production planning away from Singapore. This ripple-chain effect will seriously hit other manufacturing supporting industries in Singapore. As an illustration, WUS Printed Circuit, a Taiwan-based company and one of top 5 Printed Circuit Board (PCB) manufacturers in Singapore, has recently decided to consolidate its operations and shifted the bulk of PCB manufacturing from Singapore and Taiwan to Kunshan.

To ensure that we remain competitive, Singapore cannot compete simply on labor costs. We must ride on our strengths as a trusted business, financial and logistics hub to leapfrog the competition, and transform Singapore into Asia's key Collaborative Manufacturing Services Hub. Singapore can also be an attractive option for those industries that requires a high level of system efficiency and network connectivity.

In addition, Singapore companies can effectively compete with multinational corporations that have vast international networks by harnessing the strengths of our neighbors and integrating complementary services of our partners. Multinational customers rely on Singapore companies' strong project management expertise, cultural and language proximity to other Asian economies, and a robust e-Business infrastructure to aggregate and manage all of the best-of-class manufacturing services in Asia. For example, they can aggregate the labor-intensive manufacturing capabilities of Chinese manufacturers; the software development expertise of Indian IT companies; and the product design capabilities of Japan - all through Singapore. What will result is an extensive, but close-knit network, which leverages the complementary strengths of all the Asian cities to build partnerships that will boost Asia's competitiveness in the global infocomm arena. In short, an Asian Belt of IT Cities - a vision outlined by our Prime Minister this year.

To realize this vision, we need to first understand what is happening today before we can define our strategies going forward.

Today, competition is no longer between companies but between supply networks. Supply Chain Management must be transformed from a one-entity effort into a cooperative effect, where all partners in the chain join forces to create and share the value created. It was quoted in the July issue of the Intelligent Enterprise magazine that the new attack strategies of world class companies like Hewlett Packard, Cisco, EMC and Inventec is "Supply Chain vs. Supply Chain". Companies cannot afford to fight this new economy war alone anymore. Companies are now being forced to break down their walls and collaborate with their partners.

This trend was further highlighted in a study by Strategic Intelligence on Asian Supply Chains. The study revealed that many multinational buyers are pressuring their suppliers in Asia to speed up supply chain standardization. Outsourcers of manufacturing operations have been exerting significant pressure on Asian contract manufacturers to accommodate online B2B collaboration, and end-to-end supply chain solutions, in order to achieve end-to-end supply chain visibility. In some cases, contract renewals are being made contingent upon the suppliers' adoption of a supply chain solution, or at least of a solution module provided by the buyer's vendor. Let us take an example of ST Assembly Tests Services (STATS). STATS is a leading provider of the semiconductor test and assembly services to fabless companies, integrated device manufacturers and wafer foundries worldwide such as Taiwan Semiconductor Manufacturing Company (TSMC) and Chartered Semiconductors. Responding to the standardization push of its clients, STATS have implemented a RosettaNet-based solution in order to integrate with their customers. For its part, STATS is now ready to support its customers' supply chain initiatives.

Upgrading of Capabilities

None of these challenges can be accomplished successfully without talent.

With the dawn of the new economy, the advances in technology and the Internet has brought radical changes to the way business is conducted. Customers' demands are also getting increasingly sophisticated. Just this morning I read about a new car that was introduced in Japan that can change colors depending on your moods. Capability development to drive this innovation is therefore critical if we want to compete effectively in the global economy. This is true for both companies and individual workers. We must recognize that the nature of work has shifted from being very manual and labor-intensive into one that is very reliant on IT. Singapore must embrace these challenges by strengthening and expanding its current pool of e-Business professionals to realize the vision of being a key Asian Collaborative Manufacturing Services Hub.

Basic IT knowledge is no longer adequate. E-Business is not like buying a PC with word processing software where we can simply plug in and achieve productivity gains. We need to keep our business leaders like you updated with the latest developments in Internet technologies and new Internet business models. The knowledge gained will allow you to transform your business and processes to meet the global challenges in this information economy. Through this seminar, I hope you can learn from the early adopters on their successes and perspectives on E-Marketplaces, and see how it can be applied effectively to your business.

Companies should also make use of this current economic downturn to sharpen their competitive edge and prepare for the rebound. In this financial crisis, some companies have grasped the opportunity to implement e-Business projects and sent their staff for training to equip them with the necessary IT skills. For example, SCM Solutions Pte Ltd, a subsidiary of the electronics component distributor, Flextech Holdings. As an integrated Materials Management and 3rd party logistics provider, SCM Solutions' core business is to help businesses manage their sourcing, procurement, warehousing, packing, and fulfillment requirements. Typically, these activities are extremely labor and space intensive. With the development of a new e-Business platform, SCM Solutions has effectively reduced their order to shipment lead time and minimized their inventory holding, thereby enabling them to take on more projects with no significant increase in overhead. They have also re-trained their purchasing staff and equipped them with the skills to effectively use this new tool.

How IDA Can Help

Recognizing the need to help Singapore's manufacturing industry transform, IDA has initiated the formation of an e-Supply Chain Task Force two weeks ago together with representatives from the Economic Development Board, Productivity and Standards Board, Singapore Confederation of Industries, Singapore National Shippers Council, Supply Chain Council South East Asia and GINTIC Institute of Manufacturing, to brainstorm various e-Supply Chain initiatives and lay the groundwork to enhance Singapore manufacturing industry's competitiveness in this information economy.

For a start, the task force will look into 3 areas. The first is to look into the promotion of e-Business standards such as RosettaNet. RosettaNet is a high-tech industry consortium of more than 400 companies world-wide that was formed to embark on an ambitious plan to develop common e-business processes and common data exchange standards. This helps companies reduce cost and increase responsiveness in their supply chain.

To date, more than 500 RosettaNet projects have been implemented worldwide. In Singapore, multinational corporations such as Seagate, Intel, Cisco and Chartered Semiconductors have implemented this global business standard with their customers or suppliers. Over 40 e-business hubs in Singapore have used these standards in their order management, design collaborations, logistics and payment processes. I strongly urge all high-tech manufacturing companies in Singapore to acquire the knowledge of this global supply chain initiative and evaluate how it can be deployed effectively in your organizations.

The second area that the task force is looking into is the development of a framework to benchmark the e-Business and e-Supply Chain readiness of Singapore companies to global best practices. Lastly, the task force will identify potential projects that can help reduce the cost of e-Business adoption for Small and Medium Enterprises. One example being explored is the development of industry-shared service platforms for supply chain management and product design collaboration.

Finally, for companies that want to go the full distance, the Government will assist them through the numerous e-Business and manpower training programs to help you enhance your productivity and competitiveness. IDA has been promoting the E-Business Industry Development Scheme (eBIDS) to fund projects that have the potential to e-transform the industry and have a significant impact on Singapore's e-Business adoption; and the E-Business Savviness Programme, an Infocomm training incentive program that aims to equip non-Infocomm professionals with e-Business skills.

Such initiatives are there for one reason - to encourage and help Singapore companies in their e-transformation journey. Yes, it is a journey because results will not be seen overnight. Companies need to be patient and smart about the decisions they make. But for those who persist in this journey, you will reap the benefits in due course. E-Business is your solution for survival in this increasingly competitive global business arena. So don't wait, you either transform your business today or you will be left behind.

In closing, I would like to commend the Singapore Confederation of Industries for taking the initiative to help Singapore companies learn about the various e-Business best practices. I am confident that participants here today will be able to learn something useful for your organizations. On this note, I wish all of you a fruitful afternoon.

Thank you