By Eugene Quah, Schneider Electric’s Industrial Automation Vice President
for Singapore, Malaysia & Brunei
Today, amid the ongoing health crisis in Malaysia, more than a million registered Small and Medium Enterprises (SMEs) are facing uncertainties when it comes to ensuring business resiliency and sustenance. SME owners know the importance of preparing for unforeseen circumstances, but few would have anticipated the onset of a global crisis as what we have experienced today.
At the start of the pandemic, SME Association Malaysia revealed that up to one-quarter of Malaysian SMEs are at risk of closure. SME owners are fighting battles on multiple fronts, including supply chain disruptions, reduced local and overseas demand, changing consumer patterns, manpower shortages – among other things. Although small business owners can’t change what has already happened, they can change the course of their (very near) future, simply by channelling their focus. What can SMEs do today to emerge victorious from the health crisis tomorrow? Let’s find out.
1. Rebuild and diversify your supply chain
What the health crisis has shown us time and again is the importance of diversifying our supply chains. Relying on a single, lowest-cost source is not a sustainable approach, and it is more than likely to backfire on you later down the road.
When it comes to your supply chains, ask yourself these questions: Are you single sourcing from only one supplier? Or are you heavily reliant on only one customer? If any one of them pull out, can your business still stay afloat?
SME owners should carefully review and manage interdependent levers in the organisation such as multiple sourcing, localising, and tapping into diverse markets. Your supply chain model should be adjusted to allow for more flexibility and decentralisation with a robust risk management system in place.
Whether it is your manpower, logistics or raw materials, the lesson is the same: You need to build resilience in your supply systems in order to have sustainable, long-term success. Many companies have started to realise this, and it is a valuable lesson that should stick with us, even after this pandemic.
2. Improve your communication with partners and customers
In times of crisis, most companies shy away from the limelight because nobody likes to be the bearer of bad news. We duck our heads below the surface and pray the crisis will blow over so we can go on with business as usual.
But what most SME owners forget is that no one likes to be kept in the dark. Timely and relevant communication is essential to keeping any relationship going, especially when it comes to business relations.
What your business partners and customers would like to know is not how badly affected you are by the pandemic, but rather how you are handling it: What are you doing to rebound from this crisis? What are you doing to prevent another shutdown? Providing honest updates and answering difficult questions will help to increase the confidence level among your stakeholders.
All businesses should have a crisis communication plan – and I don’t mean you have to hire an army of PR professionals to do it. Even a simple email or a short call with your customers will suffice.
3. Upskilling and reskilling your employees with digital training
The Government had emphasised upskilling and reskilling the SMEs employees in order to match the ever-increasing demands of digitalisation. The National Economic Recovery Plan (PENJANA) through its upskilling and reskilling initiatives introduced certification and non-certification programmes, particularly in high-technology and knowledge-based markets for employees to improve their skills and be future-ready for the Industry Revolution 4.0 (IR4.0).
The Malaysian government also recently introduced the SemarakNiaga Keluarga Malaysia Programme, announcing an ambitious RM40 billion channel to help businesses recover from the COVID-19 pandemic at the same time creating new job opportunities. The prime minister announced that the programme would help businesses develop workers' skills and enable reforms that would transition the country towards a sustainable economy through digital transformation.
What an SME owner should do then, is to encourage their employees to take up courses and pick up new skills useful to their industry. Besides ensuring that employees are making the best use of their time, digital training helps to bridge the gap so that when the economy starts picking up again, your employees can be the first ones out to hit the ground running.
4. Refine your workplace health and safety measures
One thing is clear: The world as we know it will no longer be the same. The emphasis on workplace health and safety will ramp up even after we emerge from the pandemic. Locally, the workplace health and safety standards have increased in order to provide maximum comfort for employees at the workplace. According to a survey by World Economic Forum (WEF) and Ipsos in 33 countries, Malaysia topped the list with 91 per cent of workplaces requiring the unvaccinated to undergo constant COVID-19 testing. Malaysia also came in at fourth with 94 per cent of workplaces requiring employees to wear masks in common areas and when in close proximity with other people.
SME owners can maintain this good record through by educating employees on these new protocols and cultivate healthy workplace habits, even after we resume some level of normalcy post pandemic. Seeing as these regulations are here to stay, ask yourself: Will you be able to manage these safety protocols manually going forward? If your answer is no, you should look into how you can automate and digitalise such functions in order to free up your time and resources for other valuable work.
5. Invest in automation to deepen your capabilities
Finally, this is perhaps the most important lesson learnt from these trying times. If the COVID-19 crisis has taught us anything, it would be that companies who can adapt, automate, and digitalise functions are the ones who stand to gain the most in the long run. As people started telecommuting and businesses moved online, those that stick to old-school methods face no other option than to pause operations, if not shut down completely.
What SMEs should learn from this episode is that automating your business and digitalising processes is not a matter of ‘if’, it’s a matter of ‘when’. It is a fallacy that SMEs cannot afford the cost of automation and that only big corporations have the capacity to undertake it. Evidently, calculation on investment and cost has changed: The cost of a two-to-three-month operations shut down has far-reaching implications on your business, and this revenue loss clearly outweighs the cost of automation, which really should be seen as an investment in growth and transformation.
So as an SME owner, think about how you can prepare for automation. Even if you are a manufacturing SME that relies heavily on labour and manual processes – there are numerous digital solutions that you can take advantage of. The government is also supporting SMEs to procure these solutions. In the recent 2022 Budget announcement, the Malaysian Government is focusing on providing incentives to SMEs that adopt digital technologies with RM200 million set aside under the SME Digitalisation Grant Scheme.
Obtaining automation funding and support has also become more accessible and easier than ever. Reach out to Schneider Electric to find out how your SME can apply for government grants to subsidise their automation costs.
In a nutshell, SME owners can sustain and remain resilient provided that they are willing to take the necessary next steps. It is vital for SMEs to do so as it does not only contribute to the wellbeing of the business but also contribute to the growth of the nation. The 12th Malaysian Plan (12MP) has already outlined that one of the main focuses to support the growth of all economic sectors, mainly to accelerate the transformation of SMEs which contribute 45 percent of the country’s gross domestic product, thus these lessons may equip SMEs with ample opportunities to survive and even thrive throughout the pandemic.
