How is inflation affecting SMEs in Singapore, and what is your company doing to cope with rising costs, both here and overseas?

Kenny Yap
Managing Director
Qian Hu Corporation

SOME SMEs with no pricing power and low productivity will see their costs go up and profit go down.

Boosting efficiency and actively trying to differentiate themselves are some of the ways to cope. In particularly, they must examine the efficiency of their supply chain management.

Business is 'half earn and half save'!

Looking for better ways for saving on costs can help cultivate good habits on containing costs.

Erman Tan
Chief Executive
Asia Polyurethane

INFLATION affects everybody. In order to cope with rising costs, SMEs must focus on managing their businesses well.

At APU, we mitigate the inflationary effects by having multiple sources for raw materials, increasing our sales mix to the higher margin products and selling our products in stronger currencies such as the Singapore dollar and Euro.

Jason Ng
Managing Director
Grand Team Technologies

ONE question that comes to my mind is: Do I need to consider increasing our employee wages to overcome the price increases due to food and fuel, or would I need to save on costs for the company in order to face up to the possibility of recession as well as the continued high inflation?

'The weakening of the US dollar and the strong appreciation of the Singapore dollar affects our export business. I do worry the inflation would affect the company's competitiveness and weaken the company as costs continue to rise while the market demand is soft.'

'These are the serious matters we are considering and we look forward to our government helping to slow down the increasing cost of living to assist SMEs to move on for the second half year.'

Donna Lee
Founder and CEO
KinderGolf

INFLATION has definitely made many SMEs rethink their current business models, relook at their cost structures, resource allocation vis-a-vis the current economic climate.

'We need to continue keeping our business competitive and at the same time, meet the needs of our customers. This is particular significant for a growing company like KinderGolf as we operate globally and must be able to ride this economic wave to our advantage.'

Annie Yap
CEO
The GMP Group

ESPECIALLY for SMEs, who do not have the same bulk resources and purchasing power as multi-nationals, the long and unforgiving arm of inflation is upsetting the fine balance of operational costs and profit-margins.

However, the smaller stature of SMEs can prove to be their point of advantage.

For GMP, leanness comes with litheness, which means that we are flexible enough to adapt and tweak its processes to create cost-savings and alternative revenue generations.

We are revisiting and repackaging our services to deliver more value-add for customers as well as to retain clientele bases.

Contingency outsourcing is an area of exploration to limit our costs.

'Internally, GMP is also looking at ways to reduce our operational costs, such as keeping our transport allowance expenditures low by encouraging our staff to use public transport. In these tough times, every little effort does make a difference.'

Nicklaus D'Cruz
CEO
The Flying Club

AT THE Flying Club, a premium members' only club, we are keeping a close watch on the soaring price of fuel.

This rapid rise has led to dramatic increases in the cost of aviation fuel and plays a determining factor in our choice of aircraft. Our initial training fleet would consume 35 litres of fuel per hour.

We are now considering a fleet of aircraft which will only consume 19 litres per hour amounting to 46 per cent in savings.

This has a direct impact on our business costs and represents a significant change in direction in this area of our business.

The touring aircraft, however, remain unchanged primarily because, in the high end segment we operate in, comfort takes precedence in meeting the needs of our members.

The key to survival in such uncertain times and increasing business costs is to adopt and implement strategic business decisions without compromising the safety and comfort of our members.

This article was first published in The Business Times on 15 July 2008.