Paving A Sustainable Business Future for SMEs

By Mark Shorney, Audrey Cheong | December 7, 2020

Building business resilience by leveraging evolving consumer trends

COVID-19 has disrupted the way we work and live, and much of the impact was felt in the heart of our Asian economy – our small and medium businesses (SMEs). Nearly 18% of East Asia and Pacific SMEs had to close between January and May 2020, and close to 61% of SMEs in Asia Pacific reported a fall in sales due to the pandemic.

In Singapore, over 8,600 businesses ceased or filed to cease operations in April 2020, despite government support to help SMEs cut costs. However, consumer demand did not wane – it mainly pivoted to online platforms. Across Southeast Asia, 47% of consumers decreased purchases from brick and mortar stores and 30% increased their online spending from the safety of their homes. They spent more time at home discovering applications they intend to keep using to for the purchase of essential goods.

Global lockdowns during this pandemic accelerated the mass shift to e-commerce by five years, with total online spending hitting $82.5 billion, up 77% year-over-year. In fact, Southeast Asia’s internet economy is expected to burgeon to more than $200 billion within a decade. With consumer demand holding steady and purchase behaviours evolving, a lot more than just monetary aid is required to keep the Asian economy alive – SMEs have to transform and upgrade the skills and resources to not only survive, but thrive in the digital economy.

With 64% of Southeast Asia’s SMEs ranking technology as the top investment priority in 2020, setting up the right digital infrastructure, processes and supply chains will serve as the baseline for this transformation.

Pivoting logistics and delivery models to capture growth opportunities

Across the region, the digital transformation of traditional and home-grown businesses has significantly accelerated, contributing to a growing ecosystem of merchants that have been meeting unprecedented online demand.

New technologies are enabling increased visibility into supply chains, revolutionizing the logistics sector. Innovations such as Artificial intelligence (AI) have reshaped predictive intelligence, in that businesses can now estimate consumer demand more accurately and systems are able to gather data and synthesize it to make reliable forecasts that help companies better plan their shipping needs.

SMEs should look to digitalise their platforms, streamlining and integrating them with inventories and supply chains for a sustainable, scalable solution to cater to demand.

The Internet of Things (IoT), sensor tracking of shipments, and automation are becoming increasingly accessible and available. Robotics is an area that will transform logistics in several ways, for instance, by increasing transparency in supply chains to allow companies to create digital dashboards that reflect relevant data and business tools to maximise efficiency. At FedEx, we are trialing Roxo, the FedEx Sameday Bot, which is designed for same-day and last-mile deliveries. Navigating us into the future, Roxo utilises pedestrian-safe machine-learning algorithms and technologies to carry out safe, effective deliveries.

For deliveries that require temperature control in the health sector, SenseAware is another innovation that FedEx has designed to help businesses – especially healthcare and pharma companies - navigate the future of logistics. Sensaware tracks time, humidy levels, temperature and other aspeccts for sensitive packages that require very specific shipping conditions and round-the-clock visibility.

By considering and adopting a more modern suite of technologies early, SMEs will gain operational and cost efficiencies at a time when they need to deliver more with less resources.

Leveraging global trade opportunities for sustainable SME growth

Asia has long been a world leader in close regional integration – and long-standing intra-Asia relationships will give SMEs in this region an opportunity to adapt and learn from the challenges from COVID-19. Intra-Asia trade is expected to remain resilient with countries focusing more on cross-border commerce with neighbouring markets. In fact, intra-Asia trade accounts for up to 60% of Asia’s trade.

Along with intra-Asia lane, the Asia-Europe lanes are expected to outgrow the Trans-pacific lane as well. Trade lane diversification is becoming a reality as businesses reduce dependencies on one country, production location, or a single supplier. There is a move towards diverse sourcing and digitalisation to build stronger, smarter, and decentralised, resilient supply chains that will help ensure lasting recovery. That said, the IMF said the eurozone economy would contract by a staggering 8.3% this year, a free fall not seen since the 1930s Great Depression. Comparatively, attributed to the relative success in containing the pandemic in the region, Asia is well positioned for economic recovery, especially within parts of Southeast Asia. This coupled with Asia’s growing and increasingly digital-savvy middle class, provides an opportunity for SMEs to pursue innovation, and be present in a space where the consumers are to offer them exactly what they need.

As people reassess their lives and businesses post COVID-19, opportunities for innovation lie in more sustainable ways. By continuous commitment to digitalisation of business operations, SMEs can build operational resilience, empowering them to evolve into established brands with regional and even global footprints.

Find out more on FedEx innovation efforts in the Asia Pacific region on our LinkedIn page.
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About the Author
authors photo

Mark Shorney

Vice President, Operations, Southeast Asia, FedEx Express

Based in Singapore, Mark manages operations in South East Asia including Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. He’s also worked in operations and finance across Japan and Korea, as well as in several multinational service businesses throughout the region.

authors photo

Audrey Cheong

Managing Director,
Singapore, FedEx Express

Audrey joined FedEx in 1998 and was based in Shanghai before settling in Singapore. Audrey has studied in Australia and California and is Chairperson of FedEx Women’s Network (FWN), a network focused on reinforcing a positive working environment for women in Singapore.

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