World Economy

Lean Times a Blessing in Disguise for SMEs in HK

Lean Times a Blessing in Disguise for SMEs in HKLean Times a Blessing in Disguise for SMEs in HK

Numerous small and medium-sized enterprises manufacturing in the mainland Hong Kong have reported increasing challenges from rising costs and slackening demand.

But some experts point out these lean times may force SMEs to upgrade their operations and make them more competitive and fit to survive, EJInsight reported.

When business is good, companies can still do well despite wasteful practices and all sorts of inefficiency.

Some factories, for example, may routinely order and keep too many raw materials or parts on hand because they don’t fully trust their systems and thus need to build up a buffer against shortages, Malcolm Fox, vice president of Epicor Software Corp., said.

Introducing the right kind of software can improve the “visibility” of the whole production process, he said.

When manufacturers have a precise knowledge of their inventory positions, keeping excess supplies as a cushion will no longer be necessary.

This means savings in space and capital tied up in excess inventory and a reduction in expenses from writing off obsolete supplies.

Real-time data sharing and communication among different sections of a factory and even with third-party suppliers can also give manufacturers a distinct advantage.

In the old days, firms often had to wait until an order came in before looking for the necessary raw materials and parts. But now, advanced software can digitally hook up a manufacturer and its suppliers.

A firm can then tap into its database of suppliers and get a fairly good idea of where it can secure the supplies it needs, Epicor executive vice president Sabby Gill said.

  Speed  Factor

That helps manufacturers respond quickly to potential business opportunities and outcompete their rivals.

Among the software requirements of SMEs, Gill said, fast implementation is usually a priority, because the market situation can change quickly.

From cost accounting to order management, procurement to inventory control, work flow management to quality control, an intelligent manufacturing system can raise the efficiency of a factory from various perspectives.

No wonder China regards smart manufacturing as a key to taking its production prowess to the next level.

There have been quite a few reports about factories leaving China for cheaper production bases elsewhere in Asia.

But a majority of manufacturers are likely to stay in China given its much better infrastructure.

Nonetheless, the country needs to find a better way to make things, so as to counter its worsening cost disadvantage.

Whether China can successfully upgrade its manufacturing sector probably depends on how well each individual player adopts new IT-based production technologies.