Taking A Bold Path To Success Amid A Crisis
Certact Engineering leveraged digital solutions to help it navigate the pandemic and emerge stronger.
Set up in 1968, Certact Engineering was primarily focused on metal machining before the pandemic served as a catalyst for the company to expand into the more niche area of plastics. The risky decision – to invest at a time of crisis – has paid off for this precision engineering firm, with sales growing rapidly over the past two years.
Certact also decided to double down on its transformation by embracing digitalisation during this period to ramp up its efficiency and productivity. To better prepare itself for this critical journey, the firm participated in SBF’s Industry 4.0 Human Capital Initiative (IHCI), a programme designed to transform businesses by equipping them with people management and job redesign skills required for successful digital transformation.
BiZQ speaks to Certact’s Managing Director, Ellis Eng, on how the company thrived during the crisis and the role that digitalisation has played in its recent success.
Having started as an employee at Certact, Ms Eng climbed the organisation’s ranks over the years to eventually become a major shareholder in the company, as well as its leader. In this role, she is seeking to guide Certact through the current uncertainties , and emerge stronger from the crisis.
How did the pandemic affect your business?
We faced several challenges over the past decade. The most impactful one was the global financial crisis (in 2008 and 2009), followed by the trade war tensions in 2019.
The unprecedented pandemic was unpredictable and led to circumstances that were beyond our control. When COVID-19 first started, our sales dropped drastically, and we fell from profit-making to making a loss. We were affected by supply chain disruptions, but, most significantly, we were hit by the labour crunch when borders were closed.
During the Circuit Breaker in 2020, my supplier, who is in the business of manufacturing component parts, was considered a non-essential business and as such could not operate. However, our customers had already engaged us to produce the component parts they required.
So, it was after this particular episode that we decided we needed to transform our business and expand beyond metal machining parts and into plastic machining. It was a turning point for us.
Why did you choose the plastic segment to expand into?
We realised that the growth in metal machining was very slow. There are around 2,700 registered companies doing precision engineering like us.
We already had a very small department doing plastic, but I realised that there was an opportunity to expand when a customer approached us in 2020 to produce a special plastic panel for a DNA machine.
We had to make a very quick decision, and it would require us to set up a new line and invest in new capacity during a crisis when our sales were going down. But we decided to go ahead and start the line and train our people to handle this new manufacturing process.
Why did you decide to participate in the IHCI Enabler Programme?
Through SBF, we got to learn about IHCI. After understanding the programme outline we felt that it was aligned with our strategy for digitalisation. As the programme focused on human capital, it helped us to manage both machines and the human interactions with those machines.
IHCI was therefore a very good programme to help us train our people in terms of converting their mindsets and upgrading their skillsets when it comes to digitalisation.
What were some of the outcomes from attending IHCI?
Through IHCI, we implemented an OEE (Overall Equipment Effectiveness) solution, which uses data to measure how efficient we were in utilising our machines and to augment our on-going efforts in automation and digitalisation. We also learnt to appreciate how our workers interacted and complemented our machinery.
This gave us the confidence that we can accelerate our growth in this new area of plastic machining.
What were some of the challenges faced in implementing the solution?
When we implemented OEE, there were extra steps for our workers to complete as they needed to collate data. The data collection process was not fully automated, and it was a struggle for the older workers to adjust as many were resistant to change.
Our challenge was to slowly change their mindset. When they saw that our management was leading by example to move in this new corporate direction and as they personally experienced the benefits of the new processes, they too were willing to make the effort to change and learn.
I have seen many smaller companies who wanted to implement new digital solutions, but their workers were not willing to learn. So, in spite of purchasing the new machines, there was no employee buy-in, and the transformation journey was short-lived, leading to a reduced return on these investments.
What were some of the tangible benefits you have seen from OEE?
The significant benefit is being able to optimise our production process from the data we collected. For example, we observed that our machines were not operating at optimal levels, such as on a Sunday or during lunch time, so we took immediate action to rectify the situation, and this enabled us to ramp up our production capacity.
After implanting OEE, the utilisation rate of our machines improved from 60% to around 73%. We are currently adopting the OEE on a trial run, and we expect to roll it out to the rest of our operations in the third quarter of 2022.
Any words of advice for other SMEs looking to digitalise?
I would recommend the IHCI Enabler Programme to companies who are really keen to transform their business and upskill their workforce.
Transformation is about the company being keen to learn, improve, and adapt to changing circumstances by adopting solutions catered to their needs. Going through this IHCI Enabler Programme will help SME owners and their staff to understand and appreciate how digitalisation can benefit their company by increasing productivity, leading to better business prospects and resilience.
The Industry 4.0 Human Capital Initiative (IHCI) – Come Join Us!
IHCI strengthens manufacturing companies’ operational and human capital capabilities to successfully implement and scale Industry 4.0 (i4.0) solutions for business transformation.
Jointly developed by the Singapore Business Federation (SBF) and Workforce Singapore (WSG), the programme aims to encourage companies to embrace their i4.0 journey by taking a holistic approach covering business, technology, and organisation.
To access the IHCI self-help portal for an array of complimentary i4.0 and human capital resources, log on to https://ihci.sbf.org.sg/self-help-portal.
If you are thinking of accelerating your i4.0 journey, you may read up more on the IHCI Enabler programme by logging on to https://ihci.sbf.org.sg/enabler-programme to register for a free session with SBF and our appointed consultants from McKinsey and EY.