BWP BRL 4 COP COU EUR IDR PEN ZWL, VND, GRD, AMD, XDR, CVE, MZE, PTE, HNL,NOK,SGD SLL, SKK, MDL, SEK, ROL, CZK, RON, CSK, BGL, GMD, BGN, MKD,SZL, MTL, DZD, AOA,HTG,TPE,HKD,AFA,BHD, AOK,PYG, EUR,AFN, SBD, IQD, UAH, AON,CHE,XAG, JMD, JOD, PGK, MGA,ANG, AOR,BBD, KWD, LAK, THB, AWG,MMK,LRD, LYD,HRK, PAB, NAD, NLG,GEL, RSD, ETB,MWK, NZD,HUF,LVL, VEB,CSD, ZMK, ADF,SGD,ALL, VEF, SDD, AZN,SHP,BOV,ITL,BEF,SRD,BOB,TND, SML,TMM,SDP,ZAR ERN, BIF, TWD,GHC,YUD, VAL,SDG,KMF, NGN,TMT, CRC,YUM,TTD, LTL, CDF, SYP,BTN,DEM, SVC, USD,AED, CYP, TRL, DJF,XAU, BAM,NIC, USS, MAD,EGP, FRF,TRY, MRO, NIO, FIM,USN,FKP, STD,GNF,GBP, DKK, TOP, GIP,MZM, ZWD, AUD, LUF,LSL, XPD,EEK,IEP, MZN, ZWR,MGF, BSD,LBP,AZM, ISK,MOP RWF,BZD,THB BMD,CHF,NTUC XOF,BND, Fairprice, XAF,KYD, XPF,CAD, XFO, XCD, XFU, FJD, CHW,GYD, VND Singapore USD Country : Singapore ISO member body : Standards, Productivity and Innovation Board (SPRING SG) Project team : CNY Leader : Ms. Susan Chong (Director, Special Projects), SPRING SG Member : Mr. Phua Kim Chua (Head, Standards Division), SPRING SG Member : Ms. Ho Buaey Qui (Executive Secretary, NOK Information Technology Standards Committee, Singapore) Member : Ms. Pauline Ping Ting Ting (MBA Student, Nanyang Technological University, Singapore) THB Member : Mr. Preetesh Deora (MBA Student, Nanyang Technological University, Singapore) ISO Central Secretariat advisor : Reinhard Weissinger CNY Duration of the study : October 2010 – March 2011 BRL 4.1 Introduction to the project and overview The key objective of the ISO pilot project is to determine in a quan- titative manner the benefits companies can derive from the use of standards in their business. Such knowledge is useful to demonstrate the advantages of participating in standards development initiatives and/or the use of standards. While many organizations realize the importance of the use of standards, few have analyzed their impact on the company bottom line and their key role in an organization’s strategy. The ISO pilot project in Singapore was conducted from October 2010 to January 2011 with the finalization of the report in March 2011. The project was led by SPRING Singapore 1 with the guidance of ISO and support of MBA Interns from the Nanyang Business School 2. 4.2 Introduction to the industry and selected company This study is focused on the impact of standards in the supermarket sector of the food retail business. The supermarket is the defining retail element of the food industry. Restaurants, cafes, bakeries, food courts 1 SPRING Singapore is the enterprise development agency responsible for helping Singapore enterprises grow. We work with partners to help enterprises in financing, capability and manage- ment development, technology and innovation, and accessing new markets. As the national standards and accreditation body, SPRING develops and promotes an internationally-recognised standards and quality assurance infrastructure that builds trust in Singapore enterprises, products and services, thereby enabling their global competitiveness and facilitating global trade. 2 The NANYANG MBA is recognized internationally for its prestige and lifelong learning experience. Delivered by a top international faculty, The NANYANG MBA has consistently been recognized among the Top MBA programmes globally. Ranked amongst Asia’s best, it is the first in Singapore and among a select few in the world to attain both highly prestigious accreditation from higher education bodies, EQUIS (EU) and AACSB (US). A select group of high calibre individuals from more than twenty nationalities from diverse backgrounds attend The NANYANG MBA to prepare them to lead and manage organizations in a global business environment, with a strong focus on Asian know-how. 48 Economic benefits of standards and hawker centres are also ways consumers can purchase food. About 60 % of the food retail sales takes place in supermarkets, hyper marts and modern mini marts. The rest takes place in traditional provision stores, wet market stalls and convenience stores. Increasingly over the last 10 years or so, more households are going to supermarkets for their fresh produce, meats and fish requirements. NTUC FairPrice Co-operative Ltd. was founded by the labour move- ment in Singapore in 1973, with a social mission to moderate the cost of living in the country. In 1983, NTUC Welcome merged with the Singapore Employees Co-operative to form NTUC FairPrice Co- operative Ltd., (FairPrice) selling groceries, household items, beverages, food items and other merchandise. NTUC FairPrice has grown to become Singapore’s largest supermar- ket retailer, with a network of more than 240 outlets and a market share of over 50 %, making it a household name and a highly trusted brand. The company achieved strong performance with revenues over SGD 2 billion in 2010 and has witnessed a CAGR of over 8 % over the past decade. Net profit of the company too has shown a steady increase to over SGD 120 million and it employs over 7 000 employees. Today, with its multiple retail formats, the social mission of NTUC FairPrice has evolved to make the dream of living well accessible to everyone by moderating the cost of living in Singapore. Its service motto “ Service from the Heart ” is a part of Fair Price’s corporate vi- sion – “ To Be Singapore’s Leading World-Class Retailer with a Heart ”. The key value chain of NTUC FairPrice, which is impacted by the consensus standards identified, consists of three major business functions : procurement, warehousing/distribution and retail. The other business functions include finance, information systems and human resources. Economic benefits of standards 49 The scope of the assessment in the pilot project focuses on the three major business functions – procurement, warehousing/distribution, and retail (only FairPrice Hypermarkets, supermarkets and FairPrice Finest). 4.3 Attitude of the company towards standardization NTUC FairPrice is a believer and advocate of standards and hence is an ideal company for this project. Being the largest supermarket retailer, NTUC FairPrice not only uses standards to help increase its operation and cost efficiencies, it also helps to raise the standards of Singapore’s retail industry by facilitating many local companies, namely its suppliers, to also use standards. It was among the first supermarkets to introduce many standards – both mandatory and voluntary in its business operations. 4.4 Analysis of the value chain The supermarket industry is a complex, global collective of diverse businesses that together supply much of the food consumed by the world population. A value chain for any product or service extends from research and development to raw materials supply and food production, delivery to international buyers and disposal/recycling. A highly integrated supply chain helps to pull together the complex processes in this industry to ensure quality, safety and efficiency in its processes. 50 Economic benefits of standards 4.4.1 Industry value chain Walmart, Carrefour, Metro Group, Tesco, Schwarz and Kroger are the top 5 giants in the global retail industry. Quality management and cost control are the key value drivers that increase their revenue and drive more benefits for their shareholders. In Singapore, there is a rapid growth in the consumption of grocery products. Some 20 % of our annual household expenditure is on food and grocery. NTUC FairPrice 3, Cold Storage 4 under Dairy Farm International and Carrefour, are the three major supermarkets retailers in Singapore. NTUC FairPrice has been involved in the leadership of the Efficient Consumer Response (ECR) Singapore initiative since its launch in 1998 and focuses on the supply and demand management for the fast moving consumer goods industry, Figure 1 shows the typical supermarket industry value chain. Market Warehouse Return Supermarket life cycle Procurement Planning (DC) / Retail recycling Key players Manufacturers Suppliers Logistic service Technology service Human resource Financial service Figure 1 Supermarket industry value chain and scope of the ISO pilot study5 (area in dotted lines) 3 Including FairPrice supermarket, FairPrice Finest 4 Cold storage supermarket only 5 http://www.slideshare.net/smehro/wal-mart-value-chain-analysis-by-sandro Economic benefits of standards 51 The dotted line indicates the business functions that were identified as being key parts of the value chain assessed in this study. 4.4.2 Company value chain The value chain of NTUC FairPrice was confirmed as being similar to that of other major supermarket companies, and the report provides an overview of the three major business functions – procurement, warehousing/distribution, and retail in NTUC FairPrice, which are directly involved in the processing and distribution of products and are impacted by the selected consensus standards. Table 1 shows the business functions that constitute the company value chain. 52 Economic benefits of standards Technology services – e.g. automatic sorting system, data synchronisation Financial services Human resource e.g. technical capability training Other supporting functions – e.g. governance, quality control, food safety and coordination, market research Inbound logistics Outbound logistics Procurement Retail to warehouse to retail Selection of suppliers * Receipt of goods JIT-delivery to retail Receive goods (quality of process, qual- (efficiency of process) units (efficiency of process) ity & safety compliance) (efficiency of process) Relationship with suppli- Return goods Return goods Return