Creative Destruction in the F&B Industry

Creative Destruction in the F&B IndustryCreative destruction, a term coined by the economist Joseph Schumpeter in 1942, is the concept of “incessant product and process innovation mechanism by which new production units replace outdated ones.” Schumpeter says that disruption is an important part of capitalism because it increases productivity.

As the term suggests, creative destruction isn’t a particularly comfortable concept, especially for those who are on the wrong side of it. The invention of the steam engine led to the creative destruction of travel by horses. The invention of automobiles led to the creative destruction of travel by steam engines. It’s an inevitable result of innovation which can make complete industries obsolete, and take thousands of jobs along with it. The positive outcome is that it creates new industries and redefines jobs within them.

So where is all of this going? McDonald’s recently announced its plan to install self ordering kiosks, thereby reducing manpower in their outlets. It’s not the only company to make a move towards automation. Chili’s Grill and Bar has made a move towards self ordering tablets. Restaurants in the US find automation a way to improve productivity.

There already exists a machine that creates 360 gourmet hamburgers in an hour. The entire machine could replace any human making burgers in the kitchen. According to this report, McDonald’s could fund the development of a burger making machine and see a one year return on investment. There are many reasons why companies are moving towards automating their processes.

In the United States, a big reason for this is the growing cost of labour. Currently, the minimum wage in the US is $7.25 per hour. For a few years now, workers in the F&B industry have protested that this number is far too low for it to be sustainable. They say that the reasonable wage floor should be at $15 per hour. LA recently passed legislation for $15 per hour.

The result of this is that fast food franchises are finding it increasingly difficult to cope with the labour costs. The alternative is to automate. Mundane and repetitive tasks can be done by smart machines. Jobs where human interaction is required, like serving food, can be taken up by people. Another reason why automation makes sense is that it’s more efficient and faster. Queues are shorter, human errors are less common, if not completely erased.

You can see parallels in the F&B industry between the US and countries like Japan and Singapore. On the one hand, labour costs are increasing in the US, forcing companies to automate. On the other hand, Japan and Singapore are facing a labour crunch often due to unwillingness of the countries’ citizens to participate in this industry, leading these countries to automate as well. The story is the same, where labour as a factor of production is being replaced by machines that can do the same work and produce better results. And this is where creative destruction fits in.

What does this mean for the F&B industry? Restaurant technology will develop and will facilitate automation. The hamburger machine by Momentum Machines, Inc is just the beginning in the back-end of a restaurant. POS systems, self ordering kiosks, cloud based scheduling applications and online reservation websites are taking over the work of regular staff in a restaurant. An entire ecosystem of automation surrounding retail and F&B already exists but what will trigger the momentum of creative destruction is the lack of a sustainable solution to the problem of increasing costs: in this case, the cost of labour.

SME Business Conference: 19th and 20th of August

Singapore Chinese Chamber of CommerceThe Singapore Chinese Chamber of Commerce & Industry is organizing a 3 day bilingual SME Business Conference on the 19th and 20th of August in the Exhibition Halls of Suntec Singapore. The event is co-organized by iDA Singapore and Lianhe Zaobao. The theme of the event is “Think Creatively, Act Innovatively”.

The SME community in Singapore gathers every year to share ideas about how to boost productivity, cut down costs and more. This year, the conference caters towards transforming businesses in Singapore through innovations in productivity.

With that theme in mind, the event will feature speakers from all facets of the business world, from startups to large corporations. They will speak about why businesses need to be agile in order to keep up with ever-changing global trends. One of the interesting sessions is on integrating technology like cloud computing, business analytics, social media and customer relationship management so that small businesses can scale smartly.

Singapore SME Conference AugustNow here is the awesome part. In an event like this, you can’t expect PayrollHero to be left behind, can you? Steve Jagger from PayrollHero will be speaking in a forum on “Innovation and Value Creation from Buzzwords to Actions for Business”. Steve will be joined by a panel comprising Dr Christopher Holmes, managing director of IDC Insights Asia Pacific, Ms Jenny Jang, manager of Jiransoft, Mr Law Chee Keong, director of Asia Pacific Partner Sales in Apigee. The discussion will focus on how Singapore businesses can transform their business plan into a reality by adopting technology.

The forum will be between 2.15pm to 5pm. in Hall 404. Mr Stephen Lim, CEO of SQL View will be moderating the discussion. Mr. Lim has a wealth of experience behind him: he is a member of the board of SPRING Singapore and NTUC Fairprice. He has 25 years of experience in the IT industry and is the perfect person to host this forum.

We’re excited about the event and hope to see many business personalities participating and networking over the two days of the programme. It will be interesting to see academics, notable members of the government and business people discuss the way forward for small and medium enterprises in Singapore. We look forward to the event and wish the Singapore Chinese Chamber of Commerce & Industry good luck for hosting the conference!

Cloud Computing Part II: 5 Companies that are Changing the way Business is Done

pablo

As a sequel to our previous post on cloud computing, we thought we would give you an idea of how cloud computing is being used by companies to help businesses in South East Asia. Below we have 5 companies that are changing the way businesses function. Some of them are catered towards bringing in more consumers through the door while others are helping business move day-to-day operations into the cloud so that businesses can spend more time and money on their core competencies.

Loyalty Apps

Perx: This Customer Relationship Management (CRM) software collects loyalty cards into one neat app. For a consumer, you earn points every time you purchase something. Accumulation of points leads to rewards. Perx says that consumers spend 7 times more with the app than without it. Some of the merchants under Perx’s belt are Subway, Joe and Dough’s, Maki San and Salad Stop.

For you, a merchant, Perx gives a huge client database by putting you on their map. The company uses Amazon Web Services to control all the data it collects. Perx’s data analytics gives information about consumption trends, how much a consumer would spend on lunch, where they are located: in short, everything you would like to know about your customer. Perx offers this wealth of data to all its merchants for a fee. As an added marketing platform, Perx features companies on their email and blog which is sure to boost your presence in the community.

Foursquare: While Foursquare does not collect virtual loyalty cards, it uses its core competency – geolocation data and services – in order to bring businesses to consumers. For businesses that claim their names in the Foursquare directory, all rewards and deals that are offered will be displayed to the user.

Inventory Management

TradeGecko: Singapore’s leading user-friendly inventory management software uses the Cloud. It helps retailers and wholesalers to manage multiple warehouses and the entire supply chain without using conventional methods like excel. TradeGecko allows remote monitoring which helps retail managers to control operations at multiple locations. TradeGecko also has Xero integrated into it to digitize the accounting end of the business as well.

Unleashed: Similar to TradeGecko, Unleashed provides analytics on turnover rates, overstocked items, managing margins across different channels (retail, wholesale, e-commerce) and all this in real time.  Unleashed also integrates other Cloud solutions to its app.

Food Delivery Apps

Slurp: Created by Silent Mode, Slurp is the Malaysian version of Foodpanda. It uses cloud based POS systems that help restaurant owners process delivery orders. While Slurp does not deliver food, it has a data analytics service along with a customer app and a waiter app, all in the effort to make ordering food a smoother and error-free process.

Part I on Cloud Computing: 3 Reasons Why Your Business Should Use Cloud Computing Now

cloud computing Cloud Computing, by definition, is “the practice of using a network of remote servers hosted on the Internet to store, manage and process data, rather than a local server or a personal computer.”

Let’s be honest, that sounds terribly boring. And you’re probably wondering: I don’t even know what half of that means.

As an intro to cloud computing, take a look at the infographic we have for you. Now, let’s talk about why your business needs to upgrade its IT infrastructure and adopt cloud computing with arms wide open. Using cloud computing services helps you increase efficiency, cut down on costs, and change the way you do business.

  1. Demand-Supply management: Cloud computing gives you the opportunity to be ridiculously client focussed using big data and data analytics. Imagine owning a gaming store that sold console games. If Game A was trending that week and Game B was not doing so well, data analytics would allow you to identify that trend, allowing you to stock up accordingly. Not only would you improve sales, you would manage inventory better and improve your turnover rates. For your business to be flexible and sustainable, you need solid data to back up your decisions. Cloud computing offers insight into your customer’s preferences. Using this data will give you the competitive advantage that you need.
  1. Cost reductions:
  • By using the Cloud, you can cut costs by moving from the CAPEX model to the OPEX model. This is particularly useful for companies that have a high debt burden. Initial capital expenditure on IT assets or building your IT infrastructure is not fully deductible, which leads to higher taxes. On the other hand, operating expenses on running services through the cloud are fully tax deductible. By moving your system to the cloud, you will be able to free up capital for other investments.
  • There is another benefit to cloud computing on your balance sheet. Think about the IT infrastructure you have set up for your business. You have 10 servers that work perfectly well on a regular basis. All of a sudden, during a special discount that you are promoting through your website, you notice greater traffic. Now you need 5 more servers to sustain the traffic. However, the investment is too expensive for the limited amount of time that you are using it for. If you could rent and pay for servers for just a short period of time, wouldn’t that make more sense than investing in assets that will not pay off in the long run?
  1. Remote-monitoring: This one is easy. By using the Cloud, you can access your company’s data anywhere and at any time. When you’re on that much needed holiday in the tropics, your spreadsheets back home will be of no use to you. With Cloud Computing, you can get back to your business at a moment’s notice and respond to any emergency, all this while sipping on some mai tais and preparing for the beach volleyball game.

Now, if you already knew all of the above, then you have probably contemplated the next question. What about security? We understand, recent security breaches that have led to disasters for some companies do not instil confidence in what we are talking about. Sensitive information is at risk when you are using Cloud Computing. But here is what’s important for your business: if IT is not your core competency, then no matter how much you invest in security, a company that rents out servers probably has a more secure system in place. Again, this is about how you want to use your resources to focus on your business.

Singapore is a great example on how Small to Medium sized Businesses (SMBs) have adopted cloud computing. Cloud Comrade, a company that provides solutions on cloud management, says that around 63% of businesses in Singapore turn to companies like Cloud Comrade for cloud technology solutions. Singapore is one of the fastest adopters of cloud computing services.

Altogether, the reasons for cloud computing, especially for SMBs was put very simply by Pavel Ershov, Parallels’ vice president of service providers business for the Asia Pacific and Japan regions:

“SMBs today have the best of both worlds to help them grow their businesses–cloud services offerings with enterprise-grade capabilities at affordable costs”


Want to learn more about PayrollHero? Check out our country specific websites:
Singapore, Philippines, Malaysia, Indonesia, Thailand | Canada, USA

 

Scheduling Practices: Hallway Test!

Today marks two weeks of my internship at PayrollHero. To celebrate my two-week-erversary, I went out to do a little survey. The aim was to understand what systems businesses have set up to manage scheduling, measure attendance and calculate payrolls.

2015-05-21 16.04.44__1432268258_115.42.154.34

The Costa Coffee crew.

I surveyed 10 cafés in the Central Business District in Singapore to find out how they schedule workers in their outlets. Some of the outlets I visited were Cedele, Starbucks, Joe & Dough and Costa Coffee. They all had similar systems set up to schedule workers, with a few interesting anomalies:

  • With the exception of one cafe, everyone uses the punch card system or a regular excel sheet for workers to clock in and clock out. The exception in question has software set up to monitor attendance.
  • Scheduling is done on a weekly basis. The worst case scenario is when a worker notifies the admin that he or she can’t show up just a few hours before the shift begins.
  • Usually, the outlet manager calls another outlet to find a substitute. In the case of one cafe, Whatsapp groups are used to coordinate and find substitutes. Most outlet managers believe that the best way to reach someone is to call them. Texting or emailing is not a common communication channel.
  • The HR admin in every outlet takes around 2 to 3 days to calculate payrolls.

With that simple survey, it was evident that cafés in Singapore use conventional ways to schedule shifts. While workers rarely drop shifts, outlet managers need to be on standby to call nearby outlets for substitutes immediately.

Using Data Analytics to Improve Productivity

When the weather is bad, or there is an MRT breakdown, the situation is worse because all outlets in the same region are affected equally. While an outlet manager is calling multiple outlets for substitutes, customers are walking in and waiting for service before walking out, disappointed and unhappy. That directly affects the bottom line. Managers should be able to access an online database and use data analytics to see which outlet is on top of things in real time in order to call that outlet directly and ask for a substitute.

The top priority for every outlet manager is to make sure the day runs smoothly. It becomes much harder when the manager is not equipped with the right data to plan ahead of time. In a country like Singapore that has high internet penetration rates and high cell phone penetration rates, installing an application that stores this data in the cloud is easy and inevitable. If managers had access to this data, it would also be a way to motivate workers to be regular in order to move higher up in the rankings among outlets.

Calculating Payrolls

The systems put in place for measuring hours worked per employee in order to calculate payrolls should also be revamped. It should not take a manager 2 or 3 days to calculate payrolls when she has a million other things to look after. What’s more, the hassle of buddy punching, human errors and shifts in multiple locations add to complications for the manager. More errors equal higher costs. Higher costs equal lower profits. The bottom line is affected by inefficiencies that can be wiped out by a one-time change in the basic infrastructure.

Finally, the idea behind having an app that does all of the above is predicaSingapore Payrollted on increasing productivity: be it that of your rank and file workers or your manager. Higher productivity leads to a better workplace environment and happier people, which further leads to higher productivity. That is a virtuous cycle, if ever I saw one. In effect: optimizing work productivity with happiness.

Now, where have I heard that before…

Clint Wilson of Cazoomi Checks Out PayrollHero

Today I had the opportunity to have Clint, Lheomar, Michael and Bernard of Cazoomi stop by the office in Manila to show them what we are all about at PayrollHero and exchange ideas from a software vet! Clint Wilson, CEO and Founder of Cazoomi is based out of San Francisco in the US but is often found traveling through Asia working with his team abroad in their operations throughout.

I was lucky to sit down with them for a coffee at The Coffee Bean and Tea Leaf to chat about our company ambitions and learn more about how Cazoomi has successfully navigated the software world as well as where opportunities exist in today’s market. I even surprised Clint with making him clock in with TeamClock on my phone, his expression was too good to not share. Thanks for that one Clint!

Always surround yourself with like minded individuals and put yourself out there to meet new people whenever possible!

clint3

Clint

clint2