5 minute read 29 Sep 2021
Startup business manager talking to business partner

Why private companies need flexibility to grasp opportunities

By Randall Tavierne

Global EY Private Assurance Leader

Global leader helping entrepreneurs and private companies realize their ambitions. Frequent speaker on the high-growth market.

5 minute read 29 Sep 2021

CFOs need adaptability and a willingness to take calculated risks to capitalize on the upcoming economic rebound.

In brief

  • Private company CFOs need to demonstrate adaptability and a willingness to take calculated risks to benefit from the upcoming economic rebound.
  • EY teams spoke to Wen Lieh Loo, Group Financial Controller of food manufacturing firm Tee Yih Jia Group (TYJ), to explore how he has been adapting.

Planning to rebound to an “old normal” post COVID-19 will no longer drive success. Business leaders are acknowledging that growth strategies cannot be built on the same assumptions or principles in the pre-pandemic era.

We spoke to Wen Lieh Loo, Group Financial Controller of Singapore-based food manufacturing firm Tee Yih Jia Group (TYJ), about how adaptability and taking calculated risks has driven growth over the past 18 months, and, importantly, how it will put the company in good stead in the upcoming economic rebound. 

Loo has faced a storm of issues over the last 18 months, but has found many opportunities too. As the COVID-19 pandemic disrupted supply chains and export markets, he has been working hard to manage financial risks; develop the finance and technology behind a cutting-edge new factory; and deal with a product re-labelling issue.

“In addition to a product re-labelling issue in early 2020, we were in the midst of building a massive new factory, just as COVID was starting, so it was a very busy time,” says Loo. “Singapore is a small market; our exports are important and they have been challenging, with many disruptions to supply and distribution chains. However, in Singapore, lockdowns were positive for our brands that are available in supermarkets as people stocked up to eat at home. But for some other customers in the hotel, restaurant and café (HORECA) sector (including factories and airlines), those sales were adversely affected.”

Singapore is a small market; our exports are important and they have been challenging, with many disruptions to supply and distribution chains.
Wen Lieh Loo
Group Financial Controller at Tee Yih Jia Group
(Chapter breaker)
1

Chapter 1

How TYJ has addressed finance challenges

Better risk assessment has become more important.

COVID-19 added greatly to the volume of compliance work for Loo and his team, with frequent new government requirements. He also had to hone his risk management skills. One of the biggest financial challenges in 2020 was that credit insurers became extremely cautious and, in some instances, refused to cover customer contracts. Loo and his team therefore had to do more work supporting decisions about whether to sell to each customer.

“If those customers go bankrupt during the COVID-19 pandemic, we might never get our money back,” he explains. “So we had to work with customers to gather and analyze their financials much more carefully than usual to assess the risk.”

CFO activity outlook

87%

of respondents expect to be most involved in business model innovation and new revenue opportunities in the next three years.

According to the latest EY DNA of the CFO survey, this is different from finance leaders in public companies, who thought CFOs would emphasize strategy first (80%), then innovation and new revenue opportunities (76%). However, CFOs are also becoming more aware of the potential of new technologies, and those in private companies are responding quicker than their counterparts in public ones.

Loo is closely involved in all these areas. TYJ has been implementing a new enterprise resource planning (ERP) system as part of a S$400m (US$307m) factory build. When completed, the factory will be three times the size of TYJ’s current premises and one of the largest of its type in Asia-Pacific. It will be fitted with cutting-edge technology, such as a one hundred thousand pallets fully automated storage facilities and intelligent automation.

To optimize information from these systems, the finance function will need a new ERP that integrates seamlessly with them. So it is replacing its previous ERP, bought locally but for which support has ceased, with one from the same provider as the warehouse management software. COVID-related labor issues delayed the factory build, and also the software implementation. But they will arrive imminently and in time to take advantage of post-pandemic opportunities, says Loo.

“Things are improving this year,” he explains. “The supply chain is moving again, although at much higher costs, and the new factory will contribute to revenue growth. It will add significant capacity to meet fast-expanding demand as the pandemic recedes.”

(Chapter breaker)
2

Chapter 2

How TYJ has unlocked cost savings

Use data analytics to avoid unnecessary costs.

In 2020, TYJ managed to maintain year-on-year revenue. However, several factors impacted profitability, including a sharp rise in freight charges. Loo hopes to counter this with significant savings from intelligent automation in the factory and economies of scale.

“For example, the new technology will help make energy consumption much more efficient and trackable,” he says. “Electricity is currently a massive overhead, but I’m not able to accurately look at which areas, machines or departments are consuming the most, or to mitigate surges, which cost us more.

“The new factory will have intelligent circuit breakers which will inform me, via an app and alerts, exactly what wattage is used where, and the source of surges. The data and analytics from that will be useful in helping control energy usage and avoiding unnecessary costs. If I can cut 10% costs, which goes straight to the bottom line, I’ll be happy.”

(Chapter breaker)
3

Chapter 3

How TYJ has developed new revenue strategies

Address new customer trends to generate additional revenue.

Loo mentioned the new factory that is being built will also be supporting his company’s new revenue strategies; for example, with plans to launch a series of meat-free and protein-based meals to meet new consumer trends, which are changing rapidly post-pandemic. This will also help avoid the complex regulatory requirements involved in exporting meat-based products, he says.

Another strategic plan is to digitize banking and client transactions and other areas of finance such as invoices and payment vouchers. “We have been trying to do this for some time,” says Loo. “Before the pandemic, it went slowly as people found the old methods safe and comfortable. The pandemic has given us the reason to move digitization faster.

As CFO, you need always to be looking at how you can do things differently, especially during an extreme event such as the pandemic.
Wen Lieh Loo
Group Financial Controller at Tee Yih Jia Group

“As CFO, you need always to be looking at how you can do things differently, especially during an extreme event such as the pandemic. The new ERP will empower our team to do that – and safely and securely at home. My colleagues have handled the challenges incredibly well and will come out stronger and better.”

Profile

Wen Lieh Loo started his career in 1996 at KPMG Singapore, then worked as CFO for Agva Corporation and Hengxin Technology before joining Tee Yih Jia in 2007. His current role covers finance, treasury, tax, internal controls, corporate governance, investment due diligence, and mergers and acquisitions. TYJ Group is one of Singapore’s biggest frozen food companies, with interests in food manufacturing, property development and investment holdings. The group comprises more than 20 companies and has distribution in more than 80 countries.

Summary

While the role of the chief financial officer (CFO) has arguably seen the most change of any C-suite leader over the last decade, its evolution continues to intensify and accelerate. At the same time, existing markets and competitive assumptions are potentially being swept aside, and finance leaders are likely having to grapple with a new emerging reality.

EY teams spoke to Wen Lieh Loo, Group Financial Controller of Singapore-based food manufacturing firm Tee Yih Jia Group (TYJ), to find out how he has been adapting his strategic approach during the Covid-19 pandemic.

About this article

By Randall Tavierne

Global EY Private Assurance Leader

Global leader helping entrepreneurs and private companies realize their ambitions. Frequent speaker on the high-growth market.