South African companies are slowly but steadily starting to claw their way out of the economic quagmire left by the Covid-19 pandemic.
Recent figures from Stats SA show that turnover increased in seven industries between the third and fourth quarters of 2020, namely real estate and other business services; community, social and personal services; construction; manufacturing; transport, storage and communication; and mining and quarrying.
Total turnover of these industries in the fourth quarter was estimated at R2.81-trillion – an increase of 8.4% compared to the third quarter of 2020.
Yet the reality remains that the pandemic has left a devastating trail in its wake.
South Africa recorded a 49% increase in liquidations between March 2021 and the corresponding period in 2020 when the lockdown was first implemented.
Many commercial ventures, especially smaller businesses, have been unable to survive, resulting in the loss of hundreds of thousands of jobs.
For these entrepreneurs and SME owners, rock bottom is no longer a cliché, but it is essential that they manage to find a way back if the country is to have any hope of attaining economic stability.
Certainly for smaller entities, hard lessons have been learnt along the way.
For one, it will have dawned on them that relying on one or only a few clients is not sustainable. For another, the importance of cash reserves cannot not be overstated enough, particularly when there are the livelihoods of employees to consider.
But perhaps the biggest lesson is that the quality of service or product is key to negotiating the choppiest waters.
Consumer spending may have fallen off dramatically as people’s incomes were lost or slashed, but when they did spend, it was on items and services they knew they could trust.
For example, at the height of the pandemic in Australia, a survey by research firm Roy Morgan found that citizens turned to trusted hardware store Bunnings and food and clothing giant Woolworths for consumables.
In South Africa, household names like Checkers and Pick n Pay thrived as online orders for groceries soared.
This is not only a matter of brand management, but quality assurance.
As South Africa emerges from its slump, SMEs will be need to be cognisant of what has gone before and at the very least match the standards set by those entities which have survived the devastation wrought by the coronavirus.
Almost all of these subscribe to the International Organisation for Standardisation (ISO), with the ISO 9001:2015 Quality Management System Standard being the standard globally recognised to assist organisations produce products and services of optimum quality.
Muhammad Ali, managing director and lead auditor of leading South African ISO standards training and implementation specialist WWISE, explains that a standard indicates the tools required – policies, process flows, procedures, work instructions, forms reports and statistical analysis, for example – to guide the organisation to fulfill its goals, targets and objectives.
Essentially, a “comprehensive baseline risk assessment” is required to understand the activities in each department and its processes.
It also looks at the areas where verification/inspection and validation/testing can be achieved by reviewing company reports, and measuring products against specifications.
“This is what determines the actual measurement of quality,” Ali says.
“In each process when the risks are identified, these then can be mitigated with treatment plans and strategies which can be achieved with functional, quality measurable objectives. These objectives that are quantified are to be linked to top managements KPIs which then allow the embracement of the system.”
ISO quality standards are applied rigorously in the manufacturing, automotive, construction and telecommunications sectors, as these require a high level of quality assurance, both locally and abroad.
The ISF group, a South African engineering, construction and management company, is now ISO 9001:2015 certified, but had experienced several challenges in the past, notably fewer tenders being awarded, loss in revenue, low customer satisfaction and no standardised structure.
However after meeting Ali and his team, which developed a necessary documentation and risk assessment process for potential future challenges and the implementation of workshops and on-the-job training and internal audits, the turnaround in fortunes was immense.
Not only did annual revenue increase by 18.75%, but the company improved effectiveness and efficiency in operations as well as improved employee and team morale. Furthermore, its certification allowed it to be verified by other industry bodies.
What is interesting to note is that smaller businesses like car rental agencies and financial service providers are increasingly becoming aware of the importance of being ISO-certified as well, recognising that in a global economy, standards are everything.
Ali recommends that to begin with, SMEs take about a R30,000 investment in a Gap Assessment, which determines how far off from or close to a company is to the relevant standards. The costs for implementation are dependent on assistance in closing the gaps and building a management system.
The installation of the system can take anywhere between three months and three years, depending on the size of the entity, the complexity of processes, scope of products and services and commitment from top management.
“Ultimately for business owners, it provides structure and reduced costs on ineffective processing time,” Ali says.