COVID-19: Supporting enterprises, jobs and incomes

Indonesian SMEs turn pandemic into new business opportunities

Small and medium enterprises (SMEs) participating in ILO SCORE Training shared their business journey surviving the pandemic. They found new business opportunities despite the many challenges.

News | Jakarta, Indonesia | 03 November 2020
The COVID-19 pandemic has hit small and medium enterprises around the world, including Indonesia, the hardest. Dagadu Djokja, an iconic garment brand from Yogyakarta, for example, never imagined that the pandemic would leave them with only 1 percent turnover. “We reached a point where we did not know what to do anymore,” said Spika Virgino, founder of Dagadu sharing his business experience.

One of the Dadagu outlets in Yogyakarta (c) Tribunnews.com
Together with four other companies, Dagadu Djokja shared how they survived the pandemic by applying what they learnt from their previous trainings with the ILO’s Sustaining Competitive and Responsible Enterprises (SCORE) Programme in an interactive webinar on 27 October 2020.

Last August we have reached a recovery of our offline stores to 85 percent and starting next year, we are going to export the personal protective equipment abroad. In this way, we can maintain our business, stores and employees."

Spika Virgino, founder of Dagadu
The event was conducted in collaboration with BEDO, a training partner of the ILO’s SCORE programme since 2015. The ILO SCORE programme promotes productivity, competitiveness and improved working conditions of small and medium sized enterprises in 11 countries, including Indonesia.

Learning about the importance of workplace cooperation, the first effort taken by Dagadu was to gather all of its employees and staff and transparently review the situation. They discussed how operations could be made more efficient, what budgets they would have to cut and how to shift to online business.

“The supportive work culture that is created through openness inspired us to find solutions together. The online business and marketing helped us managing our business,” said Spika.

Recognizing the quality of the Dagadu products, the big opportunity came from the investor offering business diversion from t-shirt making to personal protective equipment. As a result, Dagadu witnessed an increase of revenue up to 200 percent.

Together we decided to make the best use of raw materials that we have and turn them into products that are in high demand during pandemic such as masks.."

Anindyah, one of the Lawe founders
“Last August we have reached a recovery of our offline stores to 85 percent and starting next year, we are going to export the personal protective equipment abroad. In this way, we can maintain our business, stores and employees,” stated Spika.

Lawe Indonesia, a community social enterprise focusing on traditional garments, shared a similar story. When the pandemic hit, said Anindyah, one of the Lawe founders, the management team started to gather all of the employees to analyze the situation. After joining SCORE Training, Lawe made improvements in managing and recording their products, raw materials and stocks.

“Since we have a good product and storage management system, we could quickly identify our assets. Together we decided to make the best use of raw materials that we have and turn them into products that are in high demand during pandemic such as masks. We also started doing retail sales through online platforms to ensure product sales,” she said.

The COVID-19 pandemic has slowed down businesses
Indo Risakti, an export-oriented home decor producer using recycled materials, faced cancelled orders, payment delays and undelivered orders. “I felt like dark clouds hanging over us the first three months from March to May. We had a reduction of revenue between 60 to 70 percent,” said Windu Sinaga, a founder of Indo Risakti.

Based on what we learnt from SCORE, we develop three stages: protect, recover and retool. In each stage, we maintained open communications and strengthened our internal collaboration.."

Achmad Kurnia, the owner of Siji
Fortunately, based on what they learnt from SCORE, the company already had a good communication mechanism between the management and employees. Thus, both parties had the same understanding about the company’s condition and what it meant for the workforce.

Just like other companies, Indo Risakti started to shift its products to domestic and online markets. As a result, they started to witness an increase of revenues in June and they even increased the number of workers.

“Focusing on the domestic and online markets really paid off. We even have new buyers. Next year, we are going to aim at both domestic and export markets and we are going to open an online marketing division,” explained Windu.

Similar to Indo Risakti, Siji, a home ware provider in Yogyakarta, focused on export markets before COVID-19, which reduced their sales to 30 percent. They also shifted to the domestic and retail markets.

“Based on what we learnt from SCORE, we develop three stages: protect, recover and retool. In each stage, we maintained open communications and strengthened our internal collaboration. We also focused on reviewing our stocks and materials and we increased our operation efficiency by pushing the reject rate under 3 percent,” shared Achmad Kurnia, the owner of Siji.

Januar Rustandie, Progamme Manager of ILO SCORE Indonesia, appreciated the innovation and creativity shown by the enterprises and introduce a new training module. “We expanded our training programme. As a response to this crisis, we are now offering Business Continuity Planning to support more micro, small and medium enterprises in redirecting their business.”