ASEAN

Realising the Potential of Digital Technologies in the Supply Chain: Key Takeaways

AIBP Insights is a series of discussions held online which brings together a focus group of ASEAN stakeholders to discuss topics related to enterprise technology adoption in the region.

By 2030, ASEAN is expected to be the world’s fourth largest economic bloc. The region’s changing demographics, geopolitical shifts, and favourable government policies lay a solid foundation for its member countries to capitalise on growth in the manufacturing industry. More importantly, the growing emphasis on the role of the employee in the age of automation will shape how businesses in this industry adopt emerging technologies. According to the 2021 AIBP Enterprise Innovation Survey, 50% of ASEAN manufacturing respondents are looking to improve workforce resilience and upskill talent, and 43% want to experiment with RPA, AI, ML, and other cognitive technologies. (You may view more survey results in our 2021/22 ASEAN Enterprise Innovation Market Overview here

In the opening discussion for our 2022 AIBP Insights Manufacturing series, our panelists from Bukit Muria Jaya (BMJ), Oracle, Semen Indonesia Group (SIG), Sinar Mas Agro Resources and Technology (SMART), and Trames, came together to discuss and share their perspectives on transforming supply chain processes, roadblocks faced, business model shifts, and the future outlook: ROI & achieving stronger supply chain resilience.

Digital Transformation Landscape – Transforming Supply Chain Processes and the Roadblocks

Sue Yuin Ho, Vice President, Industry Platform, kicked off the discussion by giving an overview of the changing manufacturing landscape and the growing significance of the digital surge in the industry. Following which, Michael D. Lim, Director & GTM Leader, ERP & Digital Supply Chain, Oracle, shared his views on the Supply Chain Maturity Model and how manufacturers are digitising to drive process excellence and growth. 

To put it simply, data mapping is the process of determining where your information is stored. Historically, too much power has been concentrated in the hands of forwarders and carriers, and Ivan Seow, Supply Chain Officer and Co-founder, Trames, believes that it is critical to empower shippers to reclaim control of the processes and data. Creating and aligning data maps can help standardise data, reduce error margins, increase visibility, and improve collaboration.

Prior to the pandemic, Ronni Rombe, Director of Supply Chain, Sinar Mas Agro Resources and Technology (SMART), shared that they had already automated and digitised some of their operations, which has relieved pressure on the workforce because the robots are protected from COVID-19 and their productivity will not be compromised as compared to a COVID-19 infected individual.

SMART not only serves the domestic market but also exports internationally. Pak Ronni shared that because most cargo is shipped by sea freight, they have faced a number of challenges, including the Suez Canal blockage*, congestion in multiple ports, and limited container availability. To overcome this, Pak Ronni emphasised the importance of flawless communication across their ecosystem, with each stakeholder kept up to date on the various scenarios.

*If you are interested to find out more about the Supply Chain disruptions, we have outlined them in a recently published report on Manufacturing & Supply Chain Growth in ASEAN. You may view the full report here.

Fadjar Wibowo, General Manager Supply Chain and Procurement, Bukit Muria Jaya (BMJ), resonates with the international export challenges faced by Pak Ronni, and added that the international export market is declining due to the tremendous increase in freight costs. Customers would constantly seek to find cheaper suppliers of cigarette paper elsewhere, making it nearly impossible for them to retain all of their customers.

Business Model Shifts: Increasing Focus on D2C in ASEAN Manufacturing

Direct-to-Consumer (D2C) is a business model in which a manufacturer sells directly to the end user, bypassing distributors and retailers. Many businesses, including those in manufacturing, are realising the value of digital transformation (post-Covid 19).

You may view the summary of a recent discussion we concluded on Enabling Hyperlocalisation with Big Data (e-commerce and direct-to-consumer distribution) here.

All Mulk, Senior Vice President of ICT at Semen Indonesia Group (SIG), stated that the company has three existing business models: B2B, B2B2C, and B2C. B2B, where they deal directly with institutions to meet their needs. B2B2C, entailing their commerce platform for retailers to source SIG products to sell. In addition, they have several initiatives in place for their B2C model that serve as a community for customers to purchase SIG products on the marketplace/digital-based service innovation platform, Akses Toko.

Pak Fadjar’s other priority, in addition to serving the B2B market, is the B2C market, where they are collaborating with an e-commerce company to sell products directly to consumers.

The Future Outlook: ROI & Achieving Stronger Supply Chain Resilience

There is rarely a one-size-fits-all solution when it comes to measuring ROI. Pak Ronni added that digital transformation necessitates large investments and that organisations must identify and prioritise the initiative/project with the greatest impact.

Pak All added that for SIG, as a state-owned enterprise, carefully evaluating the Minimum Viable Product (MVP) is critical, and that iterative vetting of ideas would result in faster feedback for course correction towards the ‘correct’ product, with the least amount of sunk costs.

Ivan stated that each company will have its own low hanging fruit, and it is up to them to decide which ones to pursue. Ivan nicely summarised a simple methodology when evaluating ROI: test, prove value, proceed. If not, change course/pivot. Most startups and large corporations would take a similar approach because they are unwilling to face the risks head on.

Concluding the discussion, Pak All added that speed-to-market will be key. Organisations must incorporate agility into strategy execution processes to move quickly during disruption, allowing them to adapt to uncertainty as it arises. Rather than reacting to every change, organisations should plan ahead of time to shift priorities and accelerate in order to stay ahead of their competitors.

With that, we look forward to continuing our discussion on Cybersecurity for Smart Factories in Manufacturing tomorrow (29 March), ASEAN Agribusiness Revolution in the Digital Age (7 April) and Data Driven Transformation – Moving up the Manufacturing Value Chain (8 April). Registrations are available here. We will also be hosting a discussion on sustainable supply chains with Asia Pulp & Paper (APP) Sinarmas and Integrated Micro-Electronics (IMI), on 5 April 2022. For more information and to access complimentary registrations, do visit this page

Do reach out if there are topics in digitalisation you would like to hear more of!

AIBP

28 March 2022