ASEAN
Rethinking Supply Chains for the Future

Rethinking Supply Chains for the Future – Key Takeaways

Among ASEAN enterprises, priorities for 47% of them lie in delivering operational excellence with cost reductions, and priorities for 21% of them lie in improving resilience and agility, according to an AIBP study Manufacturing & Supply Chain Growth in ASEAN: Technological Shifts and Opportunities.

Today at AIBP Insights: Rethinking Supply Chains, we addressed the topic of current trends and future-proofing of manufacturing and supply chains with digitalisation and automation.

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.

Finalists of the 2021 ASEAN Enterprise Innovation Awards also showcased their innovation projects at the session.

Thirawat Loetthiraphan (Tun), Head of Supply Chain Management, and Peepoom Rungruang (Great), Senior Logistics Manager, from Central Restaurants Group (CRG), Thailand, showcased CRG’s project on Intelligent SCM for More Efficiency. They shared about how intelligent supply chain management served to address different pain points along their supply chain with digitalisation and automation.

David John Whitehead, Chairman, from Mavin Group, Vietnam, presented their project on Mavin Group – A Digital Transformation Journey. David spoke about Mavin Group’s 5-year digital transformation journey to be the most innovative digital company in Vietnam’s agricultural industry. Their 4 pillars of digital transformation comprise enterprise resource planning, cloud computing, digital and smart production & services.

The Enterprise Innovation Awards was established in 2017 by AIBP with the key objective of giving recognition to organisations who have embarked on projects to digitally transform their business through the adoption of innovative technology. The awards are held annually for ASEAN countries; Indonesia, Malaysia, Philippines, Thailand and Vietnam.

Key points brought up today are challenges and digitalisation maturity levels across the manufacturing industry and key driving forces behind digitalisation.

Challenges and Maturity Levels in Digitalisation Across the Manufacturing Industry 

When it comes to digital adoption, different sectors and geographies are experiencing different levels of maturity and challenges along their supply chains and manufacturing processes.

For the FMCG industry, ensuring that processes are optimised without disruption is important. As Sanjay Arumugam Jaganmohan, Automation & Digitalisation Architect at a multinational FMCG corporation involved in manufacturing, retailing and marketing F&B goods, mentioned, the issue to address lies in the convergence of the IT and OT space where implementation of new technologies like automation of the shop floor should not affect existing processes, but rather improving them.

Coming from the perspective of the semiconductor industry, Rhett V. Ramos, Director, Asia IT & Smart Manufacturing, Allegro Microsystems Philippines, shared about how the industry may have similar pain points, but is at a different maturity level in terms of digitalisation and automation. Smart manufacturing and industry 4.0 technologies like m2m, automation that FMCG manufacturers are beginning to adopt have been adopted in the semiconductor industry for several decades now. Despite this, Rhett mentioned that they are still constantly working on digitalising processes to keep up with digitalisation of the business. Just-in-time inventory management first adopted by the automotive industry where real time feedback will make operations leaner on various fronts and reduce costs along the supply chain as well.

Michael Lim, GTM Leader for ERP & Digital Supply Chain, APAC, Oracle, shared how a New York-based F&B business made use of cloud computing for order management as part of their omnichannel strategy. They were able to capture real-time data (rather than historical data) to derive accurate demand forecasting. In addition, technology like AI and ML which will drive supply chain automation and visibility, allows for businesses to meet customer demand as well. Aside from larger businesses, Rhett also brought up an important point about how the funds required for digitalisation projects pose a challenge to smaller businesses that do not have the financial means.

A key gap in digitalisation for the semiconductor industry that Rhett observed is how AI and ML ready solutions are not abundant for back-end semiconductor manufacturing.

Key Driving Forces Behind Digitalisation

The Southeast Asian landscape is highly dependent on human labour. However, as Rhett mentioned, human error and mistakes are unavoidable, but could result in quality issues and process inefficiencies.

In a similar vein, Sanjay elaborates about how automating manual processes means operations are more standardised and streamlined, and there are fewer chances of making mistakes. Businesses will also have more visibility of different processes, where data can be retrieved from different systems and functions to form a global view to enable key decision making. More importantly, the digital journey should be guided by local skills and suitable solutions for specific pain points in the business.

Thirawat and Peepoom shared how increasing competition in the F&B industry along with changing consumer behaviour in the new normal necessitates the exploration of new business models and cost optimisation. CRG is looking for automation and solutions to increase efficiency and productivity, as well as to increase flexibility to manage consumer demands.

At Mavin Group, David shared how their digital transformation journey was grounded in a strong vision which involved examining all opportunities for automation and advanced technology available to their (agricultural) industry. As a local Vietnamese company competing with many international businesses in the industry, Mavin Group must adopt technologies to keep up. The company made an eventual shift from adopting economical options to adopting best-in-class digital solutions along their journey.

The panel generally agreed that with automation, the workforce can then be involved in other operations even in countries where labour costs are low. However, Sanjay believes that a key hurdle from digital adoption lies in culture. David also believes that people affected by these processes must understand how the changes will benefit the company and the workforce.

Change is inevitable, but manufacturers in the region will have to consider government regulations, costs, as well as adopting the right solutions to address their pain points.

The AIBP Insights series will continue in the next couple of months, where we will host focus groups on enterprise digitalisation in ASEAN on enterprise finalists. Finalists of the 2021 ASEAN Enterprise Innovation Awards and will also be showcasing their innovation projects for their organisation.

Check out more insights on ASEAN’s supply chain trends at A Data-driven Approach to D2C Distribution.

Feel free to drop us a message if you would like to view the full session replay, or if you wish to find out more about upcoming focus groups!

AIBP

26 October 2021