Vince Poon is the CEO of Aratum.
Supply chains are the lifeblood of business. If you can’t get your product into consumers’ hands, nothing else matters. Supply chain technology solutions help organize the process from start to finish for companies of every size.
A constant stream of new software and technology is becoming available, especially systems incorporating AI and machine learning. According to McKinsey & Company, autonomous supply chain planning can increase revenue up to 4% and lower supply chain costs up to 10%. Yet a 2023 survey by PricewaterhouseCoopers found that few executives are or plan to use digital technologies to enhance their supply chains in the next two years.
Business leaders who do make the switch face tough decisions when they want to make their supply chain processes more efficient, cost-effective and resilient. The post-Covid boom in e-commerce makes this digital transformation all the more important—and difficult.
In my experience working with companies throughout Asia to modernize their supply chains, I’ve identified these key challenges and best practices for decision-makers who want to navigate this shift.
Challenges
• Unsuitable technology: In some cases, the problem may simply be the existing technology. Hardware and software systems may not be compatible, or software may be out of date and need to be upgraded. I estimate that about half of companies in Asia are still using Excel for supply chain management.
• Lack of skills and guidance: Teams need the appropriate skills and guidance from management to navigate the digital journey. Sometimes company culture resists large-scale changes, and nobody wants to waste time on a process that is complex and expensive without the proper support and direction.
• Diverse regions: Countries in a region as varied as Asia also have different currencies, financial systems, compliance rules and languages. Not everyone speaks English, especially those in entry-level jobs such as warehouse operators.
• Geographical barriers: Companies based in countries such as Indonesia and the Philippines face the additional challenge of operating across hundreds of scattered islands. Traffic on land and bad weather at sea can disrupt every step of the supply chain.
Solutions
• Conduct an audit: The first step we often advise leaders to take is to conduct an audit to get a close look at the overall workflow. While market data shows business owners what customers want, supply chain data shows how things are operating behind the scenes. Where is the chain functioning well and where are bottlenecks? Are they at the warehouse end or the last mile to customers’ doorsteps?
Having accurate data on your own supply chain is invaluable for gaining granular insights through close analysis, and for eventual use in AI and machine learning systems as well.
• Adopt scalable systems: The ideal supply chain system can scale with your business and grow as your company grows. It’s intuitive and doesn’t require prerequisite IT knowledge, so employees don’t have to constantly ask for support and aren’t tempted to bypass the system because they don’t find it useful enough.
• Start small and build: Even more important, the system should be flexible and tailored to your company’s particular workflows and operational demands. Here’s where a modular software approach is useful, especially in Asian countries where the pace of development is high.
As an example, you could start with a module focused on warehouse operations, and then eventually expand as needed from order point to physical stores, or additional e-commerce support. In the end, a holistic supply chain solution will span manufacturing, inventory, ordering, warehousing and finance.
It can be difficult to navigate the ever-evolving supply chain landscape in today’s post-Covid e-commerce environment. But through audits, scalable systems and a flexible, modular approach, it’s possible to overcome hurdles like outdated technology and skill gaps—in Asia and beyond.
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