The COVID-19 pandemic has seen supply chain disruptions across industries – while some companies struggled to come to terms with unusual fluctuations in supply and demand, other companies were better prepared.
According to a survey conducted by AIBP and Oracle from March to April, around 46.6 per cent, believed that their own companies fell behind the industry average when it comes to utilising digital tools as part of business processes. The survey counted 193 professionals, mainly from IT, innovation & business backgrounds in manufacturing and supply chain companies across the largest economies in Southeast Asia: Singapore, Indonesia, Malaysia, Thailand, Philippines & Vietnam.
The survey was sent to professionals working in 1,600 publicly listed companies and/or subsidiaries of MNCs in Indonesia, Malaysia, Thailand, Philippines, Vietnam & Singapore. These companies represent the following sectors: Consumer Durables, Non-Durables, Electronic Technology, Process Industries & Producer Manufacturing.
The manufacturing industry plays a significant role in local economies of Southeast Asian countries, contributing more than 20 per cent of Gross Domestic Product (GDP) in markets like Singapore, Indonesia, Malaysia and Thailand. Recent US-China trade tensions have also increased expectations of how manufacturing can contribute to markets like Indonesia and Vietnam.
Concurrently, local governments are focused on uplifting local manufacturing capabilities by implementing policies to encourage and support initiatives towards Industry 4.0.
Top Priorities
The survey also found that 46.6 per cent of respondents believed that the top priority of implementing digital solutions should be to drive operational efficiency in a bid to reduce costs, while 16.6 per cent feel that it should be used to increase or create revenue opportunities.
Companies from the Manufacturing and Supply Chain industries continue to innovate. Thossaporn Petporee, SVP and part of Charoen Pokphand Foods digital committee outlined how Charoen Pokphand Foods have been ahead of the curve when it comes to digital transformation because of their experiences navigating past disruptions like the African swine fever and Avian Influenza.
“Each time a pandemic hit, we prepared ourselves better. In our farms, we have the highest level of biosecurity and AI to identify animals across the farm and sales areas. We do well because we keep up to date, keep challenging ourselves.”
The recent pandemic has led them to develop innovative online solutions like Vet Online and chatbots which are made available to the farms across their network to allow for diagnosis of animal diseases remotely. Charoen Pokphand Foods saw a net profit increase of 41 per cent in 2020.
In 2020, 3 out of 10 winners of the annual ASEAN Enterprise Innovation Awards were from the Manufacturing and Supply Chain industries, including Kalbe Farma and Astra International. Both companies embarked on digital transformation projects which involved integration of their ERP across business units to allow for a more connected supply chains; enabling real time feedback from across the entire value chain.
“There is an urgent need to reorganise one’s supply chains in the wake of 2020 and the recent Suez Canal blockage, and manufacturers in the region are rightly realising that what they have in-house is not enough when creating robust and resilient logistics processes that keep the business moving efficiently,” said Michael Lim, GTM Leader, ERP & Digital Supply Chain, Oracle.
“With new capabilities upgraded onto Oracle Fusion Cloud Supply Chain Management each quarter, we are helping our customers streamline logistics to fulfil orders faster, cheaper and more sustainably to deliver the operational excellence they desire.”