Middle class, e-commerce driving trade
By Raoul Kuetemeier, head of Asia, Arvato SCM Solutions.
January 25, 2017
By Lee Kok Leong
A recent report released by market research firm Transparency Market Research (TMR) forecasts that global logistics will reach USD15.5 trillion in revenue by 2023; citing Asia Pacific and North America as key drivers. Rising volumes of trade within emerging markets is a key factor. In the Asia Pacific region, this is driven by a growing number of middle-class and a thriving e-commerce environment.
As the demand and spending on logistics increases, the impact of supply chain on business profitability has become ever more significant. Supply chain professionals in Asia are facing an increased pressure to deliver solutions that balance fast-changing business objectives and cost. To keep up, there is a need to make bolder and more astute strategic plans. Here are some trends that supply chain professionals should factor while charting their strategies:
Rise of disruptive innovations
The concept of using technology to standardise and automate processes for efficiency is not new. However, effective supply chains are now also defined by flexibility and reliability; and the latest technologies are proving valuable in achieving these goals.
A survey conducted at the Arvato Supply Chain Masterclass event this year found a consensus among top level supply chain executives that the internet of things and interconnectivity platforms is considered the most relevant disruptive technology that will drive innovation in supply chains within the next 5 years. 3D/4D printing was voted second. Growing demands for real-time tracking at all points of the supply chain, greater flexibility that allows adaptation to dynamic market changes, and the need for enhanced delivery speeds are some reasons contributing to the survey results.
Constantly trying to adopt the latest innovations is costly, but this should never deter supply chain professionals from leveraging the benefits of new technologies. The key is to identify and integrate relevant, disruptive technologies. A good rule of thumb is to ensure that the adoption of innovation is implemented with strategy and operations that adhere to best practice in supply chain management; there should also be a devotion of full attention and investment in continual improvement.
Agility is the new lean
Especially in Asia where cultures vary vastly across countries and economies are in different stages of maturity; the market environment is highly dynamic. Demand is difficult to forecast, while lead time and revenue are affected by a wide range of factors. In such unpredictable environments where the need for variability is high, an agile supply chain is necessary to react faster than competition and adapt quickly when new opportunities emerge or when circumstances change.
At the strategic level, agility is achieved when competitive strategies and business objectives are aligned with the required flexibility. In some businesses, flexibility in reverse logistics is just as important as the forward. Some useful tools for building an agile supply chain include an integrated global IT platform that allows maximal visibility of inventory flows and an effective transportation management system.
Outsourcing is outpacing insourcing
With globalisation, greater emphasis on customer experience and changing trade regulations, the complexity of supply chains keeps compounding. More companies are recognising the need for specialist knowledge and industry experience to manage their supply chain. High-tech start-ups and scaling companies for instance, are outsourcing their supply chain to focus on their branding and development of core technologies.
2017 is an opportune year for companies who have not, to start future-proofing their supply chains. Whether it is streamlining processes to achieve efficiency, adopting new technologies to enhance accuracy or creating visibilities to achieve flexibility; it is important to delegate experienced subject matter experts (SMEs) to the task or partner with specialist supply chain management companies. Early groundwork will go a long way as businesses can achieve significant competitive edges through their supply chain.