{"id":9846,"date":"2021-04-13T06:29:55","date_gmt":"2021-04-13T06:29:55","guid":{"rendered":"https:\/\/sg.syspro.com\/blog\/?p=9846"},"modified":"2021-04-20T08:24:09","modified_gmt":"2021-04-20T08:24:09","slug":"sea-as-a-central-component-in-the-global-supply-chain","status":"publish","type":"post","link":"https:\/\/sg.syspro.com\/blog\/planning-for-erp-or-purchasing-erp\/sea-as-a-central-component-in-the-global-supply-chain\/","title":{"rendered":"SEA as a Central Component in the Global Supply Chain"},"content":{"rendered":"

One of the world\u2019s largest container ships recently made headlines after it became wedged across the Suez canal and blocked normal cargo flows. The daily losses due to the supply chain disruption was estimated at between $12 million to $15 million. This example is just the tip of the iceberg for many manufacturers and distributors, as disruptions, operational efficiencies and disparate systems became the reality over the past year due to the pandemic.<\/p>\n

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Even a number of so-called “black swan events” \u2013 the Japanese earthquake and tsunami, the flooding in Indonesia and even the Filipino volcano eruption\u2013 seemed to show the ability of supply chains to keep going. But the disruption caused by the Coronavirus highlighted risks and vulnerabilities in supply chains in an unprecedented way.<\/p>\n

As a result, businesses have come to realize that in order to overcome supply chain disruptions, their business operations need to consider a different approach to ensure supply-chain resiliency. One option could be to consider SEA as a central component in the global supply chain.<\/p>\n

Seizing the SEA opportunity<\/strong><\/p>\n

In recent decades, ASEAN manufacturing, once seen as a global phenomenon, has been overshadowed by the meteoric rise of Chinese factories. Traditionally, supply chains were heavily integrated and reliant on foreign raw materials, in particular from China. With global lockdowns resulting in the increasing shortage of parts, manufacturers and distributors have had no choice but to find alternative solutions. We are starting to essentially see shift away from China.<\/p>\n

The shift is creating a huge opportunity for SEA to grow significant market share if they adopt the right technology strategy. In fact, what we are seeing is that South East Asian countries such as Malaysia, Indonesia, Philippines and Vietnam, now have the potential to become central components in the global supply chain.<\/p>\n

The major benefit in most ASEAN countries has been labor costs, in many cases much less than China\u2019s costs. However, to be attractive to multinational manufacturers and bolster its manufacturing economies, the region cannot compete on low wages alone. It must also focus on improving productivity, which, along with making the region more attractive to foreign investment in manufacturing, can also support domestic improvements in wages and living standards. Vietnam, for instance, seen by some as a close rival to China, is 87 percent less productive than China with respect to daily output per daily wage according to the Mckinsey Industry 4.0: Reinvigorating ASEAN manufacturing for the future report<\/a><\/p>\n

Closing the productivity gap with the right technology investment<\/strong><\/p>\n

Research<\/a> shows that the digital economy in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam reached US$100 billion in 2020. By increasing operational efficiencies and shortening time to value, Industry 4.0 can assist ASEAN manufacturers to overcome relatively low productivity rates to regain their stature as factories to the world. The challenge is that most ASEAN countries have been traditionally slow to adopt Industry 4.0 technologies. But this is about to change.<\/p>\n

With the region adding 40 million<\/a> new Internet users last year alone, the digital economy in SEA is projected to triple by 2025. As a result, ASEAN member states have the opportunity to exploit Industry 4.0 technologies to stake their claim to be the factory of the world. SEA governments are also awakening to this and are already implementing strategies to advance the rollout of Industry 4.0. In fact, on the ground, strong demand and equally striking investment potential are giving credence and support to these bold policies and visions. This year, the members of the Association of Southeast Asian Nations (ASEAN) aim to complete a Consolidated Strategy on the Fourth Industrial Revolution (4IR).<\/p>\n

The foundational elements needed to bring manufacturers and distributors fully into the Industry 4.0 era<\/strong><\/p>\n

A newly imagined supply chain will demand a secure digital future. Manufacturers and distributors will need better clarity and transparency of information across the business to enable enhanced decision-making in real-time. This will build the foundations for other strategic technologies down the lines and bring manufacturers and distributors fully into the Industry 4.0 era.<\/p>\n

There are some key supply chains processes to consider.<\/strong><\/h4>\n

Scheduling<\/strong>
\nMany businesses do not see scheduling as a critical business process and consequently do not identify talent to run this section. Poor scheduling struggles with several issues:<\/p>\n