Strategies for the rebound as manufacturing adapts to the new normal

(As featured in Singapore Business Times, 4 Jun 2020)

Manufacturers are learning the importance of being able to quickly adjust operational strategies, procurement and the supply chain.

By Rob Stummer, CEO Asia Pacific, SYSPRO

AS COVID-19 restrictions begin to ease in Singapore and across the globe, manufacturers are learning the importance of being able to quickly adjust operational strategies, procurement and the supply chain. Even when better times seem to be coming slowly but surely, the key to staying operational is also to be able to handle the next lockdown with prudence. While originally forward-thinking strategies, there are some developments which are set to become the norm for surviving manufacturers of the new world.

Real-time visibility in supply chains

Global supply chains have been disrupted due to worldwide lockdowns, and the closing of borders, airports, and ports to anything but essential items have seen procurement teams scrambling for locally based suppliers to ensure they can fulfill existing orders and continue with new orders. To be more resilient, businesses need to be able to quickly revise their supply-chains and shift from cost optimization to supply security; and at the same time, ensure diversification of distribution, logistics and freight channels.

By implementing a digitally-enabled enterprise resource planning (ERP) system that gives them greater visibility across their supply chain, especially inventory levels at the critical stages, procurement teams can play a significant role in solving supply chain challenges.

Focus should be to more accurately calculate demand, post new tenders and requests for quotations, and ensure that the right levels of inventory and raw materials are ordered and delivered, in the right quantities, and at the right price, while still helping to mitigate risk along the supply chain both now, and into the future.

This visibility in ERP technology is enabling the application of different procurement practices and policies. It is helping to change the linear supply chain into an expanded network of stakeholders, allowing the procurement team to diversify their procurement mix and supply chains, and reduce their dependence on any single country or supplier. The new supply chain also allows for the addition of critical steps such as temporary amendment of planned materials to receive, and manufacturing process-steps to include additional quality assurance and safety stock levels.

Building local, and maintaining regional and global supply chains

The strategy on reducing costs has long been a primary driver for using international suppliers from markets with lower labour costs from some of our Asian counterparts like China, Malaysia and South Asia, and I am not saying this reliance should end.

On-shoring, a recent trend, is the “bringing home” of offshore manufacturing. For Singapore, diversifying its strategy and investing more in on-shoring may create a stronger localised supply chain. This brings with it several material benefits, but will most likely increase manufacturing costs, and ultimately create higher prices for consumers. By investing in local manufacturing, we will be helping to bring much needed financial relief to the regional and national economy, increase tax revenues and boost the job market. With time, we will also benefit from enhanced product quality and improved supplier standards – and the ability for the nation to survive with reduced dependency on affected countries.

Complemented with closer neighbors in the region, and the existing Asean Free Trade Area (AFTA) agreement, the three levels of supply chain – local, regional and global – will bring about much-needed relief with diverse supply chain options should a resurgence occur. Existing contractual agreements across a spread of geographical supplier networks also maximize our agility to respond to price hikes or enjoy lock-in contractual pricing regardless of current circumstances instead of living with significant margin loss due to emergency purchases with costly suppliers due to global shortages.

Using technology to connect the remote workforce

Social distancing has become the new normal, and entire workforces, while having to remain separated, have needed to connect and collaborate remotely. Some businesses are being forced to work with half their normal staff, with split-teams working alternate weeks, to prevent transmission of the novel coronavirus across the entire business.

For those who have already started their digital journey, and who have a digitally-enabled ERP system, this sudden shift brought on by Covid-19 has been easier to respond to, than those who have not. The ERP system has allowed improved visibility into stock availability, material requirements, suppliers, and outstanding orders and spend with existing suppliers. The organization can also see the number of incoming customer orders, and gain insight into potential future orders, and see at a glance what their customer’s financial standing is with the business, prior to accepting any new orders. The power of a fully integrated ERP system cannot be under-estimated in troubled times like the present.

Manufacturers that are still reliant on manual processing, data capturing and reporting, are at risk of not being agile enough, of delayed decision-making based on unreliable data, and even the possibility of falling short of new government-mandated automated document processing requirements. This can be detrimental to the well-being of the business.

Manufacturers can greatly benefit from using technology and ERP to enable their remote workforce by giving them immediate insight into business activities. Accessibility to information is critical for proper decision making in every business no matter the situation. The use of automated business systems supports the efficient management of procurement and sourcing policy changes, improved distribution and lead-time planning, and better decision-making based on relevant, and accurate real-time data.

Ultimately, any technologies and solutions are only as good as the users. Proper training of ERP solutions, equipment and tools are sub-standard investments if not supported with adequately trained employees upskilled to operate and maximize their features

Business continuity with manufacturing operations management, e-warehousing and upskilling

Covid-19 has created operational challenges where safe distancing measures or remote working arrangements are required.

The first step for a manufacturer in embracing the new economy is appreciating the importance of digitizing manufacturing operations, beyond the individual machinery featuring touchscreens and downtime or feedback on performance. An entire production line can be digitized for an overview of where chokepoints are, and process and production efficiencies gained with manufacturing operations management (MOM).

MOM creates a layer across all machineries and production lines which is then plugged into a central ERP, complemented by automation machineries (or semi-robots) that help to manage the various machineries mechanically for downtime, or simple tasks like pushing the stop/start or temperature adjustment buttons, where no automation existed for the original equipment.

Traditionally, many manufacturers employing such technologies are dependent on the original equipment manufacturer (OEM) offering such capabilities. Advancement in technologies has allowed a broader capability that is less reliant on OEM such as SYSPRO’s manufacturing operations management solution.

Automating and optimizing warehouse and shop floor data collection in real-time will also benefit small and medium-sized manufacturers. E-Warehousing coupled with Singapore’s national e-invoicing setup and automation (PEPPOL) will allow manufacturers to go paperless, gain visibility into supply and demand issues, streamline stock picking and tracking, minimize wastage and more importantly, protect employees in a time of heightened safety with lesser need for physical operations.

Ultimately, any technologies and solutions are only as good as the users. Proper training of ERP solutions, equipment, and tools are sub-standard investments if not supported with adequately trained employees upskilled to operate and maximize their features. This is the reason why globally SYSPRO makes available critical role-based courses and training for our users to complete.

Adapting manufacturing to the new normal

Manufacturers in Singapore are fortunate with the government offering grants up to 80 percent to support their innovations and productivity improvements over this period. In addition, this period has seen our community and businesses banding together to help each other pull through the difficult times. Such initiatives that SYSPRO has been helping its community with include free upskilling for jobseekers retrenched worldwide and support programs to help new and existing clients continue enhancing their operations or invest in new ERP solutions and manage their cashflow.

As long as we can prevail through this period, and be prepared for what comes our way, there is light at the end of the tunnel in 2021.

Rob Stummer is the Asia Pacific CEO of SYSPRO, with regional headquarters in Singapore. He can be reached on Linkedin or rob.stummer@au.syspro.com for feedback or comments on his articles, or visit our blog at https://sg.syspro.com/blog

About SYSPRO

SYSPRO is a global, independent provider of industry-built ERP software designed to simplify business complexity for manufacturers and distributors. Focused on delivering optimized performance and complete business visibility, the SYSPRO solution is highly scalable, and can be deployed on-premise, in the cloud, or accessed via a mobile device. SYSPRO’s strengths lie in a simplified approach to technology, expertise in a range of industries, and a commitment to future-proofing customer and partner success.

SYSPRO has more than 15,000 licensed companies in over 60 countries across six continents. For more information, visits https://sg.syspro.com

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