Without a strategic, end-to-end supply chain strategy and trustworthy partners, even the best products cannot reach their full market potential quickly.
Companies that excel in product development and technology innovation often do not have an equally robust expertise in the process and operational side of the product journey.
This is a particular challenge in South-east Asia (SEA), where consumers are diverse, information flows are fragmented and inconsistent, and skilled supply chain professionals are scarce.
Throughout the end-to-end lifecycle of a product, organizations must rely on tens or even hundreds of trading partners for various parts and services. In this region, not only are these enterprises most often geographically dispersed, but they likely have dramatically different levels of business experience, technological sophistication and financial wherewithal.
Throw in risks ranging from simple human error to global economic volatility to natural disasters, and the incredible complexity of modern multi-tier, multi-region supply chains should be readily apparent.
More than anywhere else, supply chains in the region often pose greater challenges. However, organizations here have been taking steps to optimize the supply chain and ensure the continued movement of essential supply routes, especially with manufacturing moving gradually out of China into South-east Asia. This involves cooperation between the private and public sectors.
Do you see what I see?
Still, many organizations tend to underestimate the value of their supply chains. Most often, that is because they simply do not know what they do not know about strategic supply chain management. One way to understand supply chain complexity is to think of it like an iceberg—there is a lot more to it than meets the eye.
For example, above the water line, you have orders being placed, product pulled from shelves, packed and shipped to a production facility. But below the surface are the innumerable logical, physical, digital and financial elements that that must be considered and addressed to ensure the optimal flow of product, data and capital between various Asian countries.
These tactical and strategic variables include things like value-add programming and kitting; master data management; trade compliance; warranty service, working capital management, multi-tier visibility, supply chain finance, production planning, alternate source selection, and physical and cybersecurity.
When these elements are not expertly managed, coordinated, and localized for SEA, the risk of disruption, and your total cost of ownership, will increase exponentially.
Partners, partners everywhere
If supply chain strategy and execution are not a core competency of your organization, you need to find a partner to help manage this highly dispersed network of product and local service providers as seamlessly and cost effectively as possible.
The challenge here is to not add even more complexity to your supply chain with a piecemeal assortment of providers, each with their own focus, which may or may not ultimately align with your strategic and financial goals.
With time-to-market pressures, budget constraints and customer expectations on the rise, trial and error is generally not a winning strategy. Here are some considerations for choosing a strategic supply chain partner:
- Your supply chain extends throughout the end-to-end lifecycle of your product, so you need a partner that has a deep understanding of the local market dynamics that influence supply and demand, plus expertise that runs from the earliest stages of new product ideation all the way through end of life.
- As digital technologies like IoT, cloud, machine learning and AI permeate not only corporate IT but operational technologies, find a partner that can skillfully integrate these advanced technologies and complex physical supply networks to ensure you have the visibility you need to sense and respond to changes in market conditions in Southeast Asia. Fluency and expertise in implementation of intelligent automation technologies like robotic process automation and process mining are a must have.
- Focus on total cost of ownership. Like many brand owners and OEMs, component suppliers are generally all about technology innovation and new product or service development. Supply chain agility and responsiveness are rarely a core competency. So, while you may enjoy preferential pricing buying direct from a component manufacturer, your ‘total cost’ calculation should include possible added expense from expedites, payment term penalties, missed production windows and other fulfilment disruptions.
- Supply chain management is definitely a team sport. You need a partner that can help break down strategic and technological barriers between external trading partners as well as internal silos among key stakeholders like your engineering and sourcing teams. Better collaboration and coordination throughout the design-to-supply chain journey can ensure component choices will satisfy critical brand objectives around time-to-market, user experience, and factors like environmental sustainability, ethical sourcing and recyclability.
- Your supply chain partner should act as an extension of your organization, facilitating the flow of products and information between all stakeholders. If your partner becomes more like a roadblock between you and your supplier network, start looking for a new one.
- There is no one-size-fits-all supply chain model. Look for a partner that will take the time to understand your specific challenges and priorities and has the range of capabilities required to build a model that best meets your needs—from standard fulfilment and inventory management programs to sophisticated supply chain-as-a-service solutions.
Foundation of supply chain excellence
Finally, you need a partner you can trust. But trust can be a nebulous concept, so let us consider what trust can look like in the supply chain:
- The ongoing shortage of key technologies in the high-tech sector has generated a lot of buzz around shifting from ‘just-in-time’ to ‘just-in-case’ inventory strategies. A global distributor is obviously capable of buffering inventory for customers, but inventory for inventory’s sake can tie up precious capital resources and may add potential obsolescence risk if buffer stock ultimately goes unused.
- In addition, assurance of supply is just one element of an effective supply chain resilience plan. Agility and visibility are also critical. A trustworthy partner is one that works closely with customers and suppliers to facilitate a more open exchange of capabilities and requirements, ensuring resources are best aligned to achieve common goals. With techniques like scenario planning, value-at-risk calculations, deep-tier supply chain mapping and alternate source identification, a trustworthy partner can help supply chain partners more quickly and cost-effectively outmaneuver potential disruptions to business continuity.
In a world where the commoditization of technologies makes it increasingly more difficult for companies to stand apart from the competition, supply chain and operations have become the new frontier for differentiation.
Companies today cannot rely solely on the technical superiority of their product or a marked price advantage to remain competitive.
Sustainable growth and profitability are the result of delivering a differentiated, value-rich customer experience throughout the entire product lifecycle. This requires both leading-edge technical and best-in-class supply chain execution.