According to PwC, The Supply Chain Ecosystem 16 of the top 20 bilateral trade routes worldwide by 2030 will include APAC markets – representing US$ 4.7 trillion in trade value by 2030. Article by Tuan Le, General Manager, ASEAN and Korea, Orange Business Services.
The Supply Chain Ecosystem global production landscape has undergone significant changes over the past few decades, with businesses spreading their supply chain networks across multiple locations worldwide to benefit from cheaper labour, regulatory incentives and proximity to growing consumer markets. According to the UN, intra-regional trade already accounts for more than half of APAC (Asia Pacific) imports and exports. Advanced logistics hubs such as Singapore and Hong Kong demonstrate a strong potential for evolving into digital nerve centres, managing the rising complexity of supply networks in APAC in the coming years.
Now, picture this: just like how neural circuits interconnect to one another to form large scale brain networks, biological neural networks have inspired the design of digital neural networks. This is also being played out in the world of supply chains – as APAC is projected to account for the largest share in retail e-commerce sales worldwide (66 percent) by 2021, there is rising interest in the digitalisation of this network to effectively manage the fast-growing order flows.
Rising Supply Chain Complexities
According to PwC, 16 of the top 20 bilateral trade routes worldwide by 2030 will include APAC markets – representing US$ 4.7 trillion in trade value by 2030. However, there still exists multiple challenges including infrastructure gaps, operational complexities and evolving market dynamics that need to be addressed to achieve this goal and strengthen APAC’s position in global supply chains.
These challenges make it difficult to understand how disparate parts of the supply chain interact, and where possible bottlenecks or areas of optimization could be located. To circumvent this, supply chain businesses need to evolve from a traditional linear approach to an integrated digital model, and establish centralized, technology-driven hubs to better manage their regional networks.
Smart, Digital Solutions For The Supply Chain Ecosystem
New technology solutions such as next-generation analytics, autonomous transportation, wearables, asset tracking and smart contracts are enabling an ecosystem-wide integration to drive greater operational efficiencies and build a smarter supply chain model.
According to PwC, in a survey on the digital transformation of supply chains in APAC, 40 percent of respondents reported to have already deployed technologies such as collaboration applications and supply chain analytics with utilisation expected to rise beyond 50 percent for these applications in the coming years.
Analytics is expected to gain strong traction, with a large percentage of businesses planning to adopt these solutions to fuel smarter sales operations, inventory management, asset performance and transportation. For instance, Singapore launched Project SAFER (Sense-Making Analytics for Maritime Event Recognition) in 2017 to optimise port operations by adopting predictive analytics and machine learning based solutions that improve vessel tracking, detect illegal activities and accurately predict vessel arrivals.
Emerging wearable systems such as ‘pick-by-vision’ smart glasses provide an optimised picking list for workers, to find the right products in less time and with lower training requirements. Advanced automation solutions are increasingly being adopted for intra-warehouse logistics to help reduce labour costs while also improving productivity levels, such as drones for stock-taking in the warehouse, which is highly tedious and prone to human errors. For external transport, hybrid models such as truck platooning are being tested in Singapore where a series of automated trucks are able to follow a lead truck piloted by a human employee, helped by mapping software and short-range radars.
One company that has deployed some of these new technology solutions in its supply chain management is APL Logistics. By harnessing AI and automation, APL Logistics was able to reduce its operational costs across its 200 logistics facilities worldwide. It was also able to provide its customers access to information about the services they are using, improving on customer service and experience levels.
Establishing the Digital Nerve Centre
As supply chains become geographically more diverse and complex, new structural models are emerging to help maximise the impact of digital integration. These structural models will require new data processes to be established for effective information sharing. Businesses can look to cloud-based collaborative platforms with more sophisticated processes for information exchange, ones that promote data sharing while addressing concerns of data transparency and confidentiality.
Going forward, the effectiveness of supply chain networks will be a key contributor to global competitiveness, driving both governments and private sector firms towards digital adoption. Countries across APAC are stepping up and developing new capabilities to enable the flow of goods in the digital era.
For instance, Singapore launched a new trade services platform (the Global e-Trade Services), connected to multiple foreign government agencies and businesses, to enable faster cross-border clearances. These initiatives will prove to be essential in the establishment of digital nerve centres that will be responsible for multiple aspects of the supply chain, including collating and analysing information (from tracking devices, social listening and traffic feeds), alerting stakeholders of potential disruptions and informing them of remedial actions.
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