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Digitizing your Supply Chain: Evolving risks for SMEs in Asia

Logistics infographics. Shipping and storage flat concept with sea air and land delivery route and equipment vector illustration. Flat planet concept for delivery around the world

Supply chains around Asia are becoming more digitized and with this the risks are rising. Businesses in Asia are likely underestimating the risks associated with their supply chain, and Zurich’s recent annual SME survey found that the majority of SMEs across the globe think they are well positioned to manage supply chain interruptions. With only one in seven SMEs believing their business would be significantly impacted if they were to lose their main supplier this highlights how SMEs may not have full visibility of their supply chains. The figure is even higher in Asia; more than 78% of SMEs in Hong Kong and 87% in Malaysia believe there would be limited to no impact on their business operations. The benefits of going digital are many including increased visibility, transparency and traceability, but the Internet of Things (IoT) with real time communications will boost efficiency exponentially.

Better understanding supply chains

Conventional wisdom says that there are two types of supply chain risks; ‘accidental’ and ‘deliberate’. Accidental risks, such as the result of a fire at a supplier’s plant or a natural catastrophe may be a more common concern in Asia, with natural disasters and unpredictable weather being key threats. Deliberate risks include the production of counterfeit goods that look like established brands but are in fact not produced under the same quality guidelines. This type of supply chain threat can put unsuspecting consumers at risk of serious injury from counterfeit medicines and similar fakes. Companies can take action to increase their ability to safeguard against these risks.  Increasing visibility along supply chains and resilience are major sources of competitive advantage.

Five tips to accessing your company’s supply chain

  1. Keeping abreast of complex supply chain risks – analysing blind spots
  2. ‘Traditional’ supply chain risk exposures – monitoring for fraud
  3. Risks in the logistics chain – IP protection against counterfeiting
  4. Keeping close contact with consumers – quick response
  5. Enhancing product and supply chain security – awareness campaigns

Ultimately, companies must become more resilient by being adequately prepared to absorb shocks, recover quickly, and become fully operational again as soon as possible.

Chains in the Clouds

With the world becoming more interconnected, by the day, SMEs adopting cloud computing are playing a significant role in changing the way manufacturing organisations use IT services by providing timely solutions to address supply chain challenges. Cloud computing also enables organisations to become highly flexible to adapt to market changes quickly and this is key in a cost-conscious business. It has been estimated that over 70% of manufacturing companies world-wide are using cloud applications somewhere in their supply chain while another 25% are actively considering this as a way to deliver business solutions. The reason for migration to the cloud lies in the limited ability for customization of current supply chain applications. Costs are a key concern as organisations struggle with the challenges of determining the correct level of bandwidth and how to quickly respond to changes in demand. With increased connectivity comes the issue of security, where adequate levels of all aspects of security are needed to ensure business continuity with minimal interruptions.

Cyber Risks

Any business that increases its dependence on IT puts itself at increased risk of cyber attack and must improve the cyber security awareness of their staff. SMEs remain low hanging fruits for cyber criminals who also often target the SMEs as an entry point to the bigger companies. Many SMEs often lack understanding of even basic cyber threats such as ‘phishing’, a high threat which ranks low on their list of priorities. “Cyber is often not even in their top-3 priorities because they have to grapple with things like labour issues…and many SMEs in Singapore also have a perception the government will protect them with regards to cyber,” said one Cyber Security expert adding, “the slow take-up rate of cyber insurance amongst SMEs is also due to a benign regulatory environment and a lack of understanding of what is being offered.”

SMEs in Asia need to embrace new technologies

Modern supply chain tools transform business supply chains from functional necessity to a competitive advantage. The right application can monitor processing standards, create and manage work orders while concurrently monitoring shop floor status. Such applications can help manufacturers to easily and quickly execute jobs, and analyse and control costs. According to recent research by the International Data Corporation (IDC) there is a growing momentum for supply chain cloud. Cloud-based applications for logistics are expected to grow substantially compared to on-premises tools. The same is true for inventory management. There is a shift in the mindset across all business sectors when it comes to supply chain applications choices because supply chain cloud applications can help provide rapid return on investment, greater scalability and requires fewer IT resources. Applications are fast and easy to deploy, and adoption risks have been largely mitigated given equivalent functionality to on-premises alternatives.

Real Time Supply Chain

An efficient supply chain system is needed to cope with bringing interconnected products and services to market. This influences time to market and the associated impact on asset velocity as it is linked to inventories. A digitized IoT enabled supply chain boosts efficiency, save costs and increases asset velocity. Using ‘smart sensors’ creates the ability to monitor goods and enables analysis of the balance sheet more effectively. Speeding up a one day improvement in velocity can save millions in costs to a company. An IoT supply chain creates enhanced transparency, visibility and provides valuable insights for business improvement. Smart sensors improve the traceability of products and also enable manufacturers to measure activity across their plants. For example, how to look at maintenance of machines and data coming in using data science enables leaders to make predictions on how to better manage their operations. IoT also offers a cognitive system that learns from and infuses intelligence in to the physical supply chain. Data on an accident or natural disaster can be sent to a decision-maker in real time and be used to stop what is going on at the plant level and make a correction immediately. This applies not only at enterprise level but across industries such as mining and Oil &Gas which can be monitored in real-time.

Digital supply chains are just beginning to create great leaps in global productivity. Your own journey to a fully digitized supply chain may also just be beginning. If you want to save costs, smooth production and respond effectively in real time to supply chain challenges then managing your risks as you go digital is a top priority.

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Grant Morgan
Grant Morgan
Grant is a highly experienced and motivational sales leader with a wealth of experience within fintech and the wider tech market space from companies such as Bottomline Technologies, Ideal Hardware plc, and Panasonic. Having worked with customers from micro SME to large multinational through a variety of sales channels, Grant has extensive knowledge of supplying business’s with financial, payment and collection systems, working with partners such as HSBC, J P Morgan Chase, Barclays, and Worldpay.

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