KUALA LUMPUR: It has become more pertinent for businesses to find ways to rethink and transform their supply chains to be more consumer-centric to effectively compete in the “never normal”.

According to Vivek Luthra, Accenture managing director and lead for supply chain and operations in growth markets, “A customer-centric supply chain means the ability to reach customers where they are in the most cost-efficient and scalable way. But more than that, it also means the ability to provide hyper-personalised services. 

“For B2C (business-to-consumer) companies, it could be giving consumers the option to set their preferences for the delivery of the product while for B2B (business-to-business), it could be moving towards providing products as a service.” 

One such example of companies moving towards a more consumer-centric supply chain is Malaysia Airports Holdings Bhd (MAHB) and Alibaba Group’s Cainiao Aeropolis eWTP Hub, which commenced operations here in early November. The hub aims to facilitate 24-hour deliveries within the country and 72-hour deliveries between Malaysia and the rest of the world — a necessary capability these days.

Lazada, Southeast Asia’s largest e-commerce platform, has already made a move to leverage the hub while other players are expected to join in soon. “We are seeing some companies that were previously going through distributors and shipping products from Singapore to Malaysia that are now starting to build operations in Malaysia so they can reach consumers directly,” says Vivek.

Some may start to provide hyper-personalised delivery options such as specifying exactly when a delivery is to be made down to the hour and the way the products should be handed over. Other examples of hyper-personalisation would be e-commerce platforms Lazada, Shopee and Zalora, which track the habits of their customers by leveraging analytics to promote products that could be relevant to their customers’ interests.

On the B2B side, Vivek points out that many companies have pivoted from simply selling their goods to providing their products as a service. Companies selling industrial equipment have expanded their offerings to include monitoring and maintenance services. This extends the engagement with customers beyond the sale and creates additional revenue streams. 

“The product-as-a-service model can apply to most B2B companies, especially high-tech ones, which are inserting a ‘smart’ element or software into their products that help them move towards providing products as a service,” he says.

Sime Darby Industrial Sdn Bhd, one of the world’s largest dealers for US machinery and equipment group Caterpillar Inc, has been making progress in this space by collaborating with Icon Offshore Bhd to pilot the installation of CAT Remote Fleet Vision (RFV) on one of the latter’s offshore support vessels.

This technology allows Icon to easily track and manage its asset, with the data collected to be conveniently accessed via a web interface. It also helps Sime Darby Industrial, Icon’s parts dealer, to better prepare in terms of providing the required labour or parts for the vessel. 

Automation is another big function of the equation, Vivek notes, pointing to markets like Japan, where there is a lack of workforce, which forces businesses to calibrate their supply chains to make them 100% autonomous. Businesses there are leveraging artificial intelligence (AI) and machines to link their manufacturing operations to the supply chain while collecting data-on-demand patterns from the shop floor to better address unmet or changing demands of the end-consumer.

This is also happening in China, with its shortage of a skilled workforce, pushing companies to maximise the use of machines, leading to the implementation of warehouse automation. “It’s starting to happen in Malaysia as well — warehousing automation is one of the key areas in which companies are investing today,” says Vivek.

Although the benefits of a customer-centric supply chain is clearly needed to be competitive in these times, the big hurdle companies need to overcome is the cost of implementing it. However, Vivek says this is already becoming table stakes.

The traditional design of the supply chain is one that is based on a retail network, going through distributors and retailers. According to Vivek, using traditional distribution channels to provide hyper-personalisation of products could cost three times more. 

And with a sharp rise in home consumption via online shopping, such supply chains would have to incur a higher cost to directly reach the end-consumer. This means the unprofitable part of the business is increasing. Therefore, companies need to start thinking about reconfiguring their existing networks according to their customer needs and find areas of profitability, he adds.

As the global pandemic continues to impact economies and consumer behaviour, companies looking to build resilience in their product offerings, manufacturing and supply chains have to be hyper-focused on their customer needs in order to grow. Decisions around investments in pivoting their supply chain should be based on more than mere cost optimisation. 

Companies need to have end-to-end visibility across the supply chain, incorporating intelligent planning and manufacturing. These capabilities, powered by AI and leveraging variable cost structures, allow companies to offer customers what they want and when they want it.

“What we are seeing now is that whatever can be done digitally, they will do it digitally. As consumer behaviour shifts, businesses will start to transform their supply chains while looking at how they can make it profitable at the same time to ensure that the transformation is sustainable. That is the growth agenda to outmaneuver uncertainty,” says Vivek.