Five digital trends to watch in Asia's supply chain market

02 February 2021 6 min. read

The digitisation of supply chains has emerged from the Covid-19 pandemic as one of the key priorities for business leaders, not only to achieve operational efficiencies, but to also futureproof business models. James Christopher, TM Insight’s regional leader for Asia, shares five key trends to watch in Asia’s digital supply chain domain.

Increased omnichannel business models

While the omnichannel model – a multi-channel sales approach using digital and brick-and-mortar retail platforms – is not new, it has become a critical channel for consumers and businesses abiding by social distancing measures. 

According to industry leaders, businesses that had invested in omnichannel optimisation prior to Covid-19 have experienced more stability as a result. Many of these businesses are larger players in the market with the budget and relevant experience (both in personnel and the business in general) to do so.

James Christopher, Head of Asia, TM Insight

However, the relative ‘success’ of these businesses throughout the period has reinforced that smaller players also need to invest in seamless online-offline approaches such as the buy online, pick-up in-store concept to build resilience to future shocks and disruptions. 

The adoption of an omnichannel business model will most likely be easier said than done given the fiscal pressures facing business today. Nonetheless, it is expected that businesses, especially those that have previously entertained omnichannel expansion, will be taking their first steps towards digitisation as a priority.

Rising demand for dark stores in mega cities

The widespread proliferation of ecommerce during the lockdown periods in countries across the world has made it clear how important it is for products to be located as close to consumers as possible. 

Today, even as some lockdown measures have lifted in many countries, movement restrictions and the calls for safe distancing are still putting pressure on businesses to ensure that their customers are able to receive goods and products as seamlessly and safely as possible. 

As a result, industry leaders foresee an increased investment in dark stores moving forward. Dark stores are ecommerce fulfilment centres with no retail facing stores and have become common post- Covid-19, especially in cities the size and complexity of Tokyo in Japan. 

Other regional mega cities like Bangkok and Jakarta are also likely to see an increase in the demand for dark stores, as both cities have significant congestion issues that make the ‘last mile’ a real challenge. The more dark stores in place across cities of that size, the faster a product can be delivered, reducing the impact of that last mile. 

At the same time, the transition of physical retail stores into fulfilment stores is also seen as a measure for businesses to maintain employment levels, offset fixed lease expenses, and better manage inventory during this challenging time. 

Adoption of newer forms of automation

Automation in the supply chain has been a hot topic for many years, with China often referenced as the ‘gold standard’ in supply chain automation. The Covid-19 pandemic has, however, fast-tracked the need for automation in supply chains as well as for newer types of automated technologies that will be implemented.

A key observation made by industry leaders is that the use of drones for delivery will be one to look out for in supply chains of the future. Depending on the different regulatory environments in various countries, industry leaders are anticipating the use of drones to deliver goods particularly in the rural areas of bigger countries such as Indonesia and Australia. 

Another area to keep an eye out for is automation in the last mile of a supply chain. According to CCBJI, which has adopted much automation such as robotic picking in its warehouses, there remains a gap in automation technology to solve the challenges of last mile delivery for many companies – much of the work here is still a fully manual process.

With the pandemic bringing to light the importance of minimising contact, the development and eventual adoption of automated technologies that can help reduce the “touches” on a product in the last mile of a supply chain is expected.

Savvier data analytics and optimisation

For companies across the supply chain, capturing and analysing operational data is one of the first ports of call when digitising their operations. Moving beyond a Covid-19 era, there is the expectation that businesses will be exploring savvier and more unique ways – such as data twinning – to harness and evaluate data, especially with the use of data analytics proliferating across the supply chain in recent times. 

Industry leaders are also expecting to see an increased demand for and the implementation of more predictive data analytics to better understand what consumers want, and the changing consumption and inventory behaviours. This will help them to anticipate any potential upswings in demand and hence, take the necessary actions in terms of inventory and delivery management to ensure minimal or no disruptions throughout the supply chain. 

Enhanced use of telematics for the safety of workers

Telematics have typically been used to improve a company’s bottom line and to keep staff safe, efficient, and accountable. However, with movement restrictions and the need to ensure the adequate supply and delivery of essential goods during lockdown periods, businesses have begun using telematics for the safety of workers, particularly those who work in transportation. 

The Control Room coordination and monitoring at Toll Group’s control tower in Thailand, for instance, allowed for the continual updating of information to be shared with operations on affected delivery routes and provinces so drivers reach their destinations safely. 

The unique link between digitalisation and behaviours brought about the opportunity to improve driving skills, behaviour, and overall safety focus. This also allowed the organisation to adapt to change quickly when the local government implemented curfews amid the Covid-19 pandemic. 

Industry leaders are of the view that this use of telematics to ensure the safety of delivery drivers on the roads is set to continue. It is also expected that business leaders, especially those in logistics, will use telematics, to facilitate social distancing measures at pickup and delivery locations such as warehouses to prevent potential risks of infection. 

TM Insight is company specialising in supply chain optimisation, property advisory and project management services.