March 9, 2017
Different countries have formulated industrial strategies based on their own industrial characteristics, for example, Germany's 'Industry 4.0', China's 'Made in China 2025' and Hong Kong's 'Re-Industrialisation' initiative.
How should Asian manufacturers digitally transform their business and improve productivity?
Based on our observations, there are two conflicting trends at the moment. On the one hand, over the past 15 to 20 years, many corporations have outsourced their manufacturing processes to developing markets such as Bangladesh, India and Vietnam to lower their overall operating costs.
On the other hand, thanks to the proliferation of smart manufacturing through extensive adoption of big data analytics and IoT in recent years, countries such as Germany and even the U.S. are trying to create the ideal environments to encourage manufacturers to bring their factories, skilled-labour and jobs back home.
The question is how manufacturers in Asia can stay competitive: According to our Asia-focused research, over a quarter of large manufacturers (26 percent) cited price pressure and increasing costs as their primary business challenges.
To overcome these challenges, many traditional manufacturers have started to embrace the concept of smart manufacturing, where machines, sensors, computers, and humans are connected along the supply chain through IoT and big data analytics.
In fact, most Asian manufacturer respondents (68 percent ) revealed that they are quick to jump on the IoT bandwagon to leverage data collected from sensors and monitors to improve staff and device utilization and, thus increase capacity and speed up production.
This in essence is what Asian manufacturers must do to stay competitive. They must get a head start by deploying smart manufacturing technologies and get first-mover advantage. This is especially important in countries where government-led smart manufacturing initiatives are not in place yet.
Can you talk about the role emerging technologies such as IoT and big data analytics may be playing in the region?
While Alibaba has integrated AI, VR, big data and cloud to their eCommerce platform, other Asian countries are found to be lagging behind China in terms of introducing eCommerce, m-commerce or even peer-to-peer (P2P) solutions. How should local retailers transform their business to improve competitiveness?
Although Chinese retailers are at the forefront of Asia's retail market in terms of market size and adoption of disruptive technologies, the rest of Asia is catching up quickly.
We see strong traction in big data analytics (62 per) being adopted by large retailers in Asia - highest among all the surveyed industries. In addition, different disruptive technologies such as IoT (55 percent), online-to-offline (O2O commerce) (48 percent) and virtual reality/digital immersion (46 percent ) are also being incorporated into retail businesses, to offer innovative online shopping experiences such as augmented reality-powered in-store navigation.
The next frontier of the retail industry is the extensive application of big data and IoT, by retailers, to drive international O2O growth. Both disruptive technologies are critical elements that help businesses improve the visibility and efficiency of their supply chain, as well as optimizing operations and profits.
Your survey found that 60 percent of retailers, manufacturers and wholesalers are quick to deploy IoT and big data; how do you plan to persuade the rest of the market?
The success of many retailers, manufacturers and wholesalers is a good indicator that the new technologies are providing the transformations they need to stay competitive. By seeing all these successes, we believe that this is a natural progression that companies who are yet to adopt the technology will follow.
Indeed, Asian companies have started to extensively apply IoT and big data to capture real-time business intelligence from all touchpoints, and overcome business blind spots in the ecosystem, to great success. While the combination of IoT and big data is far from new, the extensive application of these tools are proving to be a game changer for companies' supply chains.
However, Asian retailers, manufacturers and wholesalers must realize that these disruptive technologies are not just the key, but a critical elements in order to meet the needs of more demanding consumers and tougher market environments.
Therefore, what they need is a strategic approach to select a mix of disruptive technologies to overhaul their supply chains - bearing in mind that often the readiness of infrastructure; connected technology; and talent are the pre-requisites to success.
Legacy IT, security and compliance, as well as complexity in selection and procurement are the most cited IT obstacles, how should enterprises unblock these bottlenecks?
It's very important to note that among all the obstacles, infrastructure readiness is the most critical if enterprises wish to unlock the bottlenecks.
The success of retail and manufacturing is essentially to rely on an efficient supply chain ecosystem, that facilitates 'Information Flow, Goods Flow and Cash Flow' - all the way from the point of manufacture to the hands of customers. Enabled by IoT connected systems and the support of reliable infrastructure, an optimal ecosystem can be built on a visible and traceable supply chain, that gives all stakeholders access to actionable data insights to drive business decisions.
In view of this, we were informed by the survey that more than 60 percent of respondents have chosen to solve the issues by outsourcing transformation projects. With technology changing at lightning speed, outsourcing not only provides the benefit of agility, but also reduces deployment time and cost, and taps cross domain expertise from partners for skillsets complementary to their in-house professionals.
What's your advice for retailers and manufacturers who plan to overhaul their supply chain ecosystem?
Digital transformation has to be comprehensive, but not disruptive.
Companies must also integrate back-end networking connectivity and application or service hosting to improve the customer experience and distribution channels.
Above all, infrastructure readiness is not the only prerequisite for successful transformation. The ability to make optimal use of growing volumes of data to carry out smart business decisions is equally important.
This feature was first published on Computerworld Malaysia 9 March 2017.