This article appeared in The Business Times on 5 May 2022.

Regional cooperation is key, and the Singapore Government can take the lead in catalysing cooperation between enterprises and countries.

Not too long ago, trade wars sent technology companies in various parts of the world scrambling to hoard electronic parts essential to computers, smartphones and other products. Such stockpiling efforts led to shortages of components such as semiconductors, which impacted other industries, like automotive, that were reliant on those parts. More recently, we have seen energy prices skyrocket when oil supplies were impacted.

In a world where an unprecedented global pandemic has upended economies and supply chains, the need for regional cooperation has never been greater. This is particularly true for Singapore, which is heavily reliant on trade and whose businesses may still have some way to go in their transformation of supply chains.

Case in point: Even though over three-quarters of Singapore’s business leaders admitted in KPMG’s 2021 CEO Outlook Survey that their supply chains had been under stress over the past 18 months, fewer than half had implemented any deep monitoring capabilities to anticipate demand or supply disruptions. They had also not diversified their sources to make their supply chains more resilient.

KPMG’s interactions with businesses today further validate this, with many companies citing a lack of time and expertise and preferring instead to adopt a ‘wait-and-see’ attitude.

Singapore can bring enterprises and countries together regionally

A regional approach can complement local efforts to evolve supply chains here. There will certainly be challenges as well in creating a supply chain value proposition that is compelling enough for regional countries to sign on amid different economic and cultural conditions, and unique variations in their taxes and regulations.

This is where the Singapore Government can take a leading role to catalyse cooperation between countries and enterprises across the region. This may involve creating structures and platforms to leverage data at a regional and national level, as well as sharing resources and exchanging best practices. It could also involve collaboratively developing new supply chain technologies to ramp up productivity while addressing environmental, social and governance (ESG) goals.

For example, Singapore companies in the manufacturing sector can work with a wide range of partners in the region to identify and leverage best practices for supply chain transformation. Insurance companies can also join forces with enterprises that sell to them, creating a partnership that improves their ability to identify and address trust issues that have prevented them from doing business in the region.

These projects and partners can be expanded into free trade agreements (FTAs) that Singapore can look to establish with both developing and emerging nations. FTAs harmonise disparate rules between jurisdictions, providing long-term certainty and consistency to companies managing supply chains. It is crucial not to underestimate the importance of this, particularly as manufacturing shifts to less developed countries with businesses optimising costs. Simplified procedures, fewer paper documents, more transparent customs laws and preferential duties can all contribute towards smoother supply chain flows across countries. 

There are many benefits to participating in a regional cooperation. Business leaders are able to improve their strategic and operational thinking and collaborate on common problems.

There’s also the potential to develop cross-country supply chains where companies can source materials from anywhere in the world to serve customers located in different countries. A variety of strategies from drop shipping to the use of virtual warehouses can be employed. The entire supply chain, from sourcing materials to selling products, will be more resilient to disruptions with resources replaced more quickly in the field.

Leveraging cognitive decision centres to undergird data sharing in the region

Regional cooperation in the form of data sharing is another important aspect for the supply chain. Having access to real-time data across countries can help companies see how their products are performing and detect early trouble spots that can save them money and time.

In recent times, a number of companies have invested in control towers designed to provide end-to-end visibility over supply chains. However, these are geared towards optimising supply chain processes in isolation. Furthermore, much of supply data is unstructured and may overwhelm key decisions that drive value. What is also clearly missing is the ability to generate insights at a national level and enable collaboration between all stakeholders across the value chain. Only with this approach can supply chain professionals evaluate and ensure alignment with business objectives.

Singapore could facilitate regional data sharing by encouraging global and regional organisations to establish cognitive decision centres (CDC) in Singapore through the provision of grants for feasibility studies. At the company level, firms that are well linked to a central database can leverage CDCs to aggregate supply and demand analytics for the entire industry since CDCs provide companies with end-to-end visibility over their supply chains.

This enables organisations to see the bigger picture and make effective decisions, such as how much stock to hold and where to hold it, whether to have promotions to offload excess stock and in comparing the cost of stocking inventory against the cost of failing to satisfy customers.

CDCs also use predictive supply chain tools such as advanced track and trace blockchain technology for the entire ecosystem of industries. The tools can be used as a sandbox where scenarios for potential future crises are tested, aiding decision-making. The industry can then use data in a meaningful way to improve existing capabilities, employ IoT to predict product failures and leverage supplier advanced shipping notices to anticipate supply continuity issues.

With the Government leading the aggregation of data at a national or regional-level data platform, it can be a stronger call for enterprises to come on board, since there is regional expansionary potential, with data kept safe and secure under the watchful eyes of authorities.

The future of supply chains will be collaborative and agile

As economies progress, supply chain management is also entering a new era. In the next phase, countries and companies will be expected to be more innovative and agile in the way they respond to disruptions. However, this also requires a re-evaluation of supply chain strategies and understanding how to leverage technology and regional cooperation to one’s advantage in an uncertain global landscape.

Singapore has the potential to take the lead in supply chain transformation —  this will be in sync with its focus in establishing itself as a key regional hub and gateway to Asia.

For media queries, please contact:

Jeanie Lee

Associate Director, Marketing & Communications
KPMG in Singapore

Asha Raghu 

Communications Manager
KPMG in Singapore 

Ng Huiwen

Associate Communications Manager
KPMG in Singapore

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