Revitalising supply chains: Singapore as a trusted network connector in the region

Rakesh Agarwal, Partner, Advisory, KPMG in Singapore

Walter Kuijpers, Partner, Advisory, KPMG in Singapore

Fragmentation presents an opportunity for Republic to lead efforts in synergising South-east Asia’s coordination on supply chains through a well-connected, shared model.

Global developments in the economy and dynamic trade relations have had widespread effect on industries, forcing companies to rethink business priorities and adapt to changing consumer demand. The supply chain industry, with its intricate web stretching across multiple countries, is particularly susceptible to such global upheavals. 

Diversification has become a go-to strategy for many, aiming to mitigate risks by establishing alternative supply networks that include new suppliers, manufacturers, transport and logistics providers spanning one or more countries. A reliable supply chain should feature a seamless, harmonised and optimised plan-to-deliver process, encompassing both domestic and cross border logistics. However, market fragmentation with various level of supply chain maturity, remains a significant challenge, as revealed by KPMG’s interactions with industry players, mainly due to varying logistical infrastructure among countries. This can result in large deviations in terminal productivity, container traffic waiting time or even the type of technology used, which would then lead to lowered inefficiencies and limited success of diversification. 

This fragmentation makes it hard for countries to align and pool resources together. This challenge is also particularly more pronounced in ASEAN as the region is more geographically scattered. Thus, countries today continue to struggle to secure their supply chains, especially when faced with disruptions like geopolitical conflicts, inflationary pressures, and climate change events. 

However, this fragmentation presents an opportunity for Singapore to lead efforts in synergising the region’s coordination on supply chains through a well-connected, trusted, and shared model. Singapore’s robust legal and regulatory framework can offer businesses much-needed stability, while other countries may contribute through strong manufacturing bases, abundant labour, or advanced technologies. Seamless collaboration between these countries can enhance supply chain management and create opportunities in emerging areas such as technology and environment, social and governance (ESG).

Such a model could facilitate the creation of a centralised, collaborative cloud-enabled supply chain platform for information sharing, leading to end-to-end supply chain visibility and improved regional resilience during times of disruption. It could also foster discussions among supply chain experts from across the region, focusing on strategies to overhaul supply chain operations using emerging technologies like the Internet of Things (IoT) and machine learning for even further connectivity.

Critically as well, this model can help to harmonise standards for supply chains across the region, smoothing out processes for more predictable performance, consistency in execution standards will enable technology to drive innovation and increased maturity across the regional supply chain network. 

Technology has primarily been employed in marketing and sales within the supply chain industry, with backend processes often lagging. Given rapidly evolving consumer demands and potential shocks to networks, technology has become key to supply chain adaptability and organisational resilience. Embracing emerging technologies such as AI -driven spend analytics, advanced network optimisation, digital twin control towers and cognitive decision centres is crucial for building connected, trusted and resilient supply chains. 

Through the model, Singapore can establish itself as a technology-enabled central nerve centre offering comprehensive visibility of supply chains, such as providing an overview of the supply and demand of raw materials, supply movements and inventory stockpiles across the region. Data analytics could be utilised to anticipate potential bottlenecks in the region, allowing for contingency planning to minimise disruption. Singapore has already begun this transformation journey with its Industry Transformation Maps (ITM) and Industry 4.0 plans to advance manufacturing processes. Singapore’s vibrant start-up ecosystem can also serve as a testbed to trial new technologies for the industry, such as digital twin or artificial intelligence. 

As climate issues become more pressing, there will also be a stronger focus on ethical and sustainable procurement or transportation. With Singapore strategically located along the world’s major trading routes, it can play a central role in green supply chain management, which has been identified as an area of growth for the industry.

One solution that has surfaced recently in response to the hefty carbon emissions produced by the supply chain sector is the establishment of green lanes. These provide a mode of quick and secure transportation to provide expedited shipping or custom clearances to member countries in a trade bloc or via country agreements.

Though the concept of green lanes is not new, their implementation typically necessitates an agreed set of policy regulations and aligned decarbonisation goals among participating countries. Given the extensive cooperation required, progress in these discussions progress can be slow. The relatively recent emergence of ESG factors may also lead to hesitation among countries unfamiliar or lagging in this domain to kick-start such discussions.

Leveraging this well-connected, trusted and shared model, Singapore can be the unifying force in catalysing cooperation for such green lanes in the region. With a nationwide roadmap already in place for its green objectives, Singapore is ideally placed to apply insights from these existing plans to supply chains and potentially replicate them. Considering the likely pivotal role of technology in future ESG initiatives, and Singapore's status as a technology hub, this platform could also serve as a testing ground for novel ESG practices in the region.

It's important to note that these models are typically complex, requiring specialised skill sets and substantial capital for continuous development and innovation. It would be impractical for each country to create their own system. Thus, a connected, regional model, spearheaded by Singapore, can serve as a blueprint to encourage the latest enhancements to supply chains and collectively boost the region's appeal. This will benefit Singapore both as a leader and an integral component of the ecosystem, reinforcing its position as a frontier of supply chain innovation.