In Focus: Markus Meissner & Frans Kok, AEB

Managing Director, Markus Meissner and General Manager (APAC) of AEB, Frans Kok sit down with Clara Tan to share their thoughts on the latest challenges in the supply chain management software industry and the importance of technology and diversity in business. 

By Clara Tan

 

Let’s start with the supply chain industry. What are some of the challenges faced by companies in this industry?  

 

Markus: The industry as a whole is continuously evolving, so companies are having to stay abreast at a rapid pace. Some of the most pressing challenges are - 

 

Fragmented industry: We see some strong global players and many local players. The challenge for the local players is to match the expertise and service of the global ones. 

 

Customs & Regulations: Each country has its own rules, regulations, language and infrastructure. A supply chain management company needs to navigate different layers of complexity in customs. 

 

Technology: Today’s supply chain industry relies significantly on technology. However, to keep up with the changing technological landscape requires further investment and training. One example for this could be - how additional manufacturing, big data or 3D printing will influence the whole industry and decision making. There will be new business models based on this technology and we have to handle them and be ready for them. 

 

Talent: There is a need for both highly educated talent as well as manual skills. We are not being able to fill the gaps at the same pace with which the industry is growing, so further investment in skills development and attracting the right people is needed.

 

Infrastructure: Developing countries lack the infrastructure to support the growing supply chain industry. There is a lot that needs to be done in terms of software, manpower, roads etc. This is a challenge that needs to be addressed rather quickly.

 

Frans: There are two other trends in the region too. Firstly, it is urbanisation, as a lot of people are moving to big cities, which of course puts pressure on the supply chain and secondly, it is the growth of the middle class, so there is much more spending power coming and that also generates a lot more demand for products. These two things combined with the infrastructure challenges put a lot of pressure on the supply chain.

 

 

You mentioned technology as one of the challenges in the industry. How will the Internet of Things (IoT) impact this industry?

 

Markus: The internet of things will change many areas, and it relates to new business models. The IoT makes everything much more intelligent. When we have the data available, we will have the flexibility to use our resources better and we will be able to predict things based on historical data. With the help of this, we can increase the overall quality of the supply chain. However, there is still a lot that needs to be done with integrating IoT. It has a long road ahead.

 

Frans: IoT will have a much larger impact on counterfeit goods in the region because of tracking and traceability, specifically for personalised products. It stops merchandise from being falsely replicated because there’s something unique in the product that is specifically manufactured on the spot. Luxury items will really benefit from this personalised technology. 

 

 

We’ve seen an increase in online shopping, and consumer demand. How is this industry adapting to that and online shopping expectations?

 

Markus: Today’s e-commerce companies are more like logistics and supply chain management companies rather than trading companies. The differentiator in terms of competitiveness depends on the ability to move the goods around - fast, at a reasonable price, dealing with all the returns in addition to transparency. 

 

We see some companies who have evolved further and others who have just started. Many of the start-up companies rush into things by creating an e-commerce website and work their way through, but this is not sufficient anymore, of course. The customer expectation is high and is continuously rising. 

 

We also have to see that the business landscape between a brick-and-mortar and an e-commerce store is changing. It is merging together into a multi-channel shopping experience. Companies are now investing in technology to digitise their processes for better agility. There are several IT solutions out there to support transition within organisations. This is where we come into the picture. We provide software solutions for operational excellence in the supply chain industry.

 

 

2015 has been called the year of disruption. In terms of supply chain management, how can organisations stay stable amidst the turbulent environment? 

 

 

Markus: First of all, a regular risk assessment is mandatory. Companies have to identify potential weak elements in their supply chain such as single sources or potential disruptions. It is very important for companies to be aware of the risks they have in their supply chain based on the organisation and structure of the supply chain today. 

 

Through our systems in the market, there is a continuous collection of data which allows people to anticipate important things. For example, they can anticipate which regions have higher risks based on political tensions or natural disasters, and predict how it could potentially affect their supply chain. Systems can help to detect potential problems, but this is only one part of it.

 

The other part is to have a supply chain that is flexible to deal with the problems. This is the challenging part. There is a need for a certain level of flexibility in areas such as security stock, suppliers, alternative transportation, etc. 

 

 

Have you ever encountered such disruptions with your clients or in your experience? Can you share some memorable ones and lessons learnt? 

 

Markus: The interesting part is that the major, or well-known disruptions do not come from disasters or political issues but they come from the weak IT systems and failures in that area. Today’s business relies on IT solutions that work, if not, nothing is possible anymore. So firstly, it is important that companies protect their systems or know that they have reliable suppliers who protect their systems from cyber-attacks, but this is not the only thing. In many cases, failures in hardware or software are the reasons for disruptions. 

 

A lesson learnt based on my observation with the companies we deal with is that they can underestimate the potential impact on businesses when disruptions occur. Also, you really need skilled people, and you have to trust and rely on your suppliers.

 

Frans: Some strategies include diversification of the supply chain or simplification of the product. In Thailand a few years ago, floods occurred, and that was where all the hard disks were made, which, of course, had an impact on the IT infrastructure. 

 

Also, some specific minerals are only found in some countries, and they restrict export of certain products. I’ve seen a lot of companies and industries who have paid the price as a result of these dependencies. Collaboration between suppliers and vendors is important to ensure there are backup plans and visibility of the supply chain. 

 

 

You mentioned the importance of investing in talent. What are some challenges in human resources that are particular to your industry?

 

Markus: The major challenge is that we have a general lack of experienced resources. Everyone is fighting for talent, and the people we need have to have an equal understanding of the business and technology side, and that is hard to find. For someone starting in this industry, this cannot be learnt in school, but it can only be achieved through experience. 

 

Frans: Another challenge is also finding people who are flexible and can adapt to changing business models and evolving technology. 10 to 15 years ago the job used to be about executing business processes, but today it’s about big data collection, doing forecasts, demand planning, and the people who work in this industry have to keep up with both the business and technology side because one doesn’t work without the other.

 

 

How important is diversity in the supply chain management industry? 

 

Markus: Very important. It is a kind of hybrid industry where many subjects have to be involved - the technology, the business, culture, internationalisation. For example we are very happy to have people from all different cultures and languages in our company as this helps us to draw on different skills and perspectives to constantly evolve our offering to meet changing needs.

 

40% of our colleagues are women, which is unusual in our industry and something that we are very proud of – we hope the figure continues to rise. 

 

 

Lastly, do you have any advice for young graduates who want to work in the supply chain management industry?

 

Markus: I would encourage young graduates to learn as much as they can through apprenticeship, understand the business from the ground up and then go to university after two to three years. Alternatively, one can either do a technical course or take up business management. International studies, intercultural studies or language studies are also useful for this industry. 

 

Most importantly, it is critical to have the willingness to learn and the spirit to persevere. That will take you a long way.

 

- END -

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