Procurement and Supply Institute of Asia

M.A.P Insight
By Charlie Villasenor

In recent years, with the increasing pace of economic growth in Asia coupled with the slowdown in Europe and the US, the world is increasingly looking to Asia

The ASEAN flag flies alongside those of the ASEAN Member States (ASM’s) above the Border Patrol Police (BPP) checkpoint in Mae Ai, Thailand; on July 31, 2015. — Photo: ASEAN Secretariat

Furthermore, given advancements in technology and how these have enabled transformations in business, culture, and lifestyle, the old barriers are quickly disappearing.

The world is changing, especially with e-commerce, and Asia is moving to center stage. With its vast natural reserves, young and tech-savvy work force, upwardly mobile middle-class with its steadily increasing buying power, the balance of economic power is steadily shifting.

Amid all these, ASEAN is continuing to move towards a more integrated regional hub among its members, covering business, trade, banking and finance, society and culture, education, inter-governmental collaboration and geopolitics.

As you look at your business, understand that the ASEAN integration is coming. So, how do you position your business for the future? Here are at least three thoughts…

Firstly, review your Supply Chain, Procurement and Logistics undertaking.

Measure the gaps and find the greatest opportunities for improvement and cost savings. Understand that with the regional integration, traditional barriers to business will fall. Protectionism of local industry will soon become a thing of the past. This will open up many new opportunities as businesses in one country will have access to new markets across the region.

Businesses that are prepared and able to compete not just locally but across the region will be rewarded, while those that failed to see the future coming will be left behind. We need to have a change in mind-set.

Secondly, ensure that you have the right team who has the skills and talent that are mandated to satisfy customer requirements and spend the company’s money.

There will be a wider arena of competition and some standards will be raised in this area. The breaking of regional barriers will open up areas like banking, finance, information and technology, and communication. The region has already started moving towards compliance with international standards.

While many parts of Asia have long been (and some still are) viewed as lagging behind in transparency and infrastructure (in both IT and the banking sector), ASEAN integration will change this. Even the services sector will have its own supply chains.

Thirdly, implement immediate actions to reap the benefits.

Companies should focus on the Plan-Source-Move which is basically their Supply Chain Planning (sales & operations planning, demand and supply planning), Sourcing (procurement, sourcing and contracts management) and Logistics (transportation, distribution, warehouse management, and operations management).

With all the new opportunities opening up but also all the new competition coming in, flexibility is extremely important.

Your business should have the flexibility to adjust marketing and/or sales and supply chain strategies quickly, should be able to re-tool production as needed, and should be able to optimize your end-to-end supply chain to allow for operational efficiency and a cost-effective yet customer-friendly go-to-market approach that fits your business and your customers. Those that are able to adjust quickly will be the first to take advantage of new opportunities as they come up and will be able to minimize loss each time the market shifts. They’ll be able to follow trends & keep up with all the demands of the new regional marketplace.

And as an example, having said all these, let’s look at how Procurement (or Purchasing) and Supply Chain fit in, and how important they are in the emerging ASEAN integration.

To begin with, we must recognize that most organizations undervalue the importance that a competent supply chain and procurement team brings. (Note: Supply chain is the broader function that manages the entire flow of materials and/or services for a company and procurement typically fits within the supply chain function. There are different schools of thought on where procurement fits in, but for now, we’ll have it fall within the scope of the supply chain.)

Traditionally viewed as a one-dimensional function that “just” squeezes suppliers for lower price, not many are thus able to leverage the full range of value that Procurement brings.

At its best, the procurement function can provide considerable value to every function in an organization as a means to bring in external solutions form the market. Their role is to bridge the gap between a company’s situation, its needs, and the myriad options existing in the market to meet those needs. Procurement could be a force to transform a company, bringing in not just commercial value but also transformative change: managing risk, creating value, and optimizing total cost.

Making your procurement team an integral partner in business planning could yield benefits in productivity and efficiency, in both the top and bottom lines, and in how a business operates as a whole. It’s a process to get there, but it’s well worth taking.

With ASEAN integration, there is even more urgency to leverage supply chain, procurement, and logistics management because the external environment your business operates in is going to transform over the next few years.

If you haven’t been fully leveraging what the market has to offer within your own geographic borders, imagine what you might be missing out on once the region is fully integrated.

An enabled supply chain team integrated into the different business functions can drive value across the entire value chain — from planning capacity and requirements, sourcing best value raw materials to bringing in new materials altogether, or bringing in technology that transforms the production process or greatly improves efficiency (whether through increased automation or greater efficiency). These are very simple examples, and competent supply management professionals will start from the biggest opportunity areas and work through the entire supply chain, looking at every facet of your business, mining for gold. With the onset of the ASEAN integration, your competition is coming, and many of their supply chains have been optimized over the years

Tie in the ASEAN meeting happening in the Philippines where twenty one (21) state leaders are meeting this November, the Procurement and Supply Institute of Asia (PASIA) presents the 6th Annual PASIAWorld Conference with the theme “PLAN-SOURCE-MOVE: Better Planning, Procurement, and Logistics for the ASEAN Supply Chain” to be held on Nov. 16-17 at Marriott Hotel Manila, Philippines.

This two full-day learning conference, otherwise known as the ASEAN Convention attended by C-level, key decision makers, procurement, logistics, warehouse and supply chain management professionals from some of the world’s biggest brands in Asia Pacific will provide information on the latest innovations and trends by an impeccable line-up of Industry experts sharing their insights and best practices, as well as presenting case studies through plenary discussion, breakout sessions and panel discussions to be competitive in the ASEAN region.

Several practitioners and experts will be leading the event to share their insights and knowledge on Procurement, Supply Chain and Logistics.

As the Chair and CEO of PASIA, I will discuss the Supplier Assessment and Accreditation with better risk management and sourcing in your Supply Chains.

I will be joined by Isidro Lapeña, commissioner of Philippine Bureau of Customs, Jonathan Ravales, FVP-chief Market Strategist of BDO Unibank, John Peterson, managing director of FedEx Philippines, Luca Fichera, Supply Chain director of Nestle Philippines, Luis Pineda, president and chair of IBM Philippines, Paulo Campos, cofounder and CEO of ZALORA Philippines, Donald Lim, CEO of Dentsu Aegis Network Philippines and Radu Palamariu, managing director of Morgan Philips, all of whom will be the front-liners of PASIAWorld Conference.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the M.A.P. Charlie Villaseñor is Chair of the M.A.P. International Relations Committee, Chair & CEO of PASIA and CEO of TransProcure. He is well known as the supply chain management icon in Asia for his advancement and advocacy of ethics, excellence and e-enablement.