Companies ‘frequently reminded’ of need for resilient supply chains
By Justine Irish D. Tabile, Reporter
SINGAPORE — Supply chain managers need to continue working on logistics resiliency even after the pandemic, with disruptions from geopolitical events and product returns becoming bigger issues, business leaders said.
At Tech Week at the Marina Bay Sands, Ajith Gopinath, Mondelez International’s director for ingredient procurement in Asia, the Middle East, and Africa, said executives are now starting to notice how important resiliency is in their operations.
“It started with COVID; that was when the resilience concept started picking up … but even after COVID, we have been getting frequent reminders through geopolitical events,” he said.
“We have faced a lot of disruptions over these last three to four years, so it has never gone away,” he added.
He said that resilience covers physical or structural elements and the capacity to react.
Physical resilience is all about the redundancy built into a manufacturing network, involving practices like multi-sourcing and slack in inventory.
“These are structural and weigh down on financials,” he said.
“The other part is having the capability to react. When a disruption occurs, what matters is the speed of response. You want to respond to it as quickly as possible, and that is only possible when you have good processes and capabilities in your organization,” he added.
For the fast-moving consumer goods industry, he said that a focus must be on materials with a very high impact on revenue.
However, he said that businesses may have to pay a premium for tapping alternative sources.
“We focus on those materials, especially on ones that are coming from geopolitically sensitive zones. So we look at identifying alternatives: suppliers and sites,” he said.
“You may have to pay premiums. You have to invest in research and development, resources, testing and trials, and things like that. So it comes at a cost,” he added.
He said elements of resiliency involve are localization, diversification, and redundancy.
“It’s about creating a business model where resilience is a very strong part,” he said.
“When you design a business model, I think you will need to incorporate certain elements of resilience because it will work for your business, help you service your customers better, and grow your business faster,” he added.
Vicky Lee, Return Helper’s general manager for Southeast Asia and ANZ, said that at any point in time in e-commerce, especially for cross-border transactions, a return request initiated by a buyer is a disruption in itself.
“When you deliver to a buyer, you don’t want to or you don’t anticipate that they want a return. Whenever it happens, it’s a disruption to your supply chain,” Ms. Lee said.
“What happens to your product? Do you take it back? Do you ask them to keep it? Do you try to persuade them to keep it for a discount? It’s all a disruption in the entire chain,” she added.
To address this, businesses should have someone to receive the item on the company’s behalf, as it is impossible to ask consumers to send the product all the way back to its origin.
“When it comes to international shipping, we all don’t have the luxury of shipping (the items back) because it costs a lot,” she said.
Return Helper consolidates return items in bulk recall before sending it back to the company.
“That is where we help make the business a bit more resilient,” she added.
She said most of the product returns are in the fashion category, noting that some buyers return items that have been used for one occasion while keeping the tags on.
She said e-commerce have to be resilient as operating digitally presents new challenges.
“As an e-commerce seller, you are hit with different types of challenges everyday that you might not have imagined,” she said.
“COVID was a big one. But besides that, there are things like taxes when you are shipping overseas, customs from the other side, and marketplaces that have their own policies,” she added.