Supply Chain: An overview and its importance during MCO

A supply chain is the linkage between a company and its suppliers involved in the production and distribution of a product.


This chain comprises moving and transforming raw materials into finished products, logistics, and distribution, which involves various entities such as manufacturers, vendors, warehouses, logistics service providers, distributors, and retailers.

Picture source: blogs.oracle.com


The segregation of processes also brings about various functions of the supply chain, all of which are crucial in business sustainability, growth, and performance. Some of these functions include product development, finance, and customer service.


Therefore, it is vital for business owners, especially those in the Small and Medium Enterprises (SMEs) sector to enhance their Supply Chain Management (SCM) to ensure all the entities within the supply chain continue to participate in financial transactions to contribute towards the country’s economy.


The ease of restrictions on the MCO which came into effect on the 4th of May 2020 enables companies to reignite operations, provided all companies continue to adhere to the strict safety measures outlined by the relevant ministries.


In line with that, SCM must be expedited digitally to avoid physical contact with other people. Digitalisation is also one of the easiest ways forward towards Industry 4.0-compliance company, which is especially useful for SMEs.

Why go digital?

Putting in place intelligent systems and digital technologies will aid decision-makers in making informed strategic decisions for the future of the company.


The trade business involves various documents such as the Bill of Lading (detailed list of a ship's cargo), all of which are required by law.


By adopting digital technologies, the impact of points of failure in a supply chain is reduced as digitalisation allows data to be projected and shared in real-time from any location at any time.


The ability to project data in real-time also allows for instant modifications to the supply chain should any irregularities along the supply chain line is detected by the system.

For example, a manufacturing unit’s decision to minimize its inventory levels may have an impact on the delivery performance to the end-user.


The transition towards digitalisation does not only benefit companies short-term but in the long run too, as working from home, digital data and cloud-based platforms become a “new normal” for industries.


Times like these are the best times for companies and industry stakeholders to experiment and familiarise with digitalisation.


To accelerate digitalisation amongst SMEs in Malaysia, the Malaysia Automotive, Robotics and IoT Institute (MARii) developed the MARii Industry4WRD Technology Platform (MITP), a one-stop advanced production management solution that tracks and gathers accurate, real-time data on the complete production lifecycle in a single, integrated cloud-based solution.


MITP can also be leveraged by SMEs to deploy Industry 4.0 technologies to encourage growth as a system integrator that is affordable for industry 4.0 transformation, which can be applied in various industries.


Besides MITP, the government agency under the Ministry of International Trade and Industry (MITI), designed a programme called Technopreneur Development Programme (TDP) – a 6-month long programme aimed to empower the use of digital systems and tools in business operations amongst SMEs.

Diversification is key to business sustainability

Picture source: www.miltton.fi


Now is also the time to secure secondary supplier relationships (for materials and resources), including additional inventory and capacity to diversify your business.


Manufacturing products that are currently in demand such as personal protective equipment (PPE) could determine the sustainability of your company in current circumstances.


Indirectly, this move will also enable companies to penetrate various markets in the future, resulting in more revenue and cash reserves.

Emphasise top-to-bottom communication


SCM is most effective when managed from the top (management perspective) than within a functional unit (units specific to an area such as finance, logistics, and operations) as it often requires strategic decisions from the company’s organizational structure.


This is due to the nature of SCM – issues are usually cut across functional areas and business entities which often require instant decisions form the top. Decisions made during this stage are pivotal and could make or break the entire supply chain and the company’s future.

When SCM is applied is effectively across all levels of a company, it can lower a company's overall operating costs while boosting profitability, market performance, and customer attraction. However, if one entity within the supply chain breaks down, it will cause a “chain effect” affecting every other entity down the line, which can prove to be costly.


Therefore, it is always the best practice to prepare for the worst, as situations we are currently going through always come unexpectedly. Implementing digital technologies and solutions to your processes will help alleviate your company’s performance, growth, and revenue. Most importantly, it increases the readiness of your company to face any unexpected and unprecedented situation.


*Content sourced from: www.investopedia.com, scm.ncsu.edu, www2.deloitte.com, www.weforum.org

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