How Malaysia’s Manufacturers Can Navigate Uncertain Times

By Sean Er Lim, Country General Manager (Malaysia), RS Components,

The role of eSolutions and supplier consolidation in the extended lockdown

The extended nationwide full movement control order announced in Malaysia, which will be in effect until the COVID-19 pandemic is further contained, has affected manufacturing productivity and supply chains. The uncertainty around when restrictions would be lifted has led to a decrease in product demands, and supply chains are once again entering a period of disruption.

Building resilience in manufacturing and in the supply chains that we all rely on has become imperative for businesses. By taking the lessons we have learned over the last 18 months, leaders need to transform operations and embrace tech solutions. Alongside technology adoption and introducing new ways of working, many companies also need to cultivate a workplace culture where employees move forward with an agile and customer-focused mindset.

Keeping employees safe and productive through automation

Contrary to popular belief, one of the biggest challenges to digital transformation isn’t old systems or aging infrastructure. Instead, it’s the legacy mindset embedded in teams. Investing in people and collaboration play a critical role in removing information silos and old ways of working. Although buzzwords like digital transformation grab headlines, it’s the relationships with your employees, suppliers, and customers that support recovery.

Putting people at the heart of the strategy is key to success but keeping employees safe and engaged while battling physical restrictions is particularly challenging for businesses in the industry. However, the emergence of the Industrial Internet of Things (IIOT), eSolutions, and automated machines are a few examples of how technology can turn these challenges into opportunities. 

Automation and predictive MRO (maintenance, repair and operations) play a critical role in keeping your employees safe. Artificial intelligence-driven automation will quickly speed up processes. For example, the task of lining up materials needed for production can be delegated to machines. By increasing efficiency and reducing the need for manual labour, employees will have more time for strategic work across factory floors. Ultimately, a team of healthy and highly engaged employees will push businesses to be more proactive and better anticipate customer needs.

In addition to providing workers with protective workwear and personal protective equipment, traffic management and crowd control technology further increase site safety by reducing the number of people in an area and ensuring physical distancing rules are followed without impacting performance.

By investing in the automation of processes, manufacturers can also embark on a journey that takes them from preventive to predictive maintenance. The Internet of Things paved the way for the widespread use of predictive maintenance sensors that enable in-depth analysis and observation of any piece of equipment. Having this kind of insight can help businesses understand the optimal time to perform work on an asset. In addition, keeping maintenance time low and reliability high also helps remove unnecessary costs.

Taking a digital approach to procurement

The lockdown has impacted production lines and interrupted procurement processes. One of the biggest challenges we have seen over the last 18 months is that suppliers have been unable to operate, take orders, and replenish stocks on time to support their customer’s production and spare part replacement. Responses to quotes and stock updates also took much longer to complete, while remote working was often blamed for longer internal PO approval processes and lead times.

It took a global pandemic to highlight the fragility of supply chains. It presented an opportunity to build a more robust, smarter, and more resilient manufacturing industry. As an industrial and electronics products and solutions provider across Europe and the Asia Pacific that has been in business for over 80 years, RS has been helping customers keep their business running smoothly by ensuring we have a diverse supply chain and strengthening our digital and logistics capabilities.

eSolutions are an example of how digitalisation enables a company to have better visibility and control throughout their supply chain, which in turn leads to faster decision-making, fewer errors, and more savings. 

Finding the right parts to support factory projects and operations can be time consuming, especially for high volume and complex requirements. There are web-based procurement solutions available in the market which can be easily integrated to existing systems that shorten the sourcing lead time and simplify the process so that maintenance and engineering teams can improve efficiency. Digital procurement also makes real-time, data-driven analysis of cost and inventory monitoring possible.

At RS, we are looking 5 to 10 years ahead to understand what the future of manufacturing will look like in a world dominated by IoT and AI technologies. By accepting change and using it as a catalyst to innovate and drive growth, organisations can create a vision that inspires teams and allows the business to create more value to customers. 

Choose quality over quantity when it comes to suppliers.

Finding the right balance between reducing costs while increasing efficiency is another big challenge in the manufacturing industry. 

Long tail purchases, which are typically low volume or infrequent orders involving hard-to-find products can increase the supplier base. If they want to keep an eye on their budgets and drive efficiency in their logistics, procurement, and supplier relationships, companies must spend more time and resources on supplier management. This creates an additional hurdle for companies with a small procurement team or those who lack supply chain management experience. 

Supplier consolidation is one of the more effective approaches used by procurement teams to address excessive indirect spending and incurring other costs due to inefficiency and errors throughout the process. Working with a few trusted suppliers gives a company better negotiation power so they can drive savings. Moreover, procurement teams can also focus on strategic, value-adding activities, instead of daily, administrative tasks, some of which can be automated or digitised by leveraging the right solutions.

A trusted supplier or distributor makes it possible to unlock improved visibility over spend data and inventory to examine exactly what the company is buying, at what costs, and how often. In addition to providing products when needed, we also provide customers with valuable data about their purchasing habits and work with them to identify potential savings. 

Investing in the right technologies and supplier consolidation provides the transparency and flexibility needed to support long-term productivity and efficiency. Malaysian manufacturers and enterprises we partner with are already looking beyond the extended lockdown and are beginning to prepare themselves for post-lockdown demands in a dynamic and evolving market. For these reasons alone, we see the role of eSolutions and supplier consolidation to be a big topic in boardrooms for the foreseeable future.

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