Transcript
Speaker: This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
Speaker: Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
Speaker: A heads up to our listeners that this episode has been recorded remotely, therefore the sound quality may vary.
Speaker: Thank you for listening.
Speaker: This is the second part of our discussion on this topic.
Speaker: To listen to part one of our conversation, please click on the previous podcast in this feed.
Speaker: Welcome to In Conversation with Business Leaders in Asia, jointly organised by Beloy Consulting and HSBC.
Speaker: Today's topic, supply chain resilience in consumer and retail.
Speaker: My name is Winfrey Wong, representing HSBC, and I am the Regional Head of Business Development for Asia-Pacific Global Trade and Receivables Finance.
Speaker: I will be your moderator for this session.
Speaker: Joining me as facilitator is Mr. Boyd Kester, a partner in Deloitte Consulting Singapore.
Speaker: So, Boyd, over to you to introduce yourself.
Speaker: Yeah, thank you, Winful.
Speaker: As you mentioned, my name is Boy Kester.
Speaker: I'm originally from the Netherlands, but based here in Singapore, looking after growth for our clients in the consumer industries, both organic, but also inorganic growth.
Speaker: And in that vicinity, I also lead the regional M&A consulting team.
Speaker: And today I will be, apart from being your sidekick, Winfield, I will also be sharing a few industry insights from our recurring industry research, as well as typically what we're running into with our clients in the consumer industries space.
Speaker: Thank you, Boyd.
Speaker: And there is a strong link between consumer retail industry and the underlying economic performance of each country.
Speaker: That's why.
Speaker: This industry is so closely watched by industrialists, economists, financial professionals, especially during this period as we navigate through the demand side and supply side shocks caused by COVID-19.
Speaker: So we will spend some time on understanding how professionals seize threats and opportunities in the mid to long term.
Speaker: And finally, in the concluding segment, we can expect some recommended key actions from our industry experts.
Speaker: So now speaking of the professionals and industry experts, we're extremely privileged to have three distinguished guests joining us in our panel discussion.
Speaker: Allow me to introduce first Mr. Apoorv Gupta, Head of Procurement Asia Pacific, Kimberly Clark.
Speaker: Next, we have Mr. Hamjan Maja,
Speaker: Head of Sourcing and Procurement for Asia Pacific, Cargill.
Speaker: Last but not least, we have Mr. Amir Mahdi, Director of Supply Chain for Fonterra.
Speaker: Now let's move on to the second section, which is threats and opportunities.
Speaker: Boy, can I allow you to set the scene?
Speaker: Yeah.
Speaker: Thank you, Winfield.
Speaker: So I think one of the things that we're seeing in the client landscape right now, and I think
Speaker: Everybody would agree that it all comes down to prepare for a rocky ride ahead and being agile and being able to adapt to what's going to happen.
Speaker: Because nobody really knows how long this is going to take, whether there will be a vaccine and what the impact of the vaccine will be.
Speaker: Actually, a lot of optimism for the future is that what I see across the board with all of my clients is that transformation mindset is
Speaker: is phenomenal.
Speaker: And what normally would take two to three years to get through a process of internal alignment and acceptance and approvals, now all of a sudden happens in two to three weeks.
Speaker: And within three months, you basically have a complete task force set up to really drive to do the changes.
Speaker: And our proof mentioned before, for example, the leveraging AI and machine learning to look for the weak spots in the supply chain.
Speaker: And it's these kind of things that are all of a sudden becoming real.
Speaker: Leveraging technologies such as Microsoft Teams or Zoom, like the platform we're using right now, the adoption that we've seen in the last six months is amazing.
Speaker: And there's so many green shoots that you can actually build on.
Speaker: If I summarize what I've heard and what I think to see on the whole also with our clients are basically three domains that seem to be really where most attention would go.
Speaker: And it would start with first and foremost, which is the people side, which is where we're in this together.
Speaker: And there's more and more this common consensus that partnerships, working the ecosystem,
Speaker: Throughout your value chain, not even your supply chain, but your entire value chain, all the way down to your consumers, that's where you need to partner.
Speaker: But this also requires a certain agility.
Speaker: And we really see a lot of questions currently around remote working, but also health and well-being of your staff, where normally there's the social cohesion coming from being in an office.
Speaker: Now you all of a sudden need to do team drinks via Zoom.
Speaker: And, you know, we'll get there.
Speaker: We're still adapting, we're still learning and everybody's learning.
Speaker: So it's also in a way, again, it's quite an interesting journey that we're on.
Speaker: The second thing that I see really is the whole digital adoption.
Speaker: And it's not only the Zooms and the Teams and
Speaker: and those platforms.
Speaker: It's also leveraging this big data, machine learning, AI, really in predictive modeling, where can we improve?
Speaker: And we see a lot of things going on there right now.
Speaker: Often also with the enablers of the big AWS, the Azure, the real cloud players, making stuff possible, which usually would be much, much harder.
Speaker: And I think the third one, and that is
Speaker: Again, a bit of a mindset thing or a perspective, which is around cost optimization and transformation.
Speaker: We do see reallocation of capital assets.
Speaker: We see currently the M&A market is also picking up, and there is just a different perspective on the market.
Speaker: And I think on a whole, I am cautiously optimistic that we've found a new sort of equilibrium, at least for the next year,
Speaker: a couple of months to make sense out of everything that has happened to us and actually make this a little bit for the better going forward.
Speaker: And nobody's sitting still, nobody's waiting.
Speaker: And I think this is maybe also a nice way to pivot to our panelists to see how they are looking forward and the kind of the strategic initiatives that they're driving forward.
Speaker: Yeah, that's a nice one, Boyd.
Speaker: Thank you very much.
Speaker: And I can't agree more with
Speaker: your point on digital adoption.
Speaker: And that's one area that I'm really keen to hear from the experts in the industry.
Speaker: The question that I would throw to the experts here is what strategic initiatives have you launched
Speaker: to detect and respond to potential upcoming threats and or identify new opportunities.
Speaker: So you can touch on AI, big data, e-commerce and approve.
Speaker: I know you talked about e-commerce earlier.
Speaker: So I'm going to have the first question to you.
Speaker: So approve your views.
Speaker: Wonderful.
Speaker: Thank you.
Speaker: So, you know, great points made by Boyd.
Speaker: And, you know, before I start talking about the strategic initiatives, you know, for the supply chain,
Speaker: Let me first talk about the strategic initiatives for our employees, which is a really fantastic point that Boy just made.
Speaker: So the strength of the companies at the end of the day, the people and our teams were actually working and really, you know, in terms of great personal stressful times as well, they're still coming in and making sure that we continue to succeed.
Speaker: And we've launched a lot of employee assistance programs.
Speaker: to help our employees through these times and to deal with these very unusual times of not being able to see their colleagues or not being able to attend things face-to-face and not being able to come together as groups.
Speaker: But how do they operate in a virtual world, making sure they've got the right tools and technologies available to them and they've got the right counseling and support system, be it from
Speaker: our HR teams or our external partners to help them work through this crisis and stay connected.
Speaker: And not just to them, but those programs are extended to their families as well.
Speaker: We've done a lot of work on digitization of our supply chain.
Speaker: And that is related to integration, both with our suppliers as well as with the customers.
Speaker: We are looking at all the things like artificial intelligence and big data analytics.
Speaker: And what's actually come out is a new capability which is required in supply chain and specifically in procurement, which is the area which I lead, which is about data scientists.
Speaker: And the traditional role model of a procurement buyer was somebody who negotiates well and manages good relationship.
Speaker: Now there's a third capability which is becoming very, very important within the procurement team.
Speaker: And that's being able to
Speaker: analyze big pools of data, get meaningful insights out of that, and then translate them into actions which can drive our supply chain resilience and our continuity of supply assurance.
Speaker: We've done a lot of portfolio rationalization as well, and that's leads to this huge swing towards e-commerce.
Speaker: So making sure we are producing the right SKUs, the right product formats, which our consumers want and those ones which are more amenable or more suitable for the e-commerce channel.
Speaker: We've improved a lot on our planning processes and our ability to track and trace all our shipments and orders.
Speaker: And we've started to move a lot towards predictive analytics in addition to exception management.
Speaker: So these are some new kind of capabilities and roles which we are seeing emerge as a result of COVID-19.
Speaker: Very interesting, very interesting capabilities that you have actually set up as well.
Speaker: Now back to the question, it's the same question, what strategic initiatives have you launched in the tech and respond to new threats or identify new opportunities?
Speaker: So if I can hear it from Ham-Yan from Kagyo.
Speaker: Yes, yes.
Speaker: So, you know, digitalization is certainly key, but, you know,
Speaker: What I struggle to see, and I think, boy, is right, everything is on steroids.
Speaker: And everything just got accelerated to the max.
Speaker: But I haven't really seen anything which is super new.
Speaker: I mean, let's look at it.
Speaker: Zoom has been there for a long time.
Speaker: It's about adoption.
Speaker: And it's about everything being on steroids.
Speaker: So what really intrigues me is
Speaker: not the what, but more the where.
Speaker: I mean, if you look at the GDP growth numbers around the world, which February when China was in the midst of the outbreak, I think the world was looking to grow from a GDP perspective by 6 billion.
Speaker: And if you would do, and that 6 billion is over three years, so from 2019 to 2022, if you would look at the same statistics from The Economist or from anybody, in July,
Speaker: Actually, the world is going to only grow by 1.7 billion and by 2 billion in China.
Speaker: So that means that the rest of the world is actually shrinking by 300 million.
Speaker: So what does that mean for your operating model?
Speaker: What does that mean for your strategic analysis?
Speaker: And Boy mentioned M&A.
Speaker: He really quickly mentioned it.
Speaker: And this is not about M&A.
Speaker: But it really brings the question, where are you going to play?
Speaker: Are you going to bet big on growth in China?
Speaker: Or are you going to bet on places where there's no growth, post-growth, or shrinkage from an investment perspective?
Speaker: Very interesting points.
Speaker: I think Approve and Hamjan has raised very interesting points.
Speaker: So I think the challenge, Amir, is for you right now.
Speaker: Do you have other thoughts who might be the same or different?
Speaker: Happy to hear your views.
Speaker: Sure.
Speaker: I mean, it is, as you said, it is hard to follow these acts.
Speaker: Both of them have brought what are not only obvious, but very real changes.
Speaker: I think one thing that has happened, if I would just add on the digitalization,
Speaker: A lot of people who were doubting or not believing, we have converted them.
Speaker: So they're now on board.
Speaker: So that's definitely happened.
Speaker: And Fonterra's digital supply chain transformation, in fact, the business transformation started some time back.
Speaker: So we are reaping those benefits.
Speaker: But keeping both the points that Hamian and Apoorah made in the backdrop, I want to talk a little bit about for us strategically, once the dust settles and the new world manifests itself,
Speaker: is about number one, building trust.
Speaker: Now you can do it using digital because when a pandemic happens, it's every man for himself in the beginning.
Speaker: And that's what you see what suppliers, customers, and everybody starts to do.
Speaker: At a consumer level, it's about pantry loading, but at a company level, it might be something completely different.
Speaker: You've got to build trust both internally and internally.
Speaker: When you make a delivery promise to a customer, they stop panicking.
Speaker: You've got to build that trust with your employees that we're all in it together.
Speaker: So all these things about well-being that I've already mentioned, they're very important.
Speaker: And digital and other things then become vehicles to execute these new ways of working.
Speaker: They're not necessarily even operating models.
Speaker: You just heightened the awareness that we got to be more sensitive and we got to approach it together rather than the way we used to work before.
Speaker: We are also working very closely with these other stakeholders that have suddenly become very important or more important, which are your regulators and your government bodies.
Speaker: Because every country is not with open doors anymore.
Speaker: And if you're a multinational company,
Speaker: and you have a global supply chain, you can no longer rely on what you created as 10 years, 15 years of efficiency.
Speaker: All of a sudden, market access is limited, exports are not allowed, factories have to support local markets first, et cetera, et cetera.
Speaker: So you've got to take this opportunity to build those relationships where the same can then go across and deep, and you could be one of the players who enable that.
Speaker: So for me, I think strategically speaking, beyond the digitalization operating models,
Speaker: This is very important in the way you work and how eventually your customers, your consumer trust you.
Speaker: Because at the very beginning, we talked about trust and aware of what role these companies are playing.
Speaker: Are they in the game for some quick market share or are they in the long run?
Speaker: And that's, again, I bring back to Fonterra's purpose.
Speaker: It's great to bring it to life.
Speaker: It's called good together.
Speaker: And I think that's perhaps what would be my two cents worth on the top.
Speaker: Very interesting points.
Speaker: Boy, over to you.
Speaker: Would you like to make a few comments or thoughts to conclude?
Speaker: Yeah, so actually, I would like to go back to one of the things I said earlier, and then build on what Harmyan was also saying, because we've been tested through this crisis, and we are still around.
Speaker: We managed to make it work, and somehow, you know, people working dog-at-hours from small apartments with kids and, you know, home-based learning, and it was...
Speaker: very difficult for very many people.
Speaker: And for some of them, they're still in the middle of it.
Speaker: The interesting thing is, and everything on steroids and hormones, that's exactly where I'm saying, in addition to your where, I would also like to add the how.
Speaker: Because I'm 100% with you.
Speaker: Have we seen already the big new things?
Speaker: No.
Speaker: It's just massively adopted all of a sudden.
Speaker: And it is all
Speaker: And that is driving ultimately towards this, what's going to come out in the mid to long term.
Speaker: The jury is out on that.
Speaker: And that's also why it's a massively intriguing time to be witnessing as a business leader.
Speaker: I think one of the core things that I've been hearing all along is that it's putting humans first.
Speaker: It's about human-centered business.
Speaker: transformation, about human-centered resilience, because without that partnership, you're not going to be able to tag along and stay around.
Speaker: In some of the future sessions, we will go into that.
Speaker: It's the mindset that goes from long-term all of a sudden to also to immediate term and being able to pivot between the two, which is one of the capabilities where you need to collaborate with your entire value chain.
Speaker: Well said, Poi.
Speaker: So in this last segment, I would like to do a one word, one advice session.
Speaker: So maybe I will first ask Hamian, in one word, describe the outlook of supply chains in the near term and one advice on what actions that business leaders and consumer industry should take immediately.
Speaker: Yeah, I would feel it's almost impossible to go in one word, right?
Speaker: You know, there's so many things happen.
Speaker: But if I had to pick one word, you know, here I would pick dynamic, right?
Speaker: It is definitely going to be dynamic, whatever direction it's going to take.
Speaker: And then, you know, if you ask me for one advice to other businesses or other business leaders, and I think it's been said a couple of times here already in this roundtable, is that
Speaker: relationships that are built with supply chain partners in times of crisis will not be forgotten when the crisis is over.
Speaker: That would be my advice.
Speaker: And I would really focus on that.
Speaker: I like the word relationship.
Speaker: So we're going to try on approve.
Speaker: One word, one advice.
Speaker: I know it was difficult.
Speaker: Over to you.
Speaker: Wonderful.
Speaker: So great advice from Hamyan and completely agree with that.
Speaker: If I was to pick one word, I would pick agile.
Speaker: And the reason for that is that, you know, in today's world, consumer trends and behaviors are changing so rapidly.
Speaker: And the world has become, you know, there's a term which was used a few years ago, which was VUCA, you know, volatile and, you know, be ready for disruption, et cetera.
Speaker: That's become a reality.
Speaker: And, you know, the first six months of this year kind of proved it like it was never proven before.
Speaker: So it's very important for the companies and supply chains to stay relevant to the consumers, stay relevant to the societies and be completely flexible to adopt and adapt to the shifting trends.
Speaker: That's really essential for the survival of the business and survival of the company itself.
Speaker: So that's why I would say that is probably the biggest advice I would give to everyone.
Speaker: Thank you, Aparuf.
Speaker: And Amir, finally, over to you.
Speaker: One word, one advice, consumer industry.
Speaker: I think the word I would go with here is trust.
Speaker: And the reason I say that in probably building on the previous two panelists' points is one thing supply chain can do is to bring visibility and transparency right now.
Speaker: And if you can build trust, then it will become much easier to not only weather this crisis, but whatever lies at the end of it and ahead.
Speaker: So the one advice I would give, which is more operational, more on ground, is as a supply chain, whatever is not intellectual property or business confidential, make information available across the end-to-end supply chain.
Speaker: Make that decision-making all the more easy,
Speaker: and people can count on each other.
Speaker: So we can reduce.
Speaker: This is also about getting a bit lean.
Speaker: We cannot afford to have heavy baggage anywhere on the P&L or balance sheets.
Speaker: And I think that goodwill can be built, that trust can be built through small actions, whether it's information sharing or collaborating.
Speaker: I think that will give us a lot of mileage in the long run.
Speaker: Thank you.
Speaker: Thank you, Amir.
Speaker: And really excellent, very interesting dialogue on behalf of HSBC and Deloitte.
Speaker: Thank you for your insights.
Speaker: Thank you for your time, Amir Hamjan and approve.
Speaker: Thank you for listening today.
Speaker: This has been HSBC Global Viewpoint Banking and Markets.
Speaker: For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.
