Top challenges faced by SEA manufacturers today

Forecasted to reach a total of 70 million people by the year 2035, Southeast Asia’s comparatively young population is fuelling a growing consumer economy. According to a McKinsey report, the region’s accelerated young population growth will contribute 34% to consumption growth by 2030, compared to the global figure of 25%.

The increasing consumption of goods bodes well for Southeast Asia’s manufacturing industry, whose economic sector accounts for approximately 20% of the region’s GDP. As labour costs continue to rise, multinational companies will also begin to look for new production sites—representing an opening for Southeast Asian countries to establish themselves as bigger manufacturing hubs. The ASEAN Economic Community (AEC) also aims to increase regional trade through reduced tariffs and quotas and skilled labour—providing more growth opportunities for manufacturers in the region.

Growth is commonly known as “the process of increasing in size”. However, this can have varied implications for all businesses, including manufacturers. Whether their goals are to increase net profit or expand geographically, businesses should exploit technological advancements to increase manufacturing speed and respond more quickly to changes in the global market. Often, growth goals coincide with getting closer to customers and meeting their needs. With this in mind, it’s unsurprising that research has indicated that “managing growth expectations” is the top challenge facing companies today.

We met with some of our Southeast Asian customers to discuss their growth challenges. Despite them coming from different countries and at different stages of their business journey, they shared extremely insightful pain points that impacted their own growth plans. Here are some of the challenges that were highlighted:

1. Increasing labour costs

Across the region, manpower has become a key concern for the manufacturing industry. In an attempt to curb the region’s reliance on foreign labour, various Southeast Asian governments have resorted to implementing tighter policies in employing foreign staff. Navigating this challenge is difficult as firms are faced with the decision of whether to increase costs or sacrifice productivity.

2. Finding the right fit—retaining and attracting talent

Recruiting skilled personnel is also a huge challenge for SEA manufacturers, which can greatly impede the potential for growth. In fact, 73% of business leaders in Asia feel that attracting and retaining skilled staff is a main barrier to achieving optimal business growth. Singapore has also seen a shortage of manpower in labour-intensive sectors, which are not as attractive to younger workers.

If technology can be used to ease the strain of increased workloads, employees can even find themselves empowered to focus more on business issues to support the growth of the company.

3. Automation of jobs

Though companies seek to automate jobs in order to ease labour-intensive roles, not all manufacturers possess the right technological infrastructure and guidance required to implement such solutions. Some customers were even unaware of the technology available to improve their efficiency and productivity

In order to mitigate these challenges and propel growth, implementing technology solutions such as a modern ERP (enterprise resource planning) system, helps manufacturers optimise internal efficiency, increase the speed and deliver quality products on time and at affordable prices.

Real-time access to data helps businesses become more connected, making it easier to sustain quality and productivity. As business leaders are equipped with the necessary insights, they can make more assured and informed decisions, as opposed to relying on gut-feel. This ability contributes significantly to a more agile and sustainable competitive advantage—leading to faster growth.

Southeast Asia has the potential to continue its rapid economic growth and manufacturers will be busy carving out their own unique opportunities. No matter how much we plan for growth it can still surprise us—but manufacturers can be better prepared for when it happens.