Across the diverse Southeast Asia region, there has been a transformation in the way people eat, drink, and shop for what they consume.  This has been accompanied by significant growth from increased urbanisation, changing eating habits and rising disposable incomes, all leading to an increase in the consumption of packaged food and beverage products.

According to a report from McKinsey & Company, the ASEAN region’s more than 600 million people spend $200 billion on groceries each year, but traditional trade still accounts for two-thirds of this total. This strongly indicates that the modern grocery industry has headroom and the opportunity to capture a greater share of shopping needs. The report forecasts growth of 6 to 7 percent a year for modern grocery retail through 2025, making ASEAN one of the fastest-growing and most exciting regions in the world for modern grocers. 

In addition to experiencing growth, the sector is also experiencing fast-paced change in the areas of technology, digitalisation, sustainability and food security.  As a result, the region is witnessing an extraordinary growth in both local and international investments, elevating the F&B and grocery sectors to new heights.

From the integration of eCommerce and mobile applications to the adoption of more sustainable practices, industry leaders continue to employ diverse measures to cater to the evolving needs of the region’s growing middle class.

Combined, increased order volumes and evolving customer tastes and expectations have placed F&B and grocery supply chains across Southeast Asia under more pressure than ever before.

This pressure has forced many businesses across Southeast Asia to acknowledge the shortcomings of their current supply chain operations, leaving them with the challenge of how best to overcome them in order to take advantage of the huge opportunities present in today’s F&B and grocery markets. One significant challenge that is currently a major focus is supply chain labour.

In the past, conversations about labour in the supply chain environment centred mostly around the cost of labour and how this impacted the overall business’ return on investment (ROI).

Today, the focus has shifted more towards the issue of the availability and reliability of labour required to keep up with the demands of the supply chain, eCommerce, and to maintain business continuity. Labour costs and availability issues can vary widely across Southeast Asia.

In Thailand, for instance, there is a relatively low cost of labour when compared to other international regions. However, the reliability of the workforce is poor, with workers changing jobs frequently for slightly more pay or better conditions, and with high levels of absenteeism being common. This effectively makes the real cost of labour significantly higher when factoring in the additional hidden costs such as overtime, use of casual workers and more frequent onboarding and training of new hires.

Meanwhile, in Korea, recent and ongoing tensions between unions, employers and the government, have driven up the cost of using labour, with employers obliged to meet new conditions.

The city state of Singapore is highly dependent on a large number of foreign workers to support its US$400 billion economy. However, tighter controls on hiring lower-skilled foreign workers have been introduced to prompt companies to improve their productivity and reduce their dependency on foreign workers.  Further controls and restrictions are expected in the coming years.

Businesses with supply chain operations that are heavily reliant on a large manual workforce increasingly suffer from the lack of constancy, consistency, availability and reliability associated with labour, as well as an ever increasing cost base. 

Finding, retaining and flexing the level of labour necessary to keep up with the growth and demands happening in the F&B and grocery logistics space, while also dealing with increased regulations is becoming increasingly difficult for many businesses in Southeast Asia to manage. The challenges supply chain operators are facing regarding labour are one of the largest drivers we see today for investment in automated systems. That’s due to the big part automation plays in reducing reliance on labour and the challenges that come along with it.

Disruptive events such as the COVID pandemic have highlighted the vulnerability of many logistics operations with large work forces to external factors. And the Southeast region is no stranger to disruption. Over the past few decades, we have become accustomed to disruptions and the corresponding impact on labour, stemming from a range of events from the Asian financial crisis to the global financial crisis, to SARS, bird flu, swine flu, tsunamis and more.  Automation enables supply chains to deal with current labour challenges, but also with the resilience deal with the next disruption or change, by building in a high level of resilience and adaptability to their business and operations.  

Automation helps businesses to stay ahead of their competition in the highly competitive F&B and grocery environment of Southeast Asia, by increasing agility to respond to changing customer demands and being able to ship orders better, faster, more reliably, and at a lower cost.

With the wide range of supply chain automation options currently available including, automated storage systems, automated guided vehicles and autonomous mobile robots, and highly automated mixed-case palletising systems, there’s certainly no one-size-fits-all approach.  It’s best for a F&B or grocery operator to invest the time in understanding their business – where it is and where it is heading or could go – and to work in partnership with a logistics automation specialist to analyse all the information to find the best solution. 

As the new age of immense growth and innovation in the F&B and grocery sectors continues across Southeast Asia, the supply chain has no choice but to work faster and harder than ever. As labour availability and dependability cannot be guaranteed, supply chain operators are increasingly turning to automation. This enables them to achieve the scalability, resilience and agility required to meet the growing demand for F&B products and to fulfill rising customer expectations. Those operators who can provide the lowest cost, most reliable and fastest delivery and the most accurate order fulfilment, will be best positioned in an increasingly global and fiercely competitive F&B and grocery market.