Press release

29 Mar 2022 Bangkok, TH

Digital enablement and workforce are keys for Thai supply chains

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EY Thailand

Multidisciplinary professional services organization

  • Digital enablement and workforce are keys for Thai supply chains (Thai) 244 KB Download
  • Companies must address eight critical factors to design a supply chain that can withstand future disruptions
  • Key actions include incorporating advanced digital capabilities into the supply chain and transforming the workforce

BANGKOK, 29 MARCH 2022. In the face of the COVID-19 pandemic, the vulnerabilities and fragility of traditional supply chains were exposed. The pandemic has caught companies off guard with ripple effects tearing through supply chains and impacting routine operations. The Business Pulse Survey 2021: Thailand Report - Living with COVID-19 and winning together mentioned that 45% of Thai business leaders say that their supply chains have been negatively affected by issues including loss of suppliers, and higher costs of raw materials and transport.

An EY study, Investing in Southeast Asia: Reimagining manufacturing and supply chains, suggests that Southeast Asia-based manufacturers, including in Thailand, are looking to grow after the covid pandemic due to the region’s growing trade, but they need to reimagine and optimize their supply chain to be able to take advantage of this growth.

Narisara Phatanaphibul, Consulting Leader, EY Thailand says:
“Thai supply chains have always adapted themselves as they’ve faced many challenges arising from national policies and global trade tensions. However, COVID-19 is a driving force for business leaders to redesign their supply chains with a focus on responsiveness to rapidly changing conditions, reconfiguration on accelerated digital transformation, and developing the resilience to achieve sustainable growth. So, the supply chain is becoming more strategic than before.”

Eight critical factors for companies developing their supply chain strategy

The study recommends that companies that are rethinking their regional supply chain strategies consider eight critical factors:

  1. Customer collaboration and order fulfillment: Inventory, warehousing, logistics and last-mile delivery planning to meet consumer expectations for quick delivery and prompt return services
  2. Regional trade and tax value chain optimization: An ideal positioning between jurisdictions to optimize the total cost-to-serve associated with procuring, manufacturing, importing, transporting, distributing and selling goods
  3. Footprint, assets and investments: Right level of geographic decentralization attained to serve high-growth markets at compelling costs
  4. Supply chain visibility, intelligence and traceability: A well-integrated supply chain with minimum interruption and maximum collaboration
  5. Product innovation: Right balance between product standardization and product tailoring to country-specific requirements and at what stage of the supply chain
  6.  Supply chain resiliency and sustainability at different stages: Reduced dependence on a narrow set of global vendors as well as increased reliance on local sourcing at competitive prices
  7. Workforce restructuring and upskilling: A workforce that is not only technically competent, but also equipped with strategic thinking and problem-solving capabilities at different stages
  8. Digital enablement: To bring to life the various principles of Industry 4.0 and provide a much-needed boost to manufacturing efficiency and flexibility, labor productivity and workplace safety

Thai supply chains to adjust business strategy for long-term growth

The study also suggests that as corporate executives seek to reframe their businesses, they should revisit the business plan to integrate digital capabilities and transform the digital culture in their organizations. This aligns with the findings from EY’s Business Pulse Survey 2021: Thailand Report, with 78.22% of Thai business leaders saying that their top priority for the next three to six months is to accelerate their plans for digital transformation.

In addition, as people are the heart of the whole transformation process, equipping employees with digital competencies is crucial. Leaders need to drive the vision investing in employees by making them part of the change, rather than pushing them to embrace what the transformation offers. The workforce must transform through retraining, recruitment and retention.

Narisara says:
“This is a good time for companies to incorporate digitalization into the supply chain for greater efficiency. The supply chain intelligence platforms with end-to-end visibility, cloud data collection, and real-time models will enhance traceability, offer full visibility, and provide accurate data for all ecosystem partners who will have to make decisions. Ultimately, this will reduce the risk of encountering unexpected incidents, or if an incident occurs, give companies the ability to easily and quickly handle it.

“While companies look to reconfigure their supply chain processes, they should also strive for a match between digital implementation and the workforce’s digital capabilities. As new roles emerge and skills needed change, the existing pool of highly skilled workers is not big enough to respond to demand. To address the problem, companies must invest more in enabling their workforce to reskill, set up plans for workforce building, and harness technology to enable lifelong learning in order to create their own highly skilled digital-ready professionals.”

The pandemic has presented the interdependence of supply chains globally, and the need for digital and workforce transformation to be given more weight in supply chains. Businesses that are quickly flexible and adaptable in their business plans should then overcome future challenges.

Narisara concludes:
“The pandemic has dramatically shifted business patterns, and it is important that Thai supply chains are well-prepared to harness long-term economic potential when the pandemic becomes endemic. The key to success is to tailor their strategies by adopting new technologies that instills more transparency and agility in the entire value chain, and investing in people to deliver strong performance and to enhance resilience”.


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