MANUFACTURING is one of the key contributors to Philippine GDP, making up almost 25% of the economy. It is also the biggest driver of the country’s exports, accounting for 85% of the country’s outbound shipments by value last year. However, uncertainties in the technology and regulatory fronts may hinder Philippine manufacturers from experiencing further growth.
Several headwinds loom on the horizon. On the national level, manufacturing is experiencing a slowdown with manufacturing export orders steadily declining in the past months. Globally, manufacturers have to contend with rapid technology developments that are transforming the way they do business, on top of important manufacturing issues that demand close attention.
With its finger on the pulse of global trade, United Parcel Service (UPS) is committed to helping businesses stay ahead of these developments by identifying technologies such as artificial intelligence and blockchain technology that manufacturers can begin adapting. Some of these perspectives and solutions were presented by UPS to the Association of FPIP Locators, Inc. (AFLI) at the First Philippine Industrial Park in Batangas last July.
New technologies: Automation and the Internet of Things
One of the emerging trends is the tremendous potential offered by the Internet of Things (IoT). IoT is characterized by interconnected devices and hardware that improve efficiencies in production and deliver a broader mix of customized products to customers. Some applications of IoT in manufacturing include warehouses interconnected with intelligent transportation systems, IoT platforms that track all assets and devices in real time, and smart enterprise control that brings all of this together in a centralized control console.
To stay competitive, businesses should strive for reduced lead times by integrating their operational processes and production lines while remaining adaptable to fast configuration for changes.
Another pressing issue for manufacturers is the imperative to automate against the backdrop of Industry 4.0, or the further digitization of manufacturing with the use of smart and autonomous systems capable of handling data and machine learning. Smart factories are those that have adopted automation in their manufacturing systems, boosting productivity, accuracy, quality, and safety. These smart factories are estimated to contribute US$500 billion to the global economy by 2022.
Offering his insights, Chris Buono, Country Manager of UPS Philippines, said, “Supply chains and production lines are gearing up for what’s been dubbed as the ‘fourth industrial revolution.’ Automation is expected to dominate the future of manufacturing and manufacturers that fail to embrace automation in the coming years stand to lose their competitive edge.”
To help businesses adapt, UPS has led the development and adoption of automation technology that analyzes and optimizes routes of its couriers. Called ORION (On-Road Integrated Optimization and Navigation), this technology is will be useful in the dense urban centers of Southeast Asia like Metro Manila, where a driver may spend up to 16 days a year stuck in traffic. Currently, ORION is being implemented in the US.
UPS is also patenting blockchain and distributed ledger technology that routes packages throughout an international supply chain covering multiple carriers in the US. This ledger technology facilitates customs compliance by making documentation more easily and accurately fulfilled and stored. The ledger is envisioned to store data points such as package destination, movement, and transportation method, simplifying the task of distribution of manufacturers, most of whom to this day typically use multiple shipping modes and carriers, increasing efficiency and managing costs.
Complex customs regulations
Another big pain point that manufacturers struggle with are complex customs regulations, e.g., border clearance, customs duties, and permits and licenses, making expansion into international markets difficult. Expansion may seem daunting because such complexities can leave lots of room for error, and mistakes can lead to big fines.
“These challenges and optimizations that we’ve identified require you to grow into smart manufacturers—that is, forward-looking companies that are equipped to harness machine learning, big data, and automation in manufacturing,” Buono said.
“UPS customs brokerage services can guide you on the documentation and customs clearance processes and other regulations. We have over 80 years of customs brokerage experience, full import and export brokerage services, and more than 400 brokerage offices in over 40 countries.”
UPS’ customs brokerage services include compliance and clearance, consulting services, managed services, and import/export technologies. It also has an international network of warehouse facilities that customers can utilize as they scale up their operations. In the Philippines, UPS facilities are strategically located to complement business needs with centers and offices that are accessible and conveniently placed near international airports and sea ports.
UPS Philippines also has its own Customs Composite Unit in Clark, which manufacturers can use to shorten cargo clearance time.
“In UPS, it is our goal to ensure that our customers and the trade community’s best interests are well-represented. We’re committed to going above and beyond other brokers. It’s what makes us different,” Buono noted.
Philippine manufacturers may be contending with many changes across the industry, but UPS has the knowledge and the systems to support them in this new path of growth. “With UPS, it’s our business to provide tailor-fit solutions and key insights for our partners and customers,” Buono noted.
