16 mar 22

“Fleet managers need to prepare well to face the changes in APAC”

The dynamics in the APAC region are swiftly shifting amid the prolonged chip shortage. But that is far from the only issue, says Ng Yit Ming (Ming), Regional Procurement Manager of Zone AOA (Asia, Oceania, Africa) at Nestlé Group. Yet, a good strategy is a key to unlocking the opportunities and overcoming challenges for efficient fleet management, Ming says.

The fragmented structure of the region, wide differences between maturity and culture of the markets, and changing EV infrastructure require thorough work to create a good strategy in APAC.

Furthermore, the impact of the Ukraine-Russia war has not been felt strongly so far in the region, according to Ming. “Fleet managers entering the APAC region need to get prepared very well."

We asked Ming about his key components of fleet management strategy and advice for the fleet managers who will step into the APAC region.

How many vehicles do you manage in the APAC region?

“In Zone AOA, I manage roughly 5,500 vehicles out of the global fleet of 22,000. 80% are used in sales operations, and 20% are used for management while Zone AOA has 60% which are purchased, and 40% leased.”

What are the main pillars of your strategy?

“One of our strategies is to move from purchasing vehicles to leasing them where it makes business sense.

Another strategy is bringing the best practices from different markets; both APAC level and regionally is very important. Standard services in one market can be brought to another. Thus, we are trying to fill the gaps of local suppliers by improving their services.

The other part is to understand each market specifically and how they operate, considering the tax structure and supply base. Also, you need to understand the business norms in the markets because APAC has many local suppliers compared to Europe.

Consolidating the supplier base is another part of the strategy. We are trying to choose global suppliers in the markets they operate in, but it must make business sense.”

What are the opportunities in APAC?

“APAC is a growth region with a considerable population. As time goes by, disposable income increases in the markets and eventually benefits consumers. APAC also offers a mixed bag: developed countries and developing countries.

The growth in the middle class offers advantages for any company, including Nestlé. A small percentage shift of the people moving to the middle class in countries like Indonesia, China and India creates many opportunities for companies. The evolving ecosystem also enables companies to implement best practices and change the mindset of stakeholders, making the market more saturated.”

What are the most prominent challenges in the APAC?

“Global suppliers are scarce in APAC, while there are many local suppliers, resulting in no standardisation in the market. All of them have different supplies and conditions, eliminating standardisation. Also, there are no key account managers in the region, making it harder to coordinate operations at a regional level.

The maturity level of the markets is also different. Developed countries like Japan, Australia, South Korea and Singapore operate very differently. On the other hand, markets like Cambodia, Bangladesh, Pakistan, Papua New Guinea are less developed, which creates a wide range of spectrum in terms of maturity.

One other challenge we are facing in APAC is stock. In some markets, the delivery time has increased to almost one year. One of the reasons for this problem is the supply shortages related to the pandemic, while the second and more concerning reason is the chip shortage.

When things seemed to be somewhat improving this year, now the war in Ukraine is raising concerns. The APAC regions have not yet fully felt the impact of the war, but it will be felt very soon. Ukraine is a big country providing supplies to manufacturers. As a result, you see that plants in Europe are shutting down. At the same time, sanctions have forced many OEMs to temporarily close their production in Russia, eventually resulting in a stop in the supply chain and delivery of the vehicles. OEMs may try to allocate the capacity in Asian markets to supply Europe to face this problem.”

How do you establish your relations with suppliers?

“We adopt a long-term partnership strategy. This means being transparent and working with our suppliers to find a “win-win” solution for both sides. Regular catch-ups and business reviews is another good strategy to build a solid relationship.”

What is your roadmap for electrification?

“Nestle is committed to achieving Net Zero Emissions by 2050, and the car fleet category is on this journey. We are including Green vehicle options (Hybrid, Plug-in Hybrid, Electric and Biofuel) in all our tenders where possible. Electrification will not happen overnight, but we are working with our stakeholders and suppliers to accelerate this process.”

What is your advice to new fleet managers in APAC?

“The key is to understand what their company wants to achieve. Understanding the goal is done through stakeholder engagement and alignment. Once you know your goal, you can list your priorities. You need to talk to all stakeholders in a market regardless of its maturity and conditions. Also, include all internal bodies such as HR, Procurement, Finance, Facility Management, so everyone understands the plan as a group.

The other crucial factor is to use data accurately. If you input good data, you get good results. Using a standardised format or template is also crucial in analysing data coming from many markets and suppliers.

Fleet managers in APAC must learn how to customise and allow flexibility in each market. Different markets have different tax rates, different supply bases and so on. Adjusting to each market is essential. Otherwise, you can get a push back with stakeholders.”

What are your expectations in the APAC region in the coming years?

“I believe as time goes on, supply issues shall improve. We also see global suppliers emerging in the APAC region to expand. Facing more challenges from the fleet managers and increasing competition, I expect local suppliers will add more value to their propositions. The popularity of leasing is growing in APAC, and the global suppliers see this opportunity.

Electrification will also gain pace in the APAC region. More companies will introduce EVs as countries push this trend with several incentives. Malaysia is a good example as the government has provided strong tax incentives for EVs to encourage adoption. Also, Singapore plans to have all fleet vehicles fully electric by 2040. Furthermore, Indonesia and Thailand are also planning to increase investment in EV manufacturing and incentives. Whether a company or a fleet manager likes it or not, EVs will be a part of the future. Fleet managers must prepare for the transformation.

Main photo of Ng Yit Ming (Ming), Regional Procurement Manager of Zone AOA at Nestlé Group.

Authored by: Mufit Yilmaz Gokmen