Enterprise Supply Chain Software in Southeast Asia

Aebjohn Tomas
6 min readJun 8, 2020


Business Pain Point

The Asia Pacific e-commerce market was estimated to be worth $1.3 trillion in 2017, and it is expected to grow at a CAGR of 16.8% through to 2022. Driven by consumer demands for instant gratification, businesses need to service customers as quickly as possible, and within a specific timeframe that is most convenient to them. For example, a buyer would like their package delivered the next day but only after 5pm so they are able to pick it up after work. Meeting these added complexities are paramount to many businesses across different industries. These concerns are not just anecdotal; according to Chicago Booth’s Professor Amy Ward, customers are becoming more impatient. In the United States alone, business owners lose an estimated $136 billion due to customer churn.

I therefore believe enterprise supply chain management software ultimately caters to a compelling job-to-be-done: help companies — particularly SMBs — keep their customers happy to increase LTVs, and decrease churn. That being said, there are many valid business pain points which supply chain management technology (SCM) can further alleviate. Increasing visibility across supply chains is an often targeted pain point as 94% of business owners claim that they do not have a full view. However, going deeper into the addressable pain points, I believe that issues concerning the harmonization of a firm’s digital tools and human capital is often overlooked by investors in the space. VDC Research shows that the lack of skilled labor is a growing concern for many mid-supply chain operators. That said, machine learning and artificial intelligence competencies must be packaged into easy-to-operate software applications. This will help reduce training costs, increase worker productivity and, most notably, reduce costly miscoordination.

Why Southeast Asia?

The broader SaaS category is supported by favorable tailwinds such as but not limited to: (i) the mission-critical nature of enterprise integration, (ii) the exploding growth of mobile users, and (iii) the cost-effective, industry-specific solutions of vertical SaaS products.

Specific to the Southeast Asian market are the following factors which make investing in the space an attractive opportunity.

  • Macroeconomics
    The Association of South East Nations has a combined GDP of US$2.4 trillion. In 2030, the high urban share at 45% of its population of 600 million people, paired with the region’s younger demographic will set an optimal environment for investments by MNC’s as governments focus on infrastructure improvement to boost urbanization.
  • Improving infrastructure
    The Asian Development Bank predicts that between 2010–2020, sectors such as energy and transport will consist of 62.6% of the total ASEAN infrastructure investment needs. One significant investment is the Trans-Asian Highway stretching through all ten ASEAN countries at a total length of 38,400 km. In regards to energy, the need for power to stimulate the accelerated growth in the economy is constantly increasing. The demand for electricity consumption is growing at 4% annually and is estimated to be 26% in 2040 reaching the global average. Wire Southeast Asia also estimates a total market demand for products to reach ~1,958 terawatt-hour (TWh) by 2035. The ASEAN Power Grid (APG), which aspires to function as a way to connect power systems between neighbor countries, is an investment predicted at $5.9 billion.
  • Favorable entrepreneurial ecosystem
    Many countries in the region are hosts to a developing startup community backed by favorable government policies, relatively cheaper labor, interconnected ASEAN markets, and favorable regulatory landscapes. Singapore, for example, has the startup tax exemption scheme which exempts 75% of a company’s first $73,000 in income.
  • Fragmented competitive landscape & critical product-market fit
    The supply chain technology market is highly fragmented, and is becoming increasingly competitive. No one player services the entire supply chain: providers are segmented across four broad verticals, and are at different stages in the business lifecycle. As such, investors can deploy capital to support companies with great product-market fit. While SCM companies in the West might be more developed, vertical software products allow for greater customization in order to meet business needs. SMBs — particularly in the e-commerce space — are the main users of SCM platforms and thus require a specific set of solutions to help empower them keep their consumers happy. In fact, the generic and often harder-to-use and non-regionalized Western solutions in the Asian marketplace are starting to get dispalced by the localized products. As companies and subsidiaries in the region leapfrog from manually-operated methods to fully-digitized systems, software applications must be tailored to the skills and competencies of the Asian labor force.
  • Growing number of SMBs in the region
    SMBs in the Southeast Asian region are the engines that drive innovation in the region. They account for over 97% of small businesses and employ over 50% of the work force in the APEC region. Moreover, the SMB segment will continue to welcome new entrants and entrepreneurs thanks to the favorable policies for early stage ventures that are still in palce. That being said, since vertical SaaS products — like SCM technology — are built to address specific business needs, I believe that a steady flow of startups that focus on sustaining innovation can be expected.

Why now…in spite of COVID-19?

With brick and mortar retail traffic on a steep decline, e-commerce will continue to rise in importance to the typical consumer, especially considering the changes in consumer behaviors as well as the economic dislocations caused by COVID-19. This creates additional necessity for SaaS optimization — companies will need reliable and tailored solutions to adjust their supply chains and remain agile in an increasingly uncertain environemnt with changing consumer patterns.

The early onset of the coronavirus in Asia shocked supply chains around the world. The operations of SMBs in particulary have been adversely affected by such drop-offs in As such, maintaining efficient supply chains in these times is an essential activity to many enterprises, and which is why the demand for many SaaS products persist while certain components of the economic value chain are broken.

Finally, diving deeper into real estate valuations might actually provide increased confidence to technology investors. According to Greenstreet research, COVID-19 has put significant downward pressures on real estate valuations acros the board. However, the notable exception is the property values of data and telecommunications towers. Given data towers and telecom are the primary ways in which SaaS capabilities are supported, investors arguably remain convinced of the utility of these spaces in Southeast Asia’s fast-paced digitizing economy. Given the expanding government investments in infrastructure spending in Southeast Asia(OECD report — Emerging Markets), this should arguably resassure investors that the broader SaaS category in Asia will maintain its relevance and growth moving forward.


  • Data confidentiality
    According to BCC Research, cybersecurity infrastructure remains a concern for some businesses — particularly larger organizations. More specifically, uncertainties around critical data hosting securities are making some enterprises hesitant about transferring data to the cloud.

“Some enterprises are still considering SaaS or cloud technologies less reliable due to the confidentiality concern of their intellectual properties with third party services. In addition, organizations are also skeptical of their data being safe with the CSPs in the shared network and storage environment.”

  • Employee Training
    Utilizing the software would inevitably require enterprises to incur training or re-training costs. To that end, easy-to-use software with superior UI/UX will prove to be essential. Startups are arguably well-structured to serve SMBs on this front as their organizations require simpler SCM applications and to address their business needs.

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Sources (non-hypderlinked, access through the University of Chicago Economics Library)
- BCC Report IFT162A
- FarEye “Logistics Problem Whitepaper ,” Pages 2–4
- VDC Research, “Pursuing Operational Visibility in the Modern Supply Chain.”
- Greenstreet Research



Aebjohn Tomas

Tech. History. Healthcare. UChicago Senior. VC Fellow @ Dipper. Incoming @ J.P. Morgan. More about me: aebjohn.github.io