Disruption, Digitisation, Resilience

8 DISRUPTION, DIGITISATION, RESILIENCE : The future of Asia-Pacific supply chains A halt to supply chains was an understandable — and unsurprising — challenge for Asian firms, since the virus hit that region first, catching governments by surprise and leaving businesses scrambling to respond to the first of many lockdowns instigated since. “In the beginning, there was a huge supply shock,” says Jan Nicholas, a Hong Kong-based partner at PwC, a consultancy, and a vice-chair of the trade and investment committee at the American Chamber Figure 2: Disrupted by production stoppages Causes of pandemic disruption to supply chains (% of respondents ranking #1) Production stoppages Logistics (air/sea/rail/road) Access to raw materials / primary inputs (eg, cotton, iron ore, rare earths) Trade restrictions (export controls/import tariffs) Access to inputs / intermediate goods (eg, steel, components, semiconductors) Inability to shift capacity Travel restrictions Figure 1: Big hit to supply chains Significance of pandemic disruptions to a firm’s supply chain Very significant Somewhat significant Somewhat minor Very minor We have not experienced disruptions to our supply chain(s) due to the pandemic Source: The Economist Intelligence Unit Source: The Economist Intelligence Unit During the most severe pandemic in more than a century, supply chains in the world’s densest, most interconnected region stood up surprisingly well. Only 32.6% of supply-chain managers either in the Asia-Pacific region — or overseeing it from afar — reported “very significant” disruptions (Figure 1). For those who did experience disruptions, the leading cause was production stoppages, which 36.4% of respondents ranked first among a slate of nine options (Figure 2). 32.6% 30.3% 20.6% 13.7% 2.9% 36.4% 20.9% 17.3% 11.8% 6.4% 5.5% 1.8%