Disruption, Digitisation, Resilience

15 DISRUPTION, DIGITISATION, RESILIENCE : The future of Asia-Pacific supply chains That there is far more at play in terms of shifting supply-chain strategies than just the pandemic’s impacts, emerges as an interesting finding from the research. While many supply-chain managers surveyed are naturally concerned about the immediacy of their requirements from a supply- demand perspective, most experts interviewed insist on the importance of taking a broader view that underpins long-term supply-chain strategy decisions. These include longer-term trends relating to global trade, and factor in geopolitical considerations that continue to impact trade policy at a national level. Mostly business as usual At a sector level, the IT/ tech/electronics industry has the smallest share (16.7%) of companies conducting a complete overhaul of their supply- chain strategy, compared with the survey average of 32.6%. This compares with 48.3% in the automotive sector, 40% in footwear and apparel, “single sourcing” for critical inputs to reduce dependence on one (or very few) suppliers. Smaller companies — likely constrained by the relative paucity of resources — prefer localising and shortening their supply chains. Diversification was followed by regionalisation (22.3%) and localisation (20.6% — this refers to companies that have sought to either move their supply chains to or within countries that surround their primary markets and end-users (Figure 5). It also depends who you speak to, even within the same companies. Mr Nicholas says that it is profit and loss (P&L) leaders talking about localisation as they are more concerned about policy, and not cost. On the other hand, “your average supply-chain manager isn’t really invested in policy,” he says. “It is the P&L owner, the business unit owner, the CEO, that’s looking at the risk to revenue, and the risk to the customer base and saying ‘I’ve got to localise’.” Figure 5: Supply-chain strategies What actions firms are taking in Asia-Pacific region China plus one Regionalisation (to the extent possible, we are moving our supply chains to countries surrounding our primary markets/end-users) Localisation (to the extent possible we are moving our supply chains to be within our primary market/end-users) Diversification (to the extent possible, we are adapting our supply chains to source from a wide range of suppliers and/or sell into a wider range of markets) Reshoring (to the extent possible, we are moving production back to my firm’s home country) Source: The Economist Intelligence Unit 12.6% 22.3% 20.6% 29.7% 14.9%