Disruption, Digitisation, Resilience

23 DISRUPTION, DIGITISATION, RESILIENCE : The future of Asia-Pacific supply chains When Huawei started seeing the actions against it, the company went out and bought as much capacity and as many chips as it possibly could, to pile up, he says. As did Apple, with processors and some communication chips. Businesses across sectors sought to do the same thing not only on supply chain, but also on finance. Mr Nicholas says that at the beginning of the pandemic, smart companies drew down their lines on credit to become cash-rich to be able to survive the impacts of the pandemic. “Everybody had this bunker mindset at the beginning.” Preparing for this crisis and the next Strong recency bias is in evidence when supply- chain managers are asked to reflect on the future shocks to the supply chain they are most concerned about, with 29.1% picking “the next pandemic” In the Asia-Pacific, however, the top choices differed markedly — only 7% picked making their supply chains more sustainable as the top action to better prepare for future shocks. Meanwhile, 23.2% said the top measure they are looking to undertake is to carry excess inventories or to request their suppliers to do so, followed by 22.4% who said their top measure would be to localise production. This ties in with other findings from our survey, which indicate that Asian supply-chain managers are perhaps less panicked about their supply chains and have taken these disruptions in their stride — which helps explain why the top measure picked to strengthen their supply chains was simply to carry excess inventories or to ask their suppliers to do so, rather than something more transformational. Inventory management is important. Mr Nicholas refers to Huawei’s recent actions in this context. Figure 9: Responding to disruption Measures taken to make supply chains more resilient against shocks (% of respondents ranking #1) Making your supply chain more sustainable Diversifying suppliers Localising production in key markets Carrying excess inventories or requesting suppliers do so Digitising elements of supply chain Making contingency plans with exiting suppliers Source: The Economist Intelligence Unit 21.7% 20.0% 18.3% 16.6% 12.6% 10.3%