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Guest Feature
New Supply Chain
Strategies
for the Asia Era
Mark Millar MBA, GAICD, FCILT, PMHKLA
As a result of recent and rapid
developments in worldwide commerce,
we have witnessed supply chains evolve
into complex international networks that
can no longer adequately be described
using the linear concept of a ‘chain’.
The extent, depth and breadth of
complexity, connectivity and interdependencies
involved in today’s
international commerce have resulted
in the emergence of ‘Supply Chain
Ecosystems’, globally inter-weaved,
multi-layered networks of partners,
suppliers, regulators, service providers
and customers. Amidst rampant
globalization and the never ending
pursuit of low cost labour, these
supply chain ecosystems have become
elongated, complicated and frustrated
with challenges arising from Velocity,
Volatility and Vulnerability.
At the same time, the traditional growth
consumer markets in Europe and North
America are experiencing varying degrees
of economic, political, social and fiscal
uncertainties, which intensify the continual
challenge of forecasting demand and
result in high degrees of variability in our
supply chains.
Meanwhile, with the inexorable rise of
the ‘Chindia’ (China + India) powerhouse
combined with the increasing economic
prosperity and emerging consumerism
throughout the ASEAN region, our
presence here-and-now in ‘The Asia Era’ is
unequivocally confirmed, at least through
to year 2050.
The most important impact for the year
ahead in 2013 will be a renewed supply
chain focus that will move beyond the
traditional performance metrics of speed,
cost and quality and incorporate much
more emphasis on five critical Rs of supply
chain–Regional, Regulatory, Resilience,
Rationalisation and Responsibility:
Regional:
With increasing labour costs,
especially in mainland China, the
volatility in oil prices, and the
trend towards regional free trade
agreements, companies will seek
to rebalance their supply chain
complexity by adopting a more
regional approach–for example
‘Made in Asia, for Asia’. Hence,
there will be some production
that will migrate ‘closer-to-home’,
such as Eastern Europe or Latin
America. This will not however
result in a mass exodus from Asia
manufacturing, largely because of
the well-established supply chain
ecosystems that service the Asia-
Europe and Asia-America trades,
but also because the potential in
the Asian domestic markets is so
enormous.
Regulatory:
Companies expanding their
business activities in emerging
markets are forecast to account for
almost 60% of global GDP growth
through to 2015, will increase the
emphasis on having the expertise to
capitalise on free trade agreements,
whilst deploying due diligence to
ensure full regulatory compliance in
all relevant jurisdictions.
Resilience:
Following the unpredictable
events that in recent years
have caused massive-andimmediate
disruption to supply
chains (earthquakes, floods,
accidents, social unrest and
piracy) companies are seeking to
develop supply chain resilience.
22 February 2013