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APAC Supply Chain Banner Asia Pacific Global Supply Chains

Supply chains and more specifically, the disruption of supply chains have never been more in the spotlight than since the onset of the COVID-19 pandemic. Supply chain teams around the world have been called upon to rapidly adapt to volatile conditions as lockdowns swept across the globe causing scarcity of product, which has also been subsequently compounded by acute bottlenecks.

The redesign of supply chain and logistics networks in light of geopolitical, technological, demographic and urbanisation trends has been especially prevalent over recent years to optimise the combination of supplier, manufacturing, inventory, storage, and distribution flows to meet the needs of customers in the most cost-effective way.

This report, The Role of Asia Pacific in Global Supply Chains, is the first in a series by Cushman & Wakefield focussing on the impacts of disruption, customer buying behaviour and the underlying megatrends on the design of supply chain and logistics networks.

Key factors shaping the future of supply chain networks

An efficient and robust supply chain network will allow supply chain companies to capitalise on proximity and speed to market as their key differentiator. 

Let us look at some of the factors that will shape the future of supply chain networks.

The penetration of e-commerce spending is highly dependent on the ability to meet same day or next day delivery lead time. There is a growing need for increased responsiveness, consistency and visibility when it comes to meeting a customer needs. Lagging penetration of e-commerce experienced in many South East Asian markets today can be put down to the difficulty in achieving fast delivery in fragmented and geographically diverse markets. It is pertinent for supply chain to adopt a customer-centric view and the same is true when identifying potential disruptions and risks.

Customer-Centric View (image)

COVID-19 has added unprecedented volatility in the demand and supply of goods. The need to better plan for and manage both known and unforeseen risks within supply chains was a lesson learned during the pandemic. The use of predictive analytics, to allow for better forecast of demand and to manage supply, will therefore become even more critical to operating resilient supply chains. 

Supply chain networks will be configured to create more resiliency including flexible manufacturing platforms across geographies. Effectively, Industry 4.0 offers the opportunity for manufacturers to optimise their operations quickly and efficiently. Underpinning this is the Internet of Things (IoT) which connects different parts and allows vast amounts of data to be shared and analysed, providing real-time information to help them make informed decisions to stay competitive and relevant. 

Asia Pacific possesses leading growth credentials in the three largest global trends factored into supply chain network - namely changing demographics, urbanisation and technological advances.  

  • Demographics: The Asia Pacific region accounts for 36%  of the global economy and 55% of the world’s population.

  • Urbanisation: Seven of the Top 10 world’s largest cities are all located in the Asia Pacific region, with Asian cities in the top three spots. Further urbanisation across the region is not only possible but also inevitable. Currently, approximately 2.1 billion people live in urban areas in Asia Pacific, a little under 50% of the total population, which presents much urban growth opportunity for the region.

  • Technological Advances: Asia Pacific, which accounts for 64% of the world’s smartphone users, is at the forefront of global e-commerce exuberance. With its growing middle class population and increasing internet penetration, it is easy to see why the region has the largest share of global e-commerce at USD2.5 trillion out of a global total of USD3.9 trillion and online retail penetration that is almost double that of other regions. 

Top 10 World's Largest Cities (image)

The working age population in Asia is expected to see a growth of over 200 million people by Year 2030 as compared to Europe’s, which is forecast to decline by 24 million people. Between 2020 and 2030, Asia’s middle-class population is forecast to swell from 2.0bn to 3.5bn people – an increase of 73% and is 89% of the global growth. 

This presents ample opportunity for Asia as the region taps on the increasing purchasing power of its consumers. Simultaneously, trade within the Asia region will grow as consumers in Asia consume more of goods manufactured in Asia. All these will have significant ramifications on the design of supply chain networks.

Figure 3 (image)

While real estate costs make up a minute component (estimated at around 5%-10%) of the overall total supply cost, the ongoing costs as a result of erroneous decision making in location are much more considerable, not least for the flow-through cost on transportation, inventory holdings and labour availability.

Supply chain operators will need to assess their network configuration, location of their facility and building specifications to derive at a successful network design.

Snapshots

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Authors

Dominic-Brown_Headshot_AP
Dr. Dominic Brown

Head of Insight & Analysis, Asia Pacific
Brisbane, Australia


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Tim Foster (image)
Tim Foster

Head of Supply Chain & Logistics Advisory, APAC
Singapore, Singapore


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Dennis Yeo
Dennis Yeo

Head of Investor Services, APAC
Singapore, Singapore


65 96366388

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