How the Asia-Pacific Supply Chain Is Evolving

Businesses across the globe have been navigating a seemingly never-ending array of disruptions in recent years. These supply chain challenges have heavily impacted logistics processes, distribution channels, and supplier networks. As the supply chain becomes increasingly complex and interconnected, the likelihood that barriers in one region will quickly lead to a ripple effect of repercussions in others continues to grow. With that in mind, read on for a closer look at the state of supply chains in the Asia-Pacific (APAC) region today. We will explore how these trends are affecting economies around the world and the resources companies can leverage to improve and streamline production and distribution operations moving forward.

The state of the region

The supply chain in the Asia-Pacific is evolving — and quickly. A report from the Harvard Business Review reveals that 67% of APAC organizations are taking steps to transform their existing supply chain networks, compared with 52% of global respondents. Businesses in the region are hoping to transform their existing supply chains by working to remedy a variety of issues, including:

  • Supply chain bottlenecks: Countries across the region are experiencing congestion that creates shortages, shipping delays, and even shutdowns. This costs businesses valuable time and increases production expenses.
  • Raw material and component shortages: Shortages have become commonplace. Causes for these shortages include inaccurate lead time on the buyer side, poor planning on the supplier side, inventory inaccuracy, shipping delays, and more.
  • Rising freight costs: Export restrictions, additional consumer demand, and rising inflation have increased the costs associated with product shipment.
  • Infrastructure issues: Undeveloped infrastructure within the region hampers the efficient and successful distribution of commodities.

Due to the complexity of global supply chains, major disruptions to Asia-Pacific are not only a concern for businesses in this region but those across the globe. What’s more, these issues can lead to a 62% loss in finances, according to Zippia. This has quickly highlighted the critical need for organizations throughout the APAC region and beyond to consider cloud solutions — such as supply chain, logistics, warehouse, and inventory management applications — that support their distribution channels.

Is China losing its supply chain dominance?

Amid the rise of globalization and integrated supply chains, China established its place as a manufacturing powerhouse and “the world’s factory” in recent decades. However, the COVID-19 pandemic, in combination with geopolitical tensions and new tariffs imposed during the Trump administration, has begun to shift China’s position away from the center of the world’s supply chains.

For example, in December of 2022, the WSJ reported on Apple’s accelerated plans to relocate production facilities beyond China’s borders. This is only one instance of China losing its foothold in global manufacturing. The transition away from China as the APAC region’s supply chain core is leading to greater supply chain diversification in the United States and Europe. This ultimately leads to important benefits, including reducing the risk of:

  • Inventory backlogs
  • Longer lead times
  • Inadequate supply strategies

However, the beginning of 2023 saw China’s great post-pandemic reopening, along with factories in Southeast Asia ramping up production and purchasing. With supply-side pressures easing, lower inflation rates, and improvements for Asia’s manufacturers early in the year, the region has quickly become more optimistic about the future.

 

 

India’s push to become a global hub

As China’s control over the global supply chain fluctuates, Morgan Stanley analysts predict that India, Mexico, Vietnam, and Turkey stand to benefit the most from U.S. and EU companies diversifying their supply chains. With its policy stability, skilled labor force, and high levels of digital technology adoption, India is particularly well-positioned to become an integral hub in international production and distribution channels.

In fact, with the long-term goal of becoming a well-oiled global production hub, companies across India’s manufacturing sector are looking to cut dependence on China for parts and materials. This quiet revolution comprises plans to make more components locally, improve quality and delivery, and ramp up manufacturing across a range of categories.

The India Brand Equity Foundation reports that India’s government has taken up initiatives to support those goals. The National Manufacturing Policy, which aims to increase the manufacturing industry’s contribution to India’s gross domestic product (GDP) to 25% by 2025, was unveiled recently. Yet these aspirations are ambitious as manufacturing only accounts for 17% of the country’s GDP. But with a renewed focus on building up its manufacturing and supply chain dominance, India is in a great position to continue taking advantage of China’s declining competitiveness.

Solutions that support a streamlined process

Shifting supply chain dominance in APAC — in conjunction with continued disruptions, rising consumer expectations, and unpredictable markets — are throwing companies off balance. In response, business leaders and supply chain managers across the region, and elsewhere, are adopting solutions that create resilient supply chains and support flexibility in the face of volatility. This includes introducing cloud-based strategies that leverage enterprise-wide data and analytics, enhancing transparency, enabling greater adaptability, and emphasizing end-to-end risk management.

Regardless of geographic location, Inspirage equips businesses with the insights, strategies, and technological expertise that integrated enterprises require in order to manage their supply chains holistically. Our team helps organizations maintain operational excellence despite the inevitability of unpredictable disruptions in global markets. Are you ready to bring the right teams and technology together to boost organizational agility and resilience? Contact us today to learn more about our customized solutions and world-class Oracle Cloud expertise.

Sarah Hart | Key Contributor

Sarah Hart is an experienced Marketing professional with a demonstrated history of working in the information technology and services industry. She is skilled in management, customer service, account management, sales, and marketing strategy. Her responsibilities include initiating, directing and executing B2B marketing initiatives.