2012 - Re-Configuring Global Supply Chain Ecosystems for the Asia Era

by Mark Millar on 2012-03-02 06:04:50

2012 is the year when the focus will be on reconfiguring global supply chain ecosystems – in many cases to reduce complexity and address volatility. Key drivers of the need to change include: reduced demand in the developed markets, overcapacity in the container shipping and air cargo sectors, increasing focus on environmental issues, concerns over the uncertainty of oil prices and the need to build supply chain resilience to react and respond to deal with the unpredictable disruptions that can cause massive and immediate impact, such as accidents and natural disasters eg Iceland volcano, Japan earthquake and Thailand floods.

However, the overwhelming driver of the need for change is that the centre of economic gravity has shifted east – we are now firmly in the “Asia Era” and will remain so for the foreseeable future.

Global supply chain ecosystems – particularly for consumer goods and high tech products – have traditionally been built around manufacturing in low-cost locations throughout Asia for subsequent export to North American and Western European markets. These developed markets are experiencing a variety of economic, political and financial challenges all of which are impacting consumer demand, resulting in some slowdown of high tech exports from Asia.

Low-cost labour-intensive production that has been outsourced to Asia has generated economic prosperity thus creating rapidly emerging consumer markets. In Asia, there are significant numbers of predominantly young people who now have disposable income - many for the first time - and who are, through technology, digitally enabled, permanently connected and globally aware – the Asia Era has millions of digital natives with money to spend!

In contrast to the USA and Europe, most domestic markets in Asia are experiencing rapid economic growth and increasing consumer spending. Hence, multinational brands are looking specifically to the Asia consumption markets for more volume, revenue and growth – and therefore need to revisit and reconfigure the structure of their supply chain ecosystems in order to better serve these local markets.

The rapid emergence of the Asia Era will require companies to adapt and adjust their business models accordingly, including reconfiguring their supply chain ecosystems to focus on the multiple markets throughout the Asia region. Businesses that successfully address this challenge will become empowered to gain competitive advantage and drive profitable business growth during the year of the dragon.

About Mark
Mark Millar is Managing Partner of M Power Associates, providing supply chain and logistics consulting, advisory and recruitment services that empower superior performance. With over 25 years global business experience, Mark is acknowledged as an industry thought leader - clients have engaged him as Speaker, Moderator or Conference Chairman at more than 200 functions in 17 countries.

Contact him at mark@markmillar.com