The Supply Chain Challenges in Southeast Asia Reach Turning Point

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supply chain challenges in Southeast Asia reached a turning point

Source: Reuters, Ralph D. Freso

The supply chain challenges in Southeast Asia have reached a turning point owing to the scarcity of supply chain professionals, increased consumer diversity and fragmented supply chains. Transforming supply chains to reach market potential is a mammoth task but it can become a source of competitive advantage and drive global growth for businesses.

The many layers of suppliers, localized delivery and route to consumer practices, and lack of transparency and consistency in information flows make it incredibly difficult for businesses to achieve the next wave of global growth but also positions global businesses to capitalize on growing demand in these markets. For most companies the potential is clear; the challenge is how to address it.

As companies move their factories from China to Southeast Asia due to rising labor costs and the move away from an export-based economy, they should grasp the opportunity to carry out a full supply chain review to identify how they should configure their supply chains better.

Accelerate the supply chain transformation with best practice

Bringing best practice into the strategy from elsewhere can accelerate the transformation. Labor remain a big challenge for this relatively young region for the manufacturing industry meaning there is limited supply chain knowledge and a lack of experienced professionals and high staff turnover as employees are quick to leave for even marginally higher wages.

To capture the full potential in Southeast Asia, it is best to establish a physical presence and subsequently localize knowledge and skills.

This can be done by setting up R&D centers or developing region specific leadership and training programs. Coupled with a long-term focus on developing local supply chain knowledge and people capabilities, it can ensure a successful transformation.

A version of this appeared in Supply Chain Digital on June 20. Read the full article here.