IDC Reveals New Supply Chain Priorities in Asia/Pacific
SINGAPORE— Over the past year, organizations across Asia/Pacific had to recalibrate their business models as every aspect of operation was disrupted by the pandemic. While there are many factors at play, Covid-19 highlighted the weaknesses of the global supply chain, with production and distribution of essential goods halted as lockdowns were enforced. Organizations will need to handle changes related to climate, shipping, and scarcity, compelling enterprises to reevaluate their supply chain priorities as a matter of urgency.
Having ascertained the indispensable role of digital resiliency to an enterprise’s survival, many organizations, including manufacturers, ramped up their digital transformation (DX) investments to achieve years’ worth of innovation over a period of months. According to the IDC Manufacturing Insights Asia/Pacific report Embedding Value Chain Redundancies Versus Upstream Visibility to Drive Resiliency in Asia/Pacific (Excluding Japan) Manufacturing, 58% of the organizations surveyed indicated that their immediate focus is on increasing supply chain visibility to help create operational resilience.
“Supply chain and logistics are typically viewed as support roles, and as such, investment in these functions was associated with being a cost to enterprises. Organizations now realize that enabling visibility and agility through connected systems can provide opportunities for competitive advantage. The necessity of digitally integrating functional capabilities across and between organizations is now apparent, highlighting that end-to-end visibility enables agility, improves customer experience, and can differentiate supply chains in normal and disrupted states,” says Stephanie Krishnan, Research Director, Asia/Pacific Manufacturing Insights at IDC.
Ensuring technology-enabled supply chain visibility can significantly increase value chain effectiveness while mitigating market disruptions. Key to boosting visibility and agility is the ability to derive value from supply chain data and facilitate actionability in real-time, aided by technologies like Internet of Things (IoT), big data and analytics (BDA), cloud, and artificial intelligence (AI). Aside from enabling enterprises to leverage data, these technologies also allow them to better manage, track, and trace movements with the supply chain ecosystem. By the end of 2021, 60% of all manufacturing supply chains will have invested in the technology and business processes necessary for resiliency, resulting in productivity improvements of 25%.
As awareness of the environmental impact of supply chain activities grows and influences government regulatory requirements, consumer pressure, and employee engagement needs, organizations have extended their transformation efforts to sustainability. Sustainability initiatives vary, including increasing efficiency in energy usage optimization, adhering to regulatory compliance, emissions tracking, materials traceability, and circular economy considerations such as reverse logistics and disposal. Transparency and traceability are crucial to sustainability, and the systems and technologies that support this lay the foundations for deeper insights and new opportunities.
While recent global events have reignited the clamor for sustainability, more than 50% of manufacturing organizations are already investing more than 10% of their IT budget on sustainability-related investment. IDC Manufacturing Insights has found that manufacturers that combine digital transformation with sustainability efforts have higher revenue and profitability levels than their counterparts.
With disruptions resulting from capacity, economic, climate, and health expected to continue, enterprises need to prepare for new challenges and opportunities and build for future capabilities by capitalizing on technologies that have helped them survive the first year of the pandemic. IDC will release its Supply Chain Predictions this coming January 2022 to help organizations make strategic business and tech decisions amid an uncertain future. Learn more about the latest insights on supply chain trends here.