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Asia Is Leading The Supply Chain Revolution

By Kawal Preet | First published: May 21, 2019    Updated: June 22, 2020

But to maintain global competitiveness, supply chains must become a strategic priority.

It’s official. Asia is leading the way in evolving smarter, technology-driven supply chain models. Highly interconnected, these models can readily compete in the digital marketplace. Supply chain investment in Asia has never been more of a strategic priority. Businesses must have the flexibility to respond quickly and efficiently to economic headwinds, whatever they might be.

And the rewards can be worth it. Modern supply chains make it much easier for small to mid-sized businesses (SMEs) in Asia to not just scale up fast, but be globally competitive.

So what exactly is Asia’s advantage?

Asia is well ahead in digitization, which delivers greater visibility and supply chain efficiency. Historically, too, the region is starting from a vastly different place. In the early 90s, Asia’s supply chains ran from a desktop and reflected technology of the time –electronic shipments such as PCs, clunky mobile phones or semi-conductors.

Trade routes were one-dimensional and linear – focused simply on delivering products from low-cost factories in Asia to highly-developed US and European markets. Trends in outsourcing, offshoring, and near-shoring were yet to come. And by the mid-2000s, just-in-time supply chains were fully established.

Fast forward to today. Global supply chains are almost unrecognizable. For starters, they’re now run on smartphones. They are more innovative, diverse, sophisticated and, critically – aligned to business strategy. Not just in the array of products and the way they’re being transported, but in best-practice supply chain solutions which are driving cost efficiencies and ensuring global trade is more accessible to all kinds of business.

Global production shifts have fed this growth, with more products now originating in Asia, traded intra-Asia, and destined not just for the United States but other major regions. With this huge transformation in trade flows, Asia has a central role in the supply chain revolution.

Intra Asia: a network shift

Over time, we’ve gone from Silk Road to spider’s web. Trade lanes are no longer dominated by Asia to Europe, or Asia to the US. Intra-Asia has emerged. While this has been happening, some developed economies have found themselves stuck with older, more rigid supply chain models and legacy infrastructure.

In contrast, developing Asian economies and businesses often started from nothing, so could hit the ground running with a fresh approach and develop new supply chain models unencumbered. Regional supply chain hubs have sprung up across Asia, from Guangzhou to Shanghai to Osaka and Singapore, giving APAC economies a bigger role in new networks. A heart patient in Taiwan can now receive a pacemaker made halfway around the world in one night. Sensitive biomaterials such as human liver cells can be sent between Japan and the US – arriving in perfect condition.
Sensitive biomaterials can be sent – arriving in perfect condition.

Asia’s resilience has powered change

With five billion people accounting for 40% of global GDP, it’s not just size that makes the Asia-Pacific region stand out. Asia is a vibrant, receptive marketplace and its supply chains have had to be ultra-resilient. The same market has seen the Asian Financial Crisis, the Global Financial Crisis, the growth of China and the fall-out from global pandemics.

As a result, Asia’s infrastructure and modern supply chains have evolved. In this diverse region, technology transcends culture, language, and to a large extent, regulations, to streamline cross-border trade. Looking ahead, Asia’s place at the centre of world trade looks set for some time to come.

Staying ahead of the curve

Of course, not everyone is on board for the digital age, yet. Some sectors and companies in Asia are slower to embrace change. They still prefer old ways of working – like paper airway bills, telephone and even fax bookings for shipments.

At FedEx, continuing to migrate as many of our customers as possible to automated, online solutions such as our online shipping solutions and FedEx Billing Online helps us streamline processes for a digital era and eliminate risk. We must continue to put our digital foot forward in a changed landscape; e-commerce businesses in Asia, for example, have never known anything other than electronic, integrated supply chain systems.

Staying ahead of the global competition demands technology-driven supply chains which are vital for business survival. Asia has had a head start in supply chain evolution. We must keep up the momentum, so we can multiply possibilities for the shifts and challenges ahead.
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About the Author
the author bio

Kawal Preet

Asia Pacific, Middle East and Africa, FedEx Express

Kawal started out as an engineer at FedEx over 27 years ago. She’s now the President of FedEx Express AMEA and is based in Singapore.

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