This is the year when the focus will be on reconfiguring global supply chain ecosystems, in many cases to reduce complexity and address volatility. The overwhelming driver of the need for change is that we are now firmly in the Asia era. The center of economic gravity has shifted east, and will remain so for the foreseeable future.
Low-cost, labor-intensive production that has been outsourced to Asia has generated economic prosperity, creating rapidly emerging consumer markets. In Asia, we have significant numbers of predominantly young people who now have disposable income, many for the first time, and through technology are digitally enabled and globally aware. The Asia era has millions of digital natives with money to spend!
Global supply chain ecosystems, particularly for consumer goods and high-tech products, traditionally have been built around manufacturing in low-cost Asian locations for export to North American and western European markets. These developed markets are experiencing a variety of economic, political and financial challenges that are impacting consumer demand, resulting in some slowdown of high-tech exports from Asia.
In contrast, most domestic Asian markets are experiencing rapid economic growth and increasing consumer spending. Hence, multinational brands are looking specifically to those markets for more volume, revenue and growth. They therefore need to revisit and reconfigure the structure of their supply chain ecosystems to better serve these local markets.
The significance of the Asia era will drive companies to adapt and adjust their business models and reconfigure their supply chain ecosystems to focus on the multiple markets throughout Asia. Businesses that successfully address this challenge will gain the competitive advantage to drive profitable business growth though 2012.