Navigating Trade Shifts to Build a Resilient Supply Chain for Asia

By Ingrid Sidiadinoto, Managing Director, UPS Singapore and Malaysia

It would be an understatement to say that businesses have had a lot to deal with in recent years. From the far-reaching impact of the Covid pandemic to the unpredictability of geopolitical tensions, the challenges of today are as complex as they are diverse.

But, as the old saying goes, with every challenge comes opportunity. And organisations that can build resilient supply chains will be best positioned to deal with future disruption.

The case for supply chain diversification

Firstly, it’s impossible to talk about supply chain resilience without first talking about diversification. When we look back at the events of the last five to ten years, it’s become clear that diversification is no longer optional, it’s essential. You areall likely aware of the expression, ‘do not put all your eggs in one basket’ – well, it is exactly the same with supply chains.

Whether you have heard it referred to as nearshoring, diversification, China Plus or something else, the facts are many companies are reviewing their business model and supply chain in order to become more resilient and protect themselves against future disruption.

This includes exploring alternative bases for manufacturing, shortening the distances between production and consumption and moving from the old just in time model to the new just in case model. Businesses are adopting multi-sourcing and multi-location strategies to mitigate risks associated with over-reliance on a single point of production. No one wants to be in a situation again where, if plan A fails, we are all scrambling around trying to find the keys to plan B.

And we have had a lot to navigate in the past few years. A lot of times where we have had to turn to that plan B, maybe even plans C and D. Trade conflicts, the pandemic, the blockage of the Suez Canal, war, disruption in the Red Sea shipping lanes, climate change, inflation, the availability of raw materials. It is not easy operating a business these days. It feels like we are constantly dealing with new and evolving challenges. The most recent example is, of course, tariffs.

Insights from the region

Earlier this year, we conducted a survey in eight of the leading Asia Pacific economies so that we could better understand and respond to our customers’ concerns in relation to tariffs. The results showed that 53% of respondents are concerned about the impact on their business, and 45% said that they will consider raising the price of their products. Some are looking at product mix changes; others are taking the ‘wait and see’ approach, while others are actually looking at price reductions through procurement and transportation mode shifts.

The truth is, there is no single ‘right’ answer, no silver bullet or one size fits all. Because the way each company operates is unique, the way to navigate every challenge will be too. We therefore recommend engaging with logistics experts to explore solutions that align with specific needs and strategic goals.

So, what does a resilient supply chain look like?

At UPS, we recently worked with the National Centre for Asia Pacific Economic Cooperation (NCAPEC) on a report that examines the state of supply chains within APEC countries.

That report shows that an optimised supply chain is a resilient supply chain, and a resilient supply chain is one that can easily adapt, rebound, or recover when faced with the kind of shocks we have experienced over the last few years.

Worryingly, it seems most companies have yet to realise this. Our research shows that in key areas of diversifying products, suppliers, customers, and transportation options, up to 89% of businesses in the Asia Pacific are still not resilient.

The report says that the resilience of a supply chain can be measured across five key dimensions – flexibility, visibility, connectivity, robustness and redundancy.

· Flexibility helps businesses adjust their operations quickly to adapt to and minimise supply disruption. This could be in the form of backup transportation options or how you manage inventory;

· Visibility allows businesses to see exactly where any issues or weaknesses exist within a supply chain and even prevent problems before they happen. This often comes in the form of digital tools such as UPS Supply Chain Symphony, a unified cloud-based platform that integrates shipping, warehousing and inventory management;

· Connectivity means having stable and smooth interactions between every link in the supply chain. As a world-leading logistics integrator, we seamlessly manage the complete end-to-end delivery experience through a mix of air, ground, ocean, rail and digital services and solutions.

· Robustness means continuing to innovate, continuing to eradicate weaknesses and always preparing for the unexpected;

· And finally, redundancy: the ability to quickly move from plan A to plan B to allow continuity of operations.

They key question you need to ask yourself is, the next time there is a major disruption to global supply chains, am I ready?

How UPS can help

UPS offers a range of solutions designed to strengthen supply chain resilience and reduce operational risk:

• Supply Chain Optimization: From inventory and network planning to warehouse automation and transport mode selection, we help businesses identify efficiencies that deliver long-term savings

• Smart Visibility Tools: Solutions like Intelligent Asset Tracking provide 24/7 monitoring of location, temperature and humidity, crucial for industries like pharma and electronics

• Packaging Solutions:
We help minimise damage-related costs with packaging that’s optimised for each product’s journey

• Global Checkout:
Our AI-powered API that guarantees upfront the amount online shoppers pay in duties, fees and taxes and eliminates the frustration of unexpected costs at delivery

• Supply Chain Symphony: This end-to-end visibility solution allows businesses to orchestrate complex supply chains involving multiple carriers, forwarders and 3PLs, all from one interface

UPS is the world’s largest package delivery company serving millions of small and medium-sized enterprises across the globe. We provide our customers with solutions for transporting packages and freight, facilitating international trade, and deploying advanced technology that can help companies efficiently navigate the world of business.

When a business chooses to partner with UPS, they instantly access a smart logistics network that serves more than 200 countries and territories worldwide; we are an airline that operates a fleet of over 570 aircraft; we are the world’s largest customs broker with over 85 years’ trusted experience helping our customers master the regulatory landscape available to them; we have almost 500,000 people around the world who are dedicated to serving our customers, solving their problems and helping them succeed.

We have been operating across Asia Pacific for over 35 years, and here in Southeast Asia, we have an experienced team with strategically located facilities that allow us to continue delivering the services our customers need, even in the most challenging times.

If you’d like to find out more, we offer free virtual consultations where you can get expert analysis and learn ways to strengthen and optimise your supply chain, find new opportunities and discover new tools and solutions to set your business up for success.

Scan the QR code below to find out more, or contact your local UPS office.