Top supply chain predictions in Asia Pacific for 2008

For 2008, outsourcing will be a key strategy in cost innovation and expansion in the growing Asia emerging economies. According to Manufacturing Insights Asia-Pacific, an IDC company, aside from understanding and developing human capital skill set and core competency in knowledge engineering, Lean and Six Sigma methodologies will be key as well in driving performance excellence.

Moreover, IT investment that enables an integrated enterprise to engage with its trading partners will be the main vehicle for faster response to the ever-changing market demand. Time spent on analyzing the vulnerability road map and building resiliency will ensure business continuity, minimize risks, and maximize opportunities.

Going ‘Green’ in manufacturing and building a ‘Green’ supply chain will also bring additional benefits to the environment and the companies.

The following are the top three key Manufacturing Insights predictions that will shape the supply chain in Asia/Pacific in 2008:

1. OUTSOURCING MODEL WILL CHANGE

Asia is still the “factory of the world,” especially China, but there will be a change in the make up of that factory. More and more companies will either set up manufacturing plants, or look for outsourcing partners in Vietnam and India driven by the cost and market perspective. India has long been seen as the business process outsourcing center. However, it is expected that local manufacturing activities and manufacturing services, such as design and engineering, will grow in 2008. Vietnam will emerge as the new low cost manufacturing center.

2. OUTWARD-FACING IT DEPLOYMENTS WILL GROW

For leading manufacturing companies, enterprise resource planning (ERP) is now standard. ERP systems attempt to integrate all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration.

A successfully implemented ERP is no longer a differentiator among companies. Companies now differentiate in their IT strategies and deployment by using applications that enable the management to connect outside the organization. This can be seen as either looking backwards into the supply chain, or forward facing to the connection with customers. Manufacturing companies in Asia will increasingly improve their outward connections in order to differentiate themselves from their competitors.

3. KNOWLEDGE WORK WILL INCREASE IN ASIA-PACIFIC

Manufacturing companies looking for continuous rapid growth and expansion will move up the value chain and focus on the increasing value-adding activities. This move into research, development and engineering capabilities will be driven by three key factors.

First, outsourcing knowledge work will grow, especially to India, where western companies will seek to leverage the well-trained and cost efficient capabilities offered. Second, we will see contract manufacturers, who are under cost and price pressures, looking to grow through their own product development activities and leveraging the skills they have been acquiring whilst serving their existing customers. Third, this growth will be supported at the government level, where national funding and manpower development schemes will encourage companies to move up the value chain.

Randy Sng, associate research director at Manufacturing Insights, concluded, “Based on our extensive surveys of the top manufacturers around the globe, these top supply chain predictions are consistent with the overriding goal of companies to make better, faster decisions in an environment of ever-increasing complexity and data.”

Courtesy: Manufacturing Insights Asia-Pacific