SINGAPORE: In recent weeks, Asia has seen new waves of COVID-19 cases, prompting countries to take unprecedented steps to halt the pandemic’s spread. In contrast to the sweeping limits imposed in previous waves, this time’s measures are more targeted.
Even though governments worked to strike a balance between lives and livelihoods, the scope and impact of the COVID-19 pandemic continued to harm sectors.
Many of Asia’s manufacturing centres have been hammered by the new waves, which have had an impact on supply chains as diverse as electronics and textiles.
“The problem is that what is happening is unpredictable. Certain countries, regions, or companies may be impacted at different times. And that’s difficult to anticipate. The segments of the supply chain need time to turn on and off,” said Associate Professor Goh Puay Guan of NUS Business School’s analytics and operations department. READ: FM: Supply chain resilience is critical to promoting economic integration. Balakrishnan
Observers are concerned that as supply chains go offline and back up, prices may rise due to disruptions in component and final product shortages.
“Inflation is definitely a topic of conversation. It is almost certainly unavoidable. The question is how much of the cost is passed on to the customer. Companies may absorb some of the cost rise and pass some of it on to the consumer in some cases. As a result, we still don’t know. However, there have been price hikes for certain products. The cost of shipping has also increased. So, at some point in the future, some of this will be passed on to consumers,” said Assoc Prof Goh. In the long run, the pandemic could force a rethinking of supply chain strategies, pushing prices even higher. According to Shantanu Bhattacharya, Lee Kong Chian Professor of Operations Management at Singapore Management University, “localized supply chains offer superior reliability.”
“The continual drop in pricing was one of the main advantages of globalised supply chains.” But, with supply chains spanning the globe, will businesses, governments, and individuals choose a model in which they are ready to pay a greater price? As a result, I believe that in the near future, consumers will have to accept a higher level of inflation. Simply because you want a better level of trustworthiness,” he continued. READ: Asia’s factories continue to expand, but supply chain issues cast a pall over the region’s prospects Asia will continue to be an important hub for manufacturing and global supply chains in the post-pandemic new normal. “One common misconception is that supply chains are solely focused on China, but this ignores the importance of other economies. Mr Sanjay Mathur, ANZ’s senior economist for Southeast Asia and India, said, “South Korea is highly vital, Taiwan is critical in the semiconductor industry, and ASEAN is gaining in importance.” “Another misunderstanding is that this is solely an electronic issue. However, the auto sector, as well as how clothing are made in Bangladesh and Vietnam, are all part of supply networks. As a result, this is a significant trend. It’s a circular tendency that, at the very least, will shift over the next two decades,” he noted. Resilience and agility will be crucial for firms dealing with supply chain interruptions. “Businesses have realized the importance of diversification. They must have risk plans in place, as well as buffer inventory and supply source flexibility. COVID-19 is unique in that it affects several places of the world at the same time,” Assoc Prof Goh explained. VIDEO: Companies are doubling down on AI and machine learning to keep their supply chains functioning smoothly. Beyond COVID-19, analysts predict that larger trends would influence organizations’ supply chain restructuring and rebuilding decisions. This includes challenges such as trade tensions between the United States and China, as well as significant reskilling of the workforce as a result of automation, according to Mr Mathur. Mr Mathur added, “Thirdly, a very crucial thing we need to grasp is how demand is going to evolve over the next few years.” “It is becoming increasingly evident that China is becoming a more dominant development driver, whilst other societies are ageing.” ASEAN appears to be developing in terms of growth, demand, and sophistication at this point in time. So, in order to meet Asian demand, do we need to relocate our manufacturing closer to Asia, which would necessitate a significant change? So there are a lot of structural factors at work in determining how factories will appear and where they will be placed, and those forces will almost certainly outweigh the pandemic.”
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