JakartaPost-Jan 10, 2024
Leaders of multinational companies face unprecedented uncertainty in shaping their supply chain strategies and reconfiguring their companies’ network footprints in response to global geopolitical upheaval. Dynamics between manufacturing powerhouse China and several major trading partners have accelerated pre-existing production shifts. Technology and relative labor costs are changing. COVID-19 demonstrated the need for more resilient supply chains, at a time when geopolitical tensions have created more complex considerations for global trade partners. In addition, CEOs must assess how to establish an environmental, social, and corporate governance (ESG)-compliant supply base, while identifying which geographical location will be the engine of economic growth in coming years. These complex considerations are why over 90 percent of global manufacturers intend to redesign their supply footprints in the next five years according to a survey by Boston Consulting Group. Resilient companies are two times as likely to outperform non-resilient peers in long-term total shareholder return (TSR) performance. What is more, a successful footprint transformation can improve companies’ resilience and sustainability and cut their global manufacturing and supply-chain costs by 20 to 50 percent. Southeast Asia has emerged as an attractive location in this evolving landscape, as companies look to manage supply costs and mitigate risks. This provides a lucrative opportunity to explore manufacturing opportunities in markets such as Indonesia. Adding to this attractive proposition is the compelling cost-competitiveness of Southeast Asia’s manufacturing landscape. BCG’s proprietary Global Manufacturing Cost Comparison Model assesses that baseline manufacturing costs in Southeast Asia are now up to 15 percent lower than China, even before applying potential logistics and tariff costs, in a region boasting large volumes of skilled, low-cost labor. Read more at: https://www.thejakartapost.com/business/2024/01/10/unlocking-indonesias-supply-chain-opportunity-in-energized-southeast-asia.html
