May 2014 | Commentary | EcoDev

Managing Complex Supply Chains in Emerging Asia

Tags: Economic Development, Asia, Global Logistics

Eng Keat Lee is Director of Logistics, Singapore Economic Development Board, 656-832-6832

Capitalizing on Asia's emerging markets requires the ability to effectively manage the complex supply chain challenges that the region presents. Often the first step to turning economic potential into actual growth is creating a strong and secure logistics hub.

Global businesses commonly centralize their logistics and supply chain management functions in a stable, secure location that offers access to a broader region. For many corporations looking to establish a presence in Asia, Singapore is an attractive supply chain management hub because of its extensive connectivity, innovation ecosystem, and the availability of consultancies and other supply chain support services.

Companies located in Singapore also benefit from a government that knows the importance of the logistics sector. Singapore has committed $33.2 million to a five-year roadmap designed to help the sector transition toward productivity-driven long-term growth.

Many companies grasp the need to tailor their supply chains to individual Asian markets, but still desire to gain advantages by coordinating operations throughout the region. This often leads them to establish operational and technical hubs—control towers that oversee their network of supply chains in Asia.

This shift toward a centralized supply chain management hub is popular with technology and industrial businesses. Iconic consumer companies, such as Nike and Unilever, also use such hubs to reach global markets from a centralized location. Nike established its global trading hub in Singapore to leverage the country's finance and logistics strengths to undertake centralized global product sourcing, logistics, and brand protection. Unilever centralized its logistics leadership for Asia in Singapore to manage end-to-end supply chain functions, allowing the company to cut costs and shrink its carbon footprint.

Drawing a Crowd

A robust ecosystem of supply chain management experts and consultants supports these control towers. One way companies are aggregating their Asia-related expertise is by establishing centers of excellence that build solutions tailored for specific industry verticals. For example, global third-party logistics provider DB Schenker set up its first global solution and competence center for electronics and industrial sectors in Singapore to develop and implement logistics solutions worldwide.

Such partnerships require careful planning and government commitment to create an ecosystem that attracts businesses across industries. In the logistics space, developing this ecosystem has required the Singapore government to invest in facilities that attract international logistics companies. Among the most significant investment is the consolidation of Singapore's port facilities into a mega-port currently under construction at the Tuas industrial zone. The port is a long-term investment in Singapore's ability to host large-scale supply chain management operations, and is expected to begin operating its first berths by 2024.

Companies with experience operating in emerging markets understand that the potential for growth is tempered by the challenges these markets inherently pose. Singapore offers an ecosystem where global companies with complex logistics needs can manage their supply chains throughout the region. Singapore is well-positioned to help global companies realize success in one of the world's most dynamic regions.