Standardisation and tech are keys to unlocking growth in Asia's supply chains

The global supply chain in 2025 presents a complex web of interconnected trends that significantly shape Asia's role and challenges. Despite ongoing concerns around deglobalisation, discussions on international trade, capital, information, and people flow, remain robust, underscoring Asia's central position in global commerce.

For Chief Operating Officers (COOs) managing supply chains in Asia, this evolving landscape offers opportunities and risks influenced by several key factors.

Global and regional trends

Global supply chains are adapting to persistent disruptions stemming from the COVID-19 pandemic, geopolitical tensions (particularly between the US and China), and increasing climate-related risks.

These factors drive companies to diversify their sourcing and manufacturing bases, with a notable shift towards the "China +1" strategy. This strategy involves supplementing China-based operations with manufacturing in Southeast Asian countries such as Vietnam, Thailand, Malaysia, and Indonesia, which offer competitive labour costs, strategic locations, and favourable trade agreements like the Regional Comprehensive Economic Partnership (RCEP).

"Recent geopolitical tensions have prompted businesses to re-engineer the supply chain model to ensure operational efficiency," observes Wassim Mnif, COO, Asia Pacific, DHL Supply Chain.

He adds that companies have (and continue to) diversified their supplier base, shifting from a "just-in-case" model instead of "just-in-time" to be prepared for any potential outbreaks.

"Most noticeably, many businesses are embracing supply chain diversification, adopting the China Plus One strategy to reduce dependency on single-source suppliers." Wassim Mnif

In Southeast Asia, for instance, the post-pandemic supply chain ecosystem has become more agile and localised. Given its established manufacturing base, skilled labour, and competitive costs, Southeast Asia has emerged as a prime location for supply chain diversification.

The increased collaboration among ASEAN nations through Free Trade Agreements and infrastructure development initiatives like the Belt and Road project further amplify its appeal.

He cautions, however, that the strategy isn't about finding a replacement for China but building a broader, more agile supply chain ecosystem that leverages multiple markets to balance cost, efficiency, and resilience.

"Maintaining operations in China while expanding strategically in Southeast Asia offers the best of both worlds, ensuring companies stay adaptable and competitive amidst ongoing geopolitical shifts," asserts Mnif.

Key challenges post-pandemic

Mnif identifies several key supply chain challenges following the pandemic, stating that the main challenges are: Supply chain E2E visibility—Supply chain resilience requires improved visibility into inventory, shipments, and supplier performance.

"However, many businesses still face challenges in adopting the necessary technology to improve this visibility across the entire value chain," he cautions.

He points out that the pandemic led to widespread lockdowns, health-related work absences, and safety restrictions. The result is an ever-rising labour shortage, one in which companies continue to struggle to attract and retain workers in key areas, contributing to delays, rising wages, and increased operational costs.

"We have introduced robotic process automation and flexible staffing models to manage labour shortages and fluctuating demand more effectively... Inflation and cost pressure – Global supply chain disruptions also increased costs for raw materials, fuel, and transportation... Managing these cost increases while maintaining profitability and competitive pricing remains a key challenge." Wassim Mnif

Strategic imperatives for COOs in Asia

To navigate this complex landscape, COOs in Asia must embrace supply chain diversification to build a more agile ecosystem that balances cost, efficiency, and resilience.

It's also crucial to drive digital transformation by investing in automation, data analytics, and AI to optimise logistics processes and adapt swiftly to changing demands.

Mnif identifies key trends that will influence the supply chain. Among these are geographic tailwinds, "where we see profound shifts in growth of trade lanes, diversification of global supply chains, and more companies going global" will be significant.

He also highlights that "supply chain resilience and risk management, including business continuity management and business continuity plans, will be key to companies hoping to expand and grow their businesses amid the volatile economy."

Finally, Mnif suggests, "Sustainability will be a major focus, with governments mandating companies have emission targets, so companies will continue to reduce their carbon footprints and adopt circular economy practices."

The impact of geopolitical events and regulations

Aside from COVID-19, Mnif highlights the Russia-Ukraine war, the Red Sea and Suez Canal situation, and the ongoing U.S.-China trade war, all of which have created ripple effects throughout the supply chain.

Mnif adds that these events have complicated the environment, "adding inflationary pressures, driving up energy prices, and pushing countries in Asia to reevaluate their sourcing network of critical raw materials and focus on how to ensure continuity of their operations."

The Regional Comprehensive Economic Partnership (RCEP) has facilitated more effortless movement of goods within Asia, simplifying logistics and tariffs. Mnif notes, "From a supply chain and operations perspective, it means lower trade barriers, more streamlined customs processes, and greater supply chain connectivity across the Asia Pacific."

Leveraging technology

Mnif emphasises that addressing the challenges of integrating technology and scalability is crucial.

"From an operational perspective, key hurdles include the costs and complexity of integrating new technology with existing systems, as well as data silos that can prevent full visibility across the supply chain... Scalability is another consideration because you would want a standardised solution across your facilities with minimal tweaks for the best return on investment." Wassim Mnif

Preparing the workforce

Mnif highlights that "Every supply chain leader understands that every digital initiative is a change management project, which comes with challenges. Adopting new technology involves training employees, requiring time to create training programs and try out new workflows."

DHL Supply Chain addresses this by "investing in comprehensive training programs to equip employees with the digital skills to use new technologies effectively" and fostering "a culture of continuous learning and innovation."

By embracing these strategies, COOs can future-proof their operations and capitalise on the region's expanding role in global supply chains. Success can be measured through "operational efficiency gains, such as reduced lead times, inventory costs, and customer satisfaction metrics" and "emissions reduction, waste minimisation, and energy efficiency," concludes Mnif.