Home » Breaking News, Customs & Trade » High-tech industry to intensify intra-Asia sourcing, eyes emerging countries

There is a significant shift among high-tech companies in Asia-Pacific to source supplies from both emerging and mature countries in the region as alternative sourcing locations to China and Japan, results of a survey by IDC Manufacturing Insights show.

Logistics service provider UPS contracted IDC Manufacturing Insights for the second year in a row to conduct the “Change in the (Supply) Chain” survey, which measures the impact of industry changes and challenges on the high-tech supply chain. This year’s study targeted 200 senior-level decision makers at high-tech companies in the Asia-Pacific region.

Although China and Japan are still expected to be supply sources for most high-tech companies, the pressure to reduce total supply chain costs is driving the search for alternative sources.

About 42 percent of survey respondents said they now source from mature Asia-Pacific countries, including Thailand, Malaysia, Hong Kong, and Singapore, while 16 percent currently source from emerging markets like the Philippines and Vietnam. Some 24 percent plan to source supplies from these emerging countries in the next three to five years.

Sourcing from North America is expected to increase to 19 percent in the next three to five years. However, more than half of the trade lanes used by high-tech companies surveyed will be intra-Asia.

Risk management emerges as the top issue for high-tech supply chains, overshadowing others such as inventory management, which has long been an issue in the high-tech industry.

“As a consequence of continuing globalization and the lengthening of supply chains, any global economic, political, or environmental event could have far-reaching effects on the performance of companies,” said William Lee, senior research manager at IDC Manufacturing Insights Asia/Pacific. “Moving ahead, we expect to see manufacturers placing greater emphasis on supply chain risk awareness and mitigation.”

Greater sustainability in the supply chain is the second leading priority for high-tech companies in Asia, outranking both cost and responsiveness.

Projecting a better corporate image is the top impetus for companies to engage in greener practices, although many sustainability projects have been recast as cost-savings initiatives, such as energy savings.

The majority of companies (63 percent) cited cost reduction and increased operating efficiency as a top three business priority for the next 18 months.

Similar to what was seen with U.S. companies in 2010, cost management will remain a top business priority for high-tech companies in Asia in the near future as they attempt to improve margins through operational efficiency, the report said.

Despite findings that reveal a continued focus on cost management in the future, responses also indicate that high-tech firms in Asia are beginning to move beyond cost to competing on service. Companies are working to achieve higher service levels, which has significant implications for high-tech supply chains.


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