NRI Papers
No. 219 January 1, 2018
  Building a Dynamic Supply Chain in the APAC Region  
Yugo Suda, Toshiro Takekoshi, and Motoki Saito

A key factor in capturing growth markets in developing APAC nations and linking them to your own company's growth is designing and building a supply chain that can respond to environmental changes unique to those growth markets. These environmental changes include (1) changes in the overall trade environment in the APAC region, (2) changes in the distribution and market environments in developing APAC nations, and (3) the increasing globalization and complexity of corporate supply chains. In addition, the pace and extent of these changes are significant.

Every enterprise is compelled to build a dynamic supply chain to be able to respond flexibly to these environmental changes. To this end, it is essential for companies to systemize their supply chain design operations (= implement supply chain design functions) and to carry out design work-which previously they would have done sporadically once every few years-more frequently and routinely.

Systemization involves the following: (1) a structure, i.e. establishing a supply chain design structure encompassing the global headquarters and all regional bases; (2) an operational process, i.e. building a formalized and specified supply chain design operational process not reliant on specialized human talent; and (3) developing IT tools.

Making each worldwide regional headquarters into a COE (Center of Excellence: a core site with international competitive capabilities) for supply chain design functions, as well as leveraging IT tools, will enable companies to successively roll out these formalized and specified operations to every country in a region, to maintain them over the medium- and long-term, and to more adeptly handle local environmental changes in any given region.

Japanese, European and U.S. companies are acquiring and investing in a great many local companies in developing APAC nations, yet there is likely significant room for them to build dynamic supply chains, by taking advantage of supply chain design, as a means of enhancing value-that is, imparting their own knowhow to those local companies which are not so endowed, thereby elevating the latter companies' corporate value.

Contents
I Environmental Changes in the APAC Region
II Issues Facing Japanese Companies in the APAC Region-The Need to Build a Dynamic Supply Chain, and the Challenges Involved
III Measures for Building a Dynamic Supply Chain
IV Enhancing Corporate Value of Acquired Companies and Investment Targets through Supply Chain Design

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