Supply chain trends in Asia: five technologies and the 2024 evidence
31 May 20246 min read
Summary
- At the end of 2023, 55 per cent of more than 1,700 manufacturing and supply chain leaders surveyed by MHI and Deloitte said they were increasing technology and innovation investment; the published results carry no Asian breakdown.
- As of May 2024, much of the case for AI and blockchain in Asia's supply chains rested on commercial forecasts, including IDC's January 2024 prediction that 60 per cent of Asia's 2,000 largest companies will use generative AI in core supply chain processes by 2026.
- VCA's assessment, as of May 2024, is that the test is whether those plans produce measured results in Asia, since McKinsey's April 2021 figures on AI gains are global.
Supply chain leaders entered 2024 intending to spend more on technology: in a survey by MHI and Deloitte at the end of 2023, 55 per cent of more than 1,700 manufacturing and supply chain leaders said they were increasing technology and innovation investment. As of May 2024, much of the evidence that this spending pays off in Asia is forecast and little is measured, and that gap frames the five technologies below.
Forty-two per cent planned to spend more than US$10 million, according to a press release published on 13 March 2024 by MHI, a US-headquartered trade association for material handling and logistics. The release gives no Asian breakdown. Its list of trends shaping supply chains included agility in the face of geopolitical risk, and visibility across supplier networks.
Those two trends link to how production is moving in Asia. Asia-focused management consultancy YCP Solidiance reported on 31 March 2023 that supply chain instability from geopolitical conflict and strict COVID-19 policies had led many companies to adopt a “China plus one” approach: adding production in at least one other country instead of relying on China alone. PwC, in a press release launching a report at the Asia-Pacific Economic Cooperation CEO Summit on 15 November 2023, said companies spreading operations across the region were unlikely to find a single location able to replace China.
In VCA’s view, a manufacturer producing in both China and Vietnam has more suppliers, border crossings and data to reconcile than one sourcing from a single country, and visibility tools are sold to manage that complexity.
Forty-two per cent planned to spend more than US$10 million, according to a press release published on 13 March 2024 by MHI, a US-headquartered trade association for material handling and logistics. The release gives no Asian breakdown. Its list of trends shaping supply chains included agility in the face of geopolitical risk, and visibility across supplier networks.
Those two trends link to how production is moving in Asia. Asia-focused management consultancy YCP Solidiance reported on 31 March 2023 that supply chain instability from geopolitical conflict and strict COVID-19 policies had led many companies to adopt a “China plus one” approach: adding production in at least one other country instead of relying on China alone. PwC, in a press release launching a report at the Asia-Pacific Economic Cooperation CEO Summit on 15 November 2023, said companies spreading operations across the region were unlikely to find a single location able to replace China.
In VCA’s view, a manufacturer producing in both China and Vietnam has more suppliers, border crossings and data to reconcile than one sourcing from a single country, and visibility tools are sold to manage that complexity.
Artificial intelligence
McKinsey reported on 30 April 2021 that early adopters of supply chain management enabled by artificial intelligence (AI) had improved logistics costs by 15 per cent, inventory levels by 35 per cent and service levels by 65 per cent compared with slower-moving competitors. The same article cited a McKinsey survey in which about 35 per cent of respondents said the impact of their planning system had fallen short of expectations. Both findings are global and do not break out Asia.
Anita Wölfl, an economist at the Munich-based ifo Institute, told the German information portal deutschland.de in August 2023 that, where the relevant data exists, AI-based programs can show a company “directly which suppliers could provide missing goods.”
Market research firm IDC made a commercial forecast in a January 2024 press release: by 2026, 60 per cent of Asia’s 2,000 largest companies would use generative AI tools to support core supply chain processes and would use AI to cut operating costs by 5 per cent. In the MHI and Deloitte survey, 84 per cent of respondents planned to adopt AI within five years.
Anita Wölfl, an economist at the Munich-based ifo Institute, told the German information portal deutschland.de in August 2023 that, where the relevant data exists, AI-based programs can show a company “directly which suppliers could provide missing goods.”
Market research firm IDC made a commercial forecast in a January 2024 press release: by 2026, 60 per cent of Asia’s 2,000 largest companies would use generative AI tools to support core supply chain processes and would use AI to cut operating costs by 5 per cent. In the MHI and Deloitte survey, 84 per cent of respondents planned to adopt AI within five years.
Blockchain
A blockchain is a shared, tamper-resistant digital ledger that several companies can rely on as one record. Daniel Laverick, vice president and head of digital and data at Zuellig Pharma, one of the largest healthcare companies in Asia, told trade publication Pharma Logistics IQ, ahead of a 2022 industry conference, that blockchain had moved “from being a buzzword to now being seen as essential to supply chains.” He said Zuellig had built a blockchain traceability system, eZTracker, to share data between drug manufacturers, healthcare providers and patients.
Market research firm Research Dive projected, in an October 2021 press release and commercial forecast, that the Asia-Pacific market for blockchain in supply chains would reach US$4,063.4 million, about US$4.06 billion, by 2028. MHI and Deloitte respondents put predicted adoption of blockchain within five years at 77 per cent, below AI and cloud computing.
Market research firm Research Dive projected, in an October 2021 press release and commercial forecast, that the Asia-Pacific market for blockchain in supply chains would reach US$4,063.4 million, about US$4.06 billion, by 2028. MHI and Deloitte respondents put predicted adoption of blockchain within five years at 77 per cent, below AI and cloud computing.
Cloud computing
Cloud computing means renting software and storage hosted on a provider’s servers. In VCA’s assessment, its appeal under China plus one is that new factories, suppliers and logistics partners can join one shared system without each building its own. Cloud computing and storage recorded 82 per cent predicted adoption within five years in the MHI and Deloitte survey.
Supply chain as a service
Supply chain as a service (SCaaS) is a business model, which sets it apart from the four technologies in this article: a company hands parts of its supply chain, such as procurement, to a provider that runs them on its own platform. SCaaS platform Aksum raised US$1 million in equity and debt in a pre-Series A round, an early-stage funding round, led by Inflection Point Ventures, start-up news site Entrackr reported on 27 April 2023. Aksum said it aimed to provide access to working capital through Indian and foreign financial institutions.
5G networks
Maersk, the Danish shipping and logistics group, wrote in January 2023 that 5G is accelerating the potential of network slicing, which customises part of a network for one purpose, such as data exchange between vehicles and with road infrastructure in fleet management. It cited the Council of Supply Chain Management Professionals as finding that over half of third-party logistics companies were investing 1 to 10 per cent of their annual information technology budget in 5G.
IHS Markit, an information services firm, estimated in November 2019 that 5G could enable US$13.2 trillion of global economic value by 2035, a figure cited in a World Economic Forum white paper produced with PwC. The estimate spans the whole economy, of which logistics is one part.
IHS Markit, an information services firm, estimated in November 2019 that 5G could enable US$13.2 trillion of global economic value by 2035, a figure cited in a World Economic Forum white paper produced with PwC. The estimate spans the whole economy, of which logistics is one part.
What to watch
VCA’s assessment, as of May 2024, is that the case for these five technologies in Asian supply chains rests mostly on investment intentions and commercial forecasts. The measured gains cited in this article, McKinsey’s, are global and date from 2021; the sources reviewed contain no Asia-specific measurement of results at the scale forecast.
Two markers will show whether that changes: whether IDC’s 2026 prediction on generative AI is met, and whether the next MHI and Deloitte survey shows spending plans holding. Wölfl named the two main hurdles to wider use of digital supply chains as data quality and data protection. In VCA’s assessment, a manufacturer adding a second country faces both hurdles with suppliers it has only just begun working with.
Correction, 1 October 2026: This article was revised to correct the Asia-Pacific blockchain forecast (US$4.06 billion, not US$4.06 trillion), McKinsey’s AI findings, the attribution of Zuellig Pharma quotes, and the source, year and scope of the US$13.2 trillion 5G estimate, and to remove figures that could not be verified against their sources.
Two markers will show whether that changes: whether IDC’s 2026 prediction on generative AI is met, and whether the next MHI and Deloitte survey shows spending plans holding. Wölfl named the two main hurdles to wider use of digital supply chains as data quality and data protection. In VCA’s assessment, a manufacturer adding a second country faces both hurdles with suppliers it has only just begun working with.
Correction, 1 October 2026: This article was revised to correct the Asia-Pacific blockchain forecast (US$4.06 billion, not US$4.06 trillion), McKinsey’s AI findings, the attribution of Zuellig Pharma quotes, and the source, year and scope of the US$13.2 trillion 5G estimate, and to remove figures that could not be verified against their sources.