New Standard Chartered survey findings indicate ASEAN firms, including those operating in Vietnam, believe the financial stability of indirect suppliers is necessary to enhance supply chain robustness.
Standard Chartered’s recent research report reveals that around 90 per cent of surveyed companies globally agree that: environmental soundness and transparency of direct suppliers, financial robustness, flexibility and adaptability, and collaboration and connectedness throughout the ecosystem are critical indicators of supply chain effectiveness.
In ASEAN, companies place relatively high importance on ensuring the financial stability of indirect suppliers by making available finance options outside of supplier finance programmes – 59 per cent believe that it is highly important compared to 52 per cent globally; although only 42 per cent of these companies in the economic bloc rate themselves highly in this area.
As global supply chains continue to experience disruptions since the outbreak of COVID-19, companies are increasingly looking to adopt a holistic approach to supply chain management. Among ASEAN companies, "understanding and monitoring the labour practices of direct suppliers" (60 per cent) is viewed as key to creating environmentally sound and transparent supply chains, although only 38 per cent of companies believe that they have strong performance in this area.
In an effort towards building flexible and adaptable supply chains, 57 per cent of companies agree that "having in place fully prepared and tested business continuity plans" and "conducting reviews of supplier relationships, production facilities, logistic routes, and other key supply chain challenges resulting from the COVID-19 pandemic" are very important.
While more companies rate themselves as performing very well (55 per cent) in having fully prepared and tested business continuity plans, only 42 per cent of companies rate the same in terms of their conducting of reviews of suppliers.
To build collaborative and connected supply chains, ASEAN companies view that "developing shared objectives/KPIs between internal departments within the firm" as the most important (65 per cent) but less than 50 per cent consider that they have performed very well.
Maisie Chong, regional head of Trade, ASEAN and Singapore, Standard Chartered, said: “As more and more ASEAN companies affirm the importance of building resilient and sustainable supply chains, the survey results also show that there are significant gaps that need to be bridged.”
She continued, “With more than 70 million micro-, small- and medium-sized enterprises in ASEAN, supporting indirect suppliers to enhance the robustness of their companies’ supply chains using alternative financing programmes is imperative. Standard Chartered is committed to boosting access to funding for lower-tier suppliers, who face challenges in securing adequate financing, and building more financially resilient supply chains. The bank’s deep-tier supply chain financing solutions for our clients and their upstream suppliers underscores our efforts to facilitate more responsible and inclusive regional and global trade.”