KUALA LUMPUR: Corporates in Malaysia are looking to move more of their supply chains closer to home over the next 12-24 months, according to HSBC Global Supply Chains – Networks of Tomorrow report.
As supply chains shift in response to ever-changing factors, the trend for Malaysian corporates to move their supply chains closer to home is becoming more apparent, the report said.
Now in its third year, HSBC Global Supply Chains examines how corporate treasurers and senior managers are reshaping their supply chain and working capital strategies in response to global economic changes, sustainability policies and digital enhancements.
This time around more than 785 corporates were interviewed across 14 markets between August and October 2022.
HSBC Malaysia head of commercial banking Karel Doshi said corporates in Malaysia have begun to realign their supply chains to capitalise on the advantages offered by Regional Comprehensive Economic Partnership (RCEP).
"Additionally, Malaysia can support these supply chain changes with its natural resources, labour force and banking infrastructure. With economic activity in South Asia back to pre-pandemic levels, we see Malaysian corporates focusing on increasing regional trade, expanding its digital capabilities and driving sustainable initiatives.", he added.
"At a time when "supply chain resilience" is increasingly heard on earnings calls, two in three (67 per cent Malaysian corporates are looking to reduce their number of suppliers.
"Most corporates facing supply chain disruptions might want to work with more suppliers, however, we are seeing that it is making more sense for corporates to secure their sourcing from fewer suppliers while cultivating longer-term, more strategic relationships with them. "
Looking at geographic diversification is an important consideration when designing more resilient supply chains," added Doshi.
According to the report, disruptions to global supply chains and the resulting logistical challenges have also caused just-in-time inventory management to give way to just-in-case.
It said nearly 73 per cent Malaysian corporates have held excess stock, with an average increase in inventory of 36 per cent.
On sustainability, it said nearly 73 per cent of corporates in Malaysia are requiring new suppliers to align to their sustainable requirements during onboarding, reflecting a desire to make this an integral part of their supplier relationships.
"Corporates in Malaysia also stood out from their regional and global peers in their desire to access banking solutions online (55 per cent) indicating the importance of seamless connective banking solutions through online platforms as a top digital priority.
"The report also noted that most corporates in Malaysia (82 per cent) are paying suppliers in their local currency, going against the regional trend of mainly using US$ to settle," it said.Ends