Uncertainty in Global Supply Chains to Remain
(10 March 2023 – Global) APAC export growth is showing promise despite the impact of elevated interest rates, research from Citi and East & Partners reports.
East & Partners and Citi recently delivered voice of the customer insights into trade and supply chain funding markets across sustainability, responses to digital disruption, inventory management, procurement forecasts, margin, pricing impacts and much more to learn more about the challenges corporates face regarding their financial supply chains.
Key insights from this research include,
- Physical supply chain disruption has given way to a new challenge: high inflation and rising interest rates
- In general suppliers have been impacted by rising interest rates with smaller suppliers facing the greatest challenges
- One in two APAC corporates predict exports will increase in the next six months by an average 10 percent and one in three corporates forecast imports will increase on average by 9 percent
- Rising prices and higher interest rates are having a distinctly negative impact as corporates actively take steps to boost financial supply chain resilience
- Corporates responded to physical supply chain disruptions quickly but must now turn its attention to the health of the financial supply chain that powers physical supply chains
Results Show That Despite Geopolitical and Economic Headwinds, Optimism Remains for Export Growth
- Pandemic disruption has given way to geopolitical tension as the primary threat to supply chain funding stability
- Despite economic headwinds, CFOs and treasurers remain optimistic about the prospect for export growth with 42 percent of rest of world corporates expecting their sales of goods internationally to increase in the coming six months
- Almost 90 percent of APAC corporates find that revenue growth could be stimulated by relieving crippling working capital constraints, with up to 40 percent of working capital in DPO on average
Supply Chain Digitisation Emerged from the Findings as “The” Powerful Force for Change
- One in two global corporates have already adopted new technology to track goods
- Over 50 percent of global CFOs and treasurers feel their supply chain partners are ready to expand at their pace without additional support
- 79 percent of APAC corporates are not using new digital technologies... yet
- 70 percent of global corporates are prioritizing greater integration and communication with existing suppliers
- Corporates and their suppliers want to strengthen relationships and broaden their supplier base to mitigate further disruption
ESG Integration Remains an Area of Focus
- No single stand out factor is preventing wider supply chain ESG integration
- Rather a combination of issues are plaguing treasury teams from quicker uptake
- Inconsistent definitions, overall complexity, compliance costs and inflexible regulatory settings rank chief among these.
- ESG remains an area of focus, but lack of clarity is impeding faster progress
Findings were featured in the January 2023 instalment of the Citi GPS report Supply Chain Finance: Uncertainty in Global Supply Chains Is Going to Stay and were shared in conjunction with economic analysis to give voice to the challenges corporates face today. The report in its entirety can be viewed here.
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