Survey: CEOs in APAC most concerned with supply chain risks
PETALING JAYA: A global survey conducted by KPMG International found that 59 per cent CEOs in Asia Pacific (APAC) are more confident about economic recovery compared to earlier this year, however they are also increasingly concerned by the risk to their supply chains.
The KPMG 2021 CEO Outlook surveyed more than 1,300 global CEOs about their strategies and outlook over a three-year horizon. Among almost 500 CEOs in Asia Pacific, 66 per cent of CEOs in APAC stated their supply chains have been under increasing stress over the past 18 months. It is thus unsurprising that CEOs ranked supply chain risk as their top threat to growth this year.
KPMG Malaysia managing partner Datuk Johan Idris observed, “Pre-pandemic, risks to the supply chain had been steadily gaining attention due to increasing volatility from trade tensions and climate-driven events but were still considered a low priority for CEOs.
“However, the pandemic brought this issue into sharper focus as organizations struggled to maintain supply chain continuity during worldwide lockdowns.”
Asia Pacific CEOs continue to recognise the importance of building resilient, flexible supply chains.
The survey also showed that 36 per cent have stated an intention to monitor deeper into their supply chain to better anticipate potential problems, while 34 per cent will diversify sources of input by adding new locations of inputs to make their supply chain more resilient.
Meanwhile, 14 per cent will prioritise reconfiguring their supply chain to provide greater resiliency and more consistent access to achieve their growth objectives.
Aside from that, scrutiny on environmental, social and governance (ESG) continue to rise as 70 per cent of CEOs said that they face increased demands from stakeholders for more reporting and transparency on ESG issues, with pressures predominantly coming from institutional investors (57 per cent) and regulators (31 per cent).
However, 42 per cent stated that a key challenge when communicating their ESG performance to stakeholders is the struggle to create a compelling ESG story.
The survey also showed that 81 per cent believe that government stimulus will be required if all businesses are to reach net zero.
Roughly the same per centage (80 per cent) agree that large corporations have resources to help governments find solutions to pressing global challenges, which showcases that CEOs recognise that greater publicprivate partnerships are needed to better address ESG issues.
Just 18 per cent of CEOs now say they are planning to downsize, or have already downsized, their organization’s physical footprint.
This is a dramatic shift from August 2020 where 75 per cent stated their intention to downsize their space.
CEOs are focused instead on providing increased flexibility for their workforce with 41 per cent looking to invest in shared office spaces. Furthermore, 34 per cent will look to implement a hybrid model of working for their staff, where most employees work remotely two to three days a week.
While 68 per cent of CEOs are placing more capital investment in buying new technology, they are also looking to build human capability with 49 per cent planning to invest in digital training, development and upskilling to ensure employees’ skills remain future-focused.
“It is evident that our combined experience over the past years have continued to prepare us in imagining what our new reality would look like. A major lesson is the need to change our ways and work together. Successful CEOs will be those that connect a trusted purpose with digital agility to drive growth and prosperity,” concluded Johan.