Disruption to Adaption: How APAC Navigating through Supply Chain in 2025

One of the most prominent observations is the move towards supply chain diversification. According to the Trade in Transition 2025 report by Economist Impact, 33% of APAC firms are building parallel supply chains to protect operations from geopolitical disruptions. Meanwhile, 29% are developing dual supply chains to serve both the U.S. and Chinese markets, a strategy needed for today’s fragmented trade environment. [1]

This shift is driving the rise of the “China Plus One” strategy, where companies reduce reliance on China by expanding into alternative hubs like Vietnam, Thailand, and Malaysia. Johor’s Special Economic Zones (SEZs) for example, such as Iskandar Malaysia and the proposed Johor-Singapore SEZ, are strategically developed to address supply chain challenges by enhancing cross-border connectivity, streamlining trade processes, and reducing operational costs. Located just across from Singapore and connected to major ports like Tanjung Pelepas, these zones offer businesses efficient access to global and regional markets.

In the medical device and packaging sector, I’m seeing more companies treat manufacturing diversification not just as a safeguard, but as smart strategy. Moving into Southeast Asia isn’t only about mitigating risk, it’s about being closer to demand, more responsive to regional needs, and ultimately more resilient.

As a supply chain manager, I know how tricky it can be to navigate all the trade agreements in APAC. Countries like Singapore and Malaysia have multiple agreements, each with different rules and tariffs. So, the same product might need to follow different rules depending on which agreement is used. This makes managing the supply chain more complicated and expensive.

As such, frameworks like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) were introduced to enable a smoother cross border movement of goods. Other countries like Indonesia and Malaysia have some of the highest medical inflations, driven by aging populations and costly new therapies. Having both RCEP and CPTPP could reduce tariffs on medical products and avoid logistics bottlenecks by having a more unified regulatory framework.

In general, modern manufacturing machinery is increasingly connected through the Internet of Things (IoT) and Artificial Intelligence (AI)-powered systems, which improves efficiency and enables predictive maintenance in supply chain but also introduces new entry points for cyber threats.

In my role, I have had experience in sourcing machinery and technology, and what I’ve learned is strong supplier relationships are important. While machinery or technology with AI can provide helpful information, it only works well if we trust our suppliers and share information openly. While our cybersecurity and compliance standards may not be identical with suppliers, maintaining alignment through mutually achievable expectations ensures that the data provided by them remains both reliable and safe. In fact, 54% of large organizations cite their supply chains as their biggest cybersecurity concern. [3]Threats such as third-party software vulnerabilities and the spread of cyberattacks through supplier networks make some companies hesitant to fully adopt AI.

To truly benefit from AI, we should invest in technology and partnerships that promote open communication and share the same standards. AI shows a promising future for supply chain operations, but realizing its full potential will take time with the right resources and good partnership.