Global Supply Chains – Networks of Tomorrow

Trade remains the bedrock of the global economy – having reached a record USD32 trillion in 2022¹ – despite prevailing recessionary concerns and the risks around deglobalisation.

In researching for the ‘Global Supply Chains – Networks of Tomorrow’ report, HSBC teamed up with East and Partners to understand global supply chains and the future of supply chain financing and sustainability.

HSBC has based this report on primary research conducted by East and Partners between August and October 2022, directly interviewing senior management from 787 corporations across 14 markets² in Asia Pacific, Europe, North America, Latin America, and the Middle East, to gather direct feedback about how they are managing their supply chains and interacting with their suppliers.

Supply chain finance programmes are premised on the potential credit arbitrage that may exist between the buyer and its suppliers. Suppliers get competitive financing costs based on the buyer’s credit rating. By injecting liquidity into the supply chain, buyers can extend supplier networks and enhance strategic supplier relationships.

-Kang Hyuk Jeon, Country Head of Global Trade & Receivables Finance, HSBC Korea

Shifting supply chain strategies

The factors influencing supply chains in the last year

• Inventory management - 83% are hulding excess stock due to the logistical challenges
• Supplier relationships - 64% are planning to reduce their supplier base in the next 12-24 months
• Risk management - 28% view currency risk as the key supply chain management cost concern

Navigating new market conditions

How external factors are impacting risk and financing across supply chains

• Trade finance - 55% are funding their supply chains using inventory financing
• Digital payments - 77% pay their suppliers via electronic bank transfer or via purchase order
• FX sulutions - 83% will use forwards to hedge FX risk in the next 12-24 months

Ensuring supply chain resilience

How corporates are laying the foundations for future supply chains

• Digitisation - 46% are looking for bank support to better visualise transactions across their supply chains
• Sustainability - 84% are currently or planning to invest in supply chain sustainability
• Sustainable pulicy implementation - 40% have implemented environmental pulicies across their supply chains