Making Headway Despite Headwinds: 3M’s Winning Regionalisation Strategy in Building a Resilient, Sustainable Supply Chain from Singapore

Since the pandemic, we've seen how susceptible supply chains can be to external disturbances. Global disruptions exposed the vulnerabilities of complex supply chains and revealed how abruptly production and manufacturing processes could ground to a halt.

However, with challenges also come opportunities—discovering potential vulnerabilities and pain points has led companies to rethink the way that they manage and run their businesses.

In particular, against the backdrop of a world confronted by a possible ‘polycrisis’, a term used to describe a series of volatile and interconnected global crises, building and increasing supply chain resilience has become a top priority for business leaders and decision makers.

To boost supply chain resilience in the face of evolving pressures and constraints, Multi-National Enterprises (MNEs) must move to reorganise and re-examine their existing supply chain networks. This could entail relocating their manufacturing footprint and diversifying their sources of supply.

Reshoring, which entails shifting manufacturing operations to the same country in which the company is operating in, may not be the most effective strategy to manage risks.

Rather, regionalisation – a process of splitting manufacturing footprint across more localised economies could enhance supply chain resiliency and allow teams to respond to disruptions quickly. It also further empowers companies to tailor the production and distribution of goods to match the preferences of consumers in the region in a more time- and cost-efficient way¹ .
 

Regionalisation as a way forward in a ‘polycrisis’ world

With an effective regionalisation strategy which takes into account the consolidation and management of supply chain risks, 3M is able to remain resilient and sustainable in its ASEAN (the Association of Southeast Asian Nations) expansion and operations.

Recognising the potential of this region, 3M seized on the opportunity to kickstart their plans to regionalise and transform their supply chain by expanding to Singapore in 1966, and over time, has set up multiple facilities for manufacturing, research and development, supply chain, and business operations.

By implementing both short-term and long-term strategies to tackle supply chain disruptions and build resiliency, 3M has been able to recover from setbacks—pandemic-induced or otherwise—and grow from strength-to-strength.

We share some key insights below, and delve more deeply in this case study:
 

3M’s regionalisation strategy helped it to ride the waves of COVID, allowing for continued global expansion even during global supply chain challenges. Since establishing its first presence here over the past 50 years, 3M has benefitted from Singapore’s stable business environment and robust IP regulatory framework. 3M has also strengthened its position as a global talent node in the region to realise its goal of providing “region for region” products.
 

Supported by the trust and stability offered by Singapore as a host for its regional headquarters, 3M was able to create more resilient and sustainable supply chains by embracing new technologies in the digitalisationand transformation of its business.

The heavy investment in digitalisation and innovation also enabled 3M to establish a more transparent supply chain that can better anticipate potential bottlenecks by building closer connections with suppliers. The enhanced visibility and better decision-making capabilities provided 3M with much-needed agility intimes of crisis.

The use of technology has also helped to improve sustainability and allowed 3M to gain a competitive advantage in this space. For example, by working with paper suppliers to trace the trees from which products originated, 3M was able to implement a digital partner-to-partner information flow to enforce sustainable sourcing. Partnerships with not-for-profit organisations and cloud-based applications are other examples of 3M implementing more sustainable supply chain practices and championing responsible sourcing and traceability.
 

The road ahead

With an uncertain and volatile business landscape looking to be a mainstay in the near future, a company’s ability to adapt to changes determines its ability to weather any economic or geopolitical changes.

3M’s forward-thinking strategies and continued spirit of innovation enabled the company to leverage Singapore’s advantages, including a favourable geographic location in the Asia Pacific region, stable businessenvironment, and commitment to technology, to overcome disruptions and remain future-ready.

Footnotes:

¹ Steven A. Altman and Caroline R. Bastian, “CONNECTING TO THE WORLD Lessons from 10 Years of the DHL Global Connectedness Index”, 17 November 2021, https://www.dhl.com/content/dam/dhl/global/dhl-spotlight/documents/pdf/10-years-lessons-gci-2021-report.pdf.