The regional industry has been lagging in a sustainability focus, but a US$1.2tn pot of gold could spur manufacturers into action

Based on a survey of over 350 industry leaders and interviews with CxO-level, a global management consultancy reported on some trends shaping regional manufacturing.

First, despite lower overall AI investments (per capita) compared to other regions including the United States and China, ASEAN governments are launching national strategies to boost AI adoption. Nearly 50% of ASEAN manufacturers surveyed had identified AI as the most crucial manufacturing trend today.

Second, although sustainability has historically been a secondary concern, it has been gaining traction. 60% of respondents indicating they were already using eco-friendly materials; 90% were measuring their sustainability impact through carbon footprint analysis.

Other findings

Third, the data indicates the ASEAN manufacturing industry has been shifting from low-value manufacturing to roles in research and development and product design. Also:

  • Manufacturers surveyed cited adopting twinning models, using Singapore as a strategic hub while tapping into cost-effective production in neighboring countries. (43%)
  • Investments in respondents’ local support ecosystems had been on the rise, particularly in semiconductor manufacturing, with Malaysia attracting significant foreign direct investments that foster a network of supporting companies.
  • Regenerative manufacturing has been identified as a transformative approach that can foster a profitable, resilient, and sustainable business while reshaping the value chain ecosystem. To embrace this, manufacturers need to prioritize designs that support sustainability, supply chain resilience, and cost efficiency from the outset. Other essential actions include:

✓ Prioritizing customer-first product design, aligning product features with market demands for sustainability

✓ Implementing Design to Excellence (DtX) that considers the entire product lifecycle, incorporating both Design to Value and Design to Sustainability principles. This includes using generative AI to optimize material selection and manufacturing processes while enhancing product circularity.

✓ Emphasizing resilience in design by identifying and addressing supply chain vulnerabilities, by adopting an end-to-end supply chain view and enabling “sense and pivot” capacities through digital supply chain mapping

✓ Implementing platforming strategies that allow for late-stage customization, ensuring efficient production while meeting diverse customer needs and regulatory changes

According to a co-author of the report, Keat Yap, Asia Pacific co-Lead (Operations and Performance), Kearney (the firm that commissioned the report with event organizer Constellar): “There is a golden opportunity for ASEAN manufacturers to capture US$1.2tn in growth, and companies must ensure they are well-positioned for this. The journey toward regenerative manufacturing will be iterative, evolving with continuous learning and adaptation.”