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Stable supply chain key to success in emerging markets

Posted: 18 Jul 2013 ?? ?Print Version ?Bookmark and Share

Keywords:supply chain? emerging markets?

Emerging markets have been identified as the primary business growth area for the next century and Gartner believes that supply chain leaders who able to accurately plan demand will have the upper hand and ensure profitability for their companies as well as mitigate risks.

While CEOs recognise the critical nature of the supply chain to this global expansion, they are split on their view of its readiness. Fifty-one per cent of executives surveyed see globalized supply chains as more complex and brittle now, with the balance feeling that they are more resilient than at any time in history. Gartner believes the solution in both cases is to develop supply chains that can achieve global scale while reliably serving the unique needs of both developed and emerging nations.

Although the emerging-market opportunity is compelling, the challenges are daunting to the supply chain organisation, and dealing with the risk of uncertainty is a common theme. A survey of 35 of the 100 companies listed by Gartner as among the top global supply chains found the most-cited supply chain challenge in emerging markets is dealing with changing rules, including regulatory or tax requirements. This was followed by building local talent or teams and adapting supply chains to local market needs.

Demand in these markets is often highly fragmented, with customers spread across many rural and urban locations. The infrastructure required to support both physical product and information flows is often unreliable, with poor transit systems hindering transportation, limited technology a barrier to communication, and local supply capabilities inconsistent. Political and regulatory instability impact market access and make long-term supply chain investment and partnering strategies a risky task.

Scarcity of both material and nonmaterial resources is a global concern, reinforcing the importance of sustainability and social responsibility in these supply chains. A Gartner survey of chief supply chain officers identified the nonmaterial resource of human capital as their top long-term resource risk concern. The ability to understand and manage local culture is a major challenge for most companies, with talent shortages and retention being significant concerns in the emerging markets.

Despite these challenges, supply chain organisations are responding to the opportunity afforded by emerging markets by first working closely with their sales and product teams to understand the differentiated product and service needs of these markets. Leaders are designing the right supply chain organisations and networks to best serve these needs within a broader global supply chain strategy.





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