SUPPLY CHAIN RISKS AND REWARDS IN EMERGING MARKETS
In uncertain times especially, the pursuit of opportunities in emerging markets such as Latin America, Africa and Asia requires companies to possess a sound knowledge of the operational challenges inherent in these markets, so that competitive logistics and supply chain networks can be facilitated more effectively.
In today’s globalised economy, diversified supply chains are of immense value. They allow companies to capture synergies that deliver value and profitably serve those emerging market countries (including Brazil, India, South Africa and Mexico) which account for approximately 40 percent of the world’s population.
However, alongside the potential rewards that supply chains proffer, there are a multitude of risks that can arise within the emerging markets arena. Many of these risks relate to sourcing raw material and interacting with sales agents, distributors and franchisees who sell products, as well as the innumerable manufacturers, transporters, brokers and other service providers in between.
According to the ‘Supply Chain Innovation in Emerging Markets’ research initiative run by the Massachusetts Institute of Technology’s (MIT) Center for Transportation & Logistics, these risks are often augmented by emerging market environments – highly dense urban areas featuring a variety of socioeconomic characteristics, as well as varying levels of physical, financial and information infrastructure. To overcome such barriers and develop greater connectivity, the MIT initiative advocates a greater focus on the role that technological innovation, including disruptive technologies, has to play, in lieu of simply adapting approaches traditionally taken by supply chain partners in emerging markets.
Jan-Mar 2017 Issue
Fraser Tennant