Some Caution Advised on Emerging Markets

The challenges are daunting to the supply chain organization, says Gartner, and dealing with the risk of uncertainty is a common theme.
By Patrick Burnson, Executive Editor
July 17, 2013 - SCMR Editorial

While Gartner, Inc. builds a compelling argument for entering emerging markets, its latest report also addresses the possible downside of hasty penetration.

The challenges are daunting to the supply chain organization, says Gartner, 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 organizations 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 organizations and networks to best serve these needs within a broader global supply chain strategy.



About the Author

image
Patrick Burnson
Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in July headed up 1.3 percent on the heels of a 0.8 percent increase in June. The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 133.3 in July, which outpaced June’s 132.3 by 0.8 percent, and was up 2.8 percent annually.

Volumes for the month of July at the Port of Long Beach (POLB) and the Port of Los Angeles (POLA) were mixed, according to data recently issued by the ports. Unlike May and June, which saw higher than usual seasonal volumes, due to the West Coast port labor situation, July was down as retailers had completed filling inventories for back-to-school shopping.

With a 0.8 cent decrease, this week’s average price per gallon is $3.835 and stands as the lowest price since hitting $3.844 the week of November 25, 2013.

LTL carriers are rapidly investing in expensive, on-dock, three-dimensional size measurement capturing machinery, and they are hoping one day of being able to more accurately charge shippers rates based on the actual dimensions of their shipments, rather than the traditional weight-and-distance-based formula that has been in effect since the 1930s or even earlier.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) recently reported that its Freight Transportation Services Index (TSI) dipped 0.9 percent from May to June.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.