Emerging markets bring high risk, high reward
A new Gartner report points to emerging markets as the primary driver of business growth for the next century. Organizations with strong demand planning capabilities and segmented supply strategies are better positioned to mitigate the risks inherent in these markets and capitalize on this opportunity.
As CEO’s remain concerned about a continued recession in advanced economies, they see emerging markets as a compelling opportunity. Executives are looking at emerging markets for opportunity and they will be tasking the supply chain organization with serving that growth. The challenge is to develop supply chains that can achieve global scale while reliably serving the unique needs of both developed and emerging nations.
Emerging markets bring challenges that are daunting to the supply chain organization, and dealing with the risk of uncertainty is a common theme. According to Gartner, 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.
In addition, 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.
Despite these challenges, supply chain organizations are responding to the opportunity 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.
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