Supply chain in emerging markets

The multinationals from North America, Western Europe, Japan and Korea appear to have near-unbeatable advantages over companies from emerging economies, such as well established brand names, large R D infrastructme, proven management systems, advanced technologies and access to a vast fund of both financial and intellectual capital. However after a closer analysis it is evident that the newly industrialized countries can benefit from the experience of advanced economies and adapt the best practices to their local advantage. Historically Japan 

Case example The auto components supply chain in India 

The most highly developed supply chain in India is that of the automobile industry and over the past decade Indian companies have begun to play a major role in its extension. The liberalization of the local equity and regulatory control encouraged the arrival of a wave of international car makers as joint ventures with local partners. 

A link up with Suzuki, forming Suzuki-Maruti company (now Maruti Udyog) led to early success. The once dominant Hindustan Motors whose Ambassador model had India s biggest selling cars in a controlled market for decades lost market share to the new Suzuki-Maruti model in an open market. Suzuki-Maruti went on to capture over 60 per cent of passenger car sales by 2002 as shown in Table 11.1. 

The development of the auto industry supply chain in India proceeded very rapidly at the level of car makers and their first tier suppUers. Here current standards are close to world class standards and it has led to exports of components and sub assemblies to overseas car makers. Furthermore domestic car makers like Mahindra and Mahindra can outsource more effectively achieving cost reductions while maintaining quality levels. Another strategic choice in a low wage environment is the use of highly qualified anployees for shop floor operations. For example, one car seat maker employs only science graduates for all production line operations. The car producers interact very closely with low technology components such as car seats and exhausts. 

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As indicated earlier in the chapter, simulation modeling is used to evaluate temporal aspects of supply chain cmifiguration. Sample simulation results illustrate evalua-timi of the robustness of supply chain configuration in the case of disruptive events (the sample is adopted from the case study of establishing an automotive supply chain in emerging markets (Chandra and Grabis 2002). 

In 2012, one in four demand planning positions were open. Supply chain talent in emerging markets is a barrier to growth. Universities in Europe and North America today support the development of supply chain talent for the world. This model is not sustainable. 

Blanco, E. (2009). Winning in emerging markets Five key supply chain capabilities. Research paper from the Center for Transportation Logistics, MIT. http //ctl.mit.edu/research... 

The chemical industry is often the strongest link in the supply chain since they provide the chemical formulations to their buyers and are in control of research into alternatives. The recent emergence of Green Chemistry and its 12 criteria has spurred innovation into safer chemicals. A few examples illustrate the progress taking place and suggest a wider potential for innovation should more market demand for safer chemicals occur. 

The second generation of supply chain professionals acted as the boots on the ground for the expansion of supply chain practices into BRIG (the emerging economies of Brazil, Russia, India, and China) countries. They were the implementers of global processes and systems to penetrate new markets. They were the builders of supply chain organizations in new countries. 

One response has been the emergence of alternative supply chains that focus on the extended product. Dell sells direct over the telephone or through its Internet site. Dell has also lowered overhead and improved cash flow by using supplier capital to finance its business. In the recent downturn, Dell fine-tuned its pricing to match the markets it serves. So, a laptop for the small business user, healthcare customers, and state and local governments had three different prices — 2307, 2228, and 2072, respectively. Also, these prices change frequently based on overall demand and changes in supplier prices for components. 

Inception Producers compete in a start-up mode. The products are new and markets are forming. As they do, supply chains take shape. No dominant supply chain model has emerged. 

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