Emerging markets are expected to be the primary business growth area for the next century, and supply chain companies that are prepared to meet their unique challenges will benefit from their “explosive” development, a recent report by a global IT research and advisory firm said.
“Emerging markets present huge opportunities but come with unique characteristics and challenges due to the constant thrust for business growth, volatile demand and low maturity of supply chain processes,” said Mike Burkett, research vice president at Gartner.
He added that organizations with strong demand-planning capabilities and segmented supply strategies are better positioned to capitalize on market opportunities, as well as to mitigate risks.
“The ability to plan demand better is a tremendous advantage, as accurate demand plans help supply chain leaders align end-to-end supply chains correctly, and forecast predictable outcomes and profitable responses to demand,” he further said.
A recent worldwide Gartner survey of more than 390 CEOs and senior business executives showed that respondents were concerned about a continued recession in advanced economies. “As business executives look to emerging markets for opportunity, the supply chain organization will be tasked with serving that growth,” a company release said.
But the emerging-market opportunities also come with risks. A Gartner survey of 35 global supply chains found that the biggest challenge is dealing with changing rules, including regulatory or tax requirements. This is followed by building local talent or teams and adapting supply chains to local market needs.
Other issues are a fragmented market with customers spread across many rural and urban locations, unreliable physical and IT infrastructure support, poor transit systems, limited technology, inconsistent local supply capabilities, and political and regulatory instability.
Another challenge is having to understand and manage local culture, with talent shortages and retention being significant concerns, Gartner said.
The special report titled “Supply Chain Strategies for Emerging Markets” said that supply chain organizations can respond to the opportunities in emerging markets by first working closely with their sales and product teams to understand the differentiated product and service needs of these markets.
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