Supply chain leaders will play a crucial role as companies capitalise on the explosive growth in emerging markets, according to Gartner, Inc. Emerging markets have been identified as the primary business growth area for the next century, and Gartner said that organisations with strong demand planning capabilities and segmented supply strategies are better positioned to capitalise on market opportunities, as well as to mitigate risks.
“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. “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.”
“Businesses are positioning to take advantage of the most explosive growth opportunity since the industrial revolution. That growth won-t come from existing developed markets but from expanding into less-developed emerging markets,” said Mr Burkett. “Defining the source of future growth was reflected in a recent worldwide Gartner survey of more than 390 CEOs and senior business executives. Respondents indicated concern about a continued recession in advanced economies. As business executives look to emerging markets for opportunity, the supply chain organisation will be tasked with serving that growth.”
While CEOs recognise the critical nature of the supply chain to this global expansion, they are split on their view of its readiness. Fifty-one per cent of executives surveyed see globalised supply chains as more complex and brittle now, with the balance feeling that they are more resilient than at any time in history. Gartner said the solution in both cases is to develop supply chains that can achieve global scale while reliably serving the unique needs of both developed and emerging nations.
Although the emerging-market opportunity is compelling, the challenges are daunting to the supply chain organisation, 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 organisations 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 organisations and networks to best serve these needs within a broader global supply chain strategy.
Additional information is available in the Gartner Special Report “Supply Chain Strategies for Emerging Markets.” This special report discusses how organisations with strong demand-planning capabilities and segmented supply strategies are better positioned to capitalise on market opportunities, as well as to mitigate risks. The special report can be viewed at http://www.gartner.com/technology/research/supply-chain/ and includes links to reports and video commentary that examine the growth of emerging markets and the opportunities for supply chain leaders.
Mr Burkett will provide additional analysis during the Gartner webinar “Supply Chain Strategies for Emerging Markets” on 18 July 18 at 2:00pm or 5:00 pm UK time. To register for this complimentary webinar, please visit http://my.gartner.com/portal/server.pt?open=512&objID=202&mode=2&PageID=5553&resId=2511916&ref=Webinar-Calendar.
The Gartner Supply Chain Executive Conference 2013 will also be held 23-24 September at the Lancaster London. For additional information about this conference, please visit http://www.gartner.com/technology/summits/emea/supply-chain/. Media can register to attend by contacting laurence.goasduff@gartner.com.
Additional information from the events will be shared on Twitter at http://twitter.com/Gartner_inc and using #GartnerSCC.
Gartner, Inc. (NYSE: IT) is the world-s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner in more than 13,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 5,500 associates, including 1,402 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.
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