To meet the demands of and capitalize on the emerging market
growth opportunity, companies must significantly re-evaluate their current supply chains.

A new white paper commissioned by DHL, makes clear that a ‘regionalized global supply chain’ model is emerging as the new paradigm to meet global shifts in demand.

Regionalized supply chains, shortened product lifecycles and shifting demographics characterize the challenges and opportunities for the technology sector in emerging markets.

“Path to Growth: Shaping Tech Sector Supply Chains in Emerging Markets” is a report by Lisa Harrington, President of the lharrington group LLC, and Associate Director of the Supply Chain Management Center and lecturer of supply chain management at the Robert H. Smith School of Business, University of Maryland.

The increasingly compressed lifecycle for many technology products is challenging in any market, allowing little room for error. And the whitepaper shows that the relentless pace of change in the technology sector makes emerging markets even more of an uncertain bet. In mature markets, demand patterns and technology adoption rates are better known and understood, as are the protocols of doing business in developed countries. The same cannot be said for emerging markets.

Harrington says, “Emerging markets present significant opportunities for the technology sector. But combine the unknown of operating in a new market with varying levels of infrastructure and unpredictable demand growth with the pressures of the sector – including expectations for effective service, product innovation, competitive price and personalization – and you have the definition of uncertainty. These risks are unique to each market and companies therefore lack the familiarity that comes with doing business across different established markets.”

“To operate profitability in the face of uncertainty, companies must counter and manage risk by adopting supply chain best practices, like the regionalized global supply chain model. In doing so, supply chain networks are best placed to respond to the specific market’s own variables, issues and challenges while also competing well with local manufacturers.”

The white paper identifies three supply chain practices the sector must adopt to capitalize on the emerging markets growth opportunity. These include:

1.            Managing risk through a scalable and flexible approach to market penetration;

2.            Prioritizing compliance and quality from the start, rather than low-cost quick fixes;

3.            Avoiding a “one size fits all” market approach.

Dr. Jan Thido Karlshaus, VP Strategy & Business Development, Global Technology, DHL Supply Chain, says, “Emerging markets were once seen primarily as a place for sourcing products, based on a low-cost labour play. That paradigm has changed. Emerging markets are fast becoming engines of demand, a trend that carries tremendous implications for technology sector supply chains.

“The technology sector requires developing a scalable, flexible supply chain that meets the regulation and policy standards of every local market and is precisely engineered to support the divergent needs of these highly individualized markets.”

The white paper can be viewed here