DUBAI, UAE–Doing an increased level of business in emerging markets has made supply chains more vulnerable than ever, says author John Manners-Bell at the launch of his latest book in Dubai.
The book, ‘Supply Chain Risk’, launched at Transport Intelligence’s ‘Emerging Markets Logistics Conference’ in Dubai, examines the evolving challenges which manufacturers, retailers and logistics companies face in achieving low inventory operations whilst maintaining remote sourcing strategies.
Over the past few decades it has been corporate mantra to unbundle and then out-source manufacturing processes to low cost labour markets. The Western consumer markets have been built on such a strategy. However recent catastrophic events in the Asia Pacific region, such as the Japanese tsunami and Thai floods, have shown that this approach is not cost-free. Although manufacturers may gain in lower costs, the greater vulnerability of supply chains to disruptive events impacting upon either their suppliers or their extended transport and logistics operations can be critical to their business, said a release.
The reliance on emerging markets, Manners-Bell told the audience at the book launch, is heightening the risks. ‘As global manufacturers look to emerging markets for increased sales as well as a low cost production base, they are being increasingly exposed to new risks. These include corruption, terrorism, crime, natural disasters as well as harm to their reputations. Security problems and political instability in countries as far apart as Mexico, Egypt and Thailand, make it very difficult for multinationals to exploit the opportunities which emerging markets present.’
The answer is not to load up supply chains with more inventory, he warned. Instead supply chains had to become more transparent to allow managers to make informed sourcing and routing decisions. This would reduce the risk of over-reliance on a single supplier; increase the level of agility when it came to disaster response and mitigate the effects of a disaster on the company’s ability to maintain a flow of goods to market. Sense and respond technology, in addition to harnessing ‘Big Data’ is critical to this.
As well as taking a practical approach to analysing all the possible risks which supply chains face, Manners-Bell’s latest book also looks at several recent catastrophic events, including the effects of Superstorm Sandy on the east coast of the United States and the impact of the Icelandic volcano on European transport systems. It discusses the effectiveness of the response and where improvements can be made.