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In particular, the focal BRIC (Brazil, Russia, India, and China) represent major targets for expansion, but with them come a host of new problem that enterprises have little to no experience in dealing with in terms of logistics capabilities. Here is what I expect to see next year: Global supply chain footprints will continue to expand.
Take for example the BRIC nations and the impact this region has across the global economy. In fact, all of the BRIC countries are now in the top 10 economies, with Brazil at 9, Russia at 6, India at 4 and China 2nd. The company sources the majority of its products from contract manufacturers in the Far East.
This is a challenging sourcing base, and global luxury brands must also pay attention to general labor and supply chain compliance policies. A fashion item loses value very quickly, and if not sold during a very short season won’t be worth anything a week later. The entire apparel supply chain is driven by these financial metrics.
Most analysts believe the future looks bright for renewable energy sources. This means that ever-more of our energy system can become less reliant on traditional sources such as coal, oil, and natural gas, thereby reducing greenhouse gases in the atmosphere.”[3] ”[4].
They don’t see it as an enabler of global manufacturing and sourcing, or as a way of increasing customer loyalty through great service. I think selecting the right markets is a big issue for automotive logistics – where should your manufacturing be based, where should your sourcing be done? For them it’s just a cost. Good question.
Traditional methods of supplier risk mitigation involve diversifying risk, multiple sourcing, or switching suppliers, which are not effective in situations where entire regions, industry segments, or supply chains are experiencing financial distress. Suddenly, the risk of massive tiers of suppliers facing obliteration became a reality.
Hadoop is an open-source software framework written in Java for distributed storage and processing of large data sets on computer clusters. The growth expectations of the BRIC countries is worrisome. I love the innovation and the fact that it is open source. As a result, the symbol for Apache Hadoop is an elephant.
BRIC Supply Chain Business Process Outsourcing Category Management Global Supply Chain Procure to Pay Strategic Sourcing Supplier Relationship Management'
The problem stems from the fact that Walmart (as well as other retailers like Target, JC Penney, Nordstrom’s and others) source products from tier one suppliers – and audit these suppliers, require them to comply to a code of conduct, and seek to drive enforcement to the tenets of a code of conduct as identified by the ILO.
And their buildings don’t tend to collapse suddenly due to cheap construction… Random thoughts perhaps… but even I’m able to start connecting the dots… BRIC Supply Chain Contract Management Global Supply Chain Supplier Relationship Management Supply Chain Management Supply chain Relationships'
As part of the BRIC countries Russia is important in driving the growth aspirations of many of the world’s largest FMCG companies. Most of the large companies have developed pan-European sourcing strategies and gone are the days when each individual region or even country had its own small “local for local” factory operations.
While it seemed like many companies would be moving more towards the BRIC countries, global events have proven this uptake to be relatively slow. No question the global supply chain is still going strong. However, the global economy has certainly gone soft…with the exception of the US!
However, outside the emergence of a newly discovered technology or energy source, an economic boom seems unlikely at this time. BRICS is an alliance between several countries (Brazil, Russia, India, China, South Africa) to do just that. Instead, we consider the possibility that the dollar could stay elevated for a long period of time.
What is now exciting is the on-going innovation projects by Coke and other companies to take the 70% of the bottle that is non-renewably sourced, and move it towards a 100% biobased resin technology. Growing beverage consumption in emerging markets of BRICS is expected to drive bio based PET market growth.
I learned a lot from them over many years; first chasing parts and capacity, then dealing with the contraction after Y2K and migration to lower cost countries in the early 2000’s, the expansion into the BRIC countries, the integration of information from customer to supplier to sub-tier supplier and so on.
The growth of a rising middle class in China, India, and other countries in Asia was identified as a major source of revenue growth for many US companies. A kickoff meeting by a renowned economist discussed some of the issues around global growth, and where the growth will come from.
I learned a lot from them over many years; first chasing parts and capacity, then dealing with the contraction after Y2K and migration to lower cost countries in the early 2000’s, the expansion into the BRIC countries, the integration of information from customer to supplier to sub-tier supplier and so on.
Image Source: Brics-Info.org. Source: Trading Economics. China will have the lead, connecting economies like Azerbaijan and Ukraine to the international market, but OBOR will bring new logistics origins online. Forwarders, get ready. China-US freight is getting Amazon’ed. Other factors to blame?
He has put together some great advice here about how the TPP is going to dramatically impact the supply chain landscape in the near future… Supply chain decision makers play a continuous game of identifying what and where to source raw materials, the most cost effective location for assembly, and the most efficient structure of their transportation (..)
The economic rise of the BRICs will continue vs the West Europe, then North America, has been the dominant economic force for hundreds of years. Sources and References [link] [link] [link] [link] [link] Eric Beckwitt is CEO of Freightera.
He writes, “Tariffs hit hard on the bottom line by hiking up costs across supply chains, thereby affecting sourcing, manufacturing, and distribution decisions. Imports from Mexico, Canada, and the BRICS countries (i.e., ”[7] His three suggestions are: Diversify. Alternatively, routing supply chains to non-U.S.
Raw materials are sourced from one country, products are manufactured in another country, and the final goods are transported to customers all over the world. There are complex webs of free trade agreements, trade barriers, international movement of labor and economic blocs like the European community.
Strategic global trade decisions take on a variety of postures, including defensive, offensive, informing sourcing strategy when it comes to trade agreements, duty positioning, country pairings, and and sourcing shifts to reach some sort of global optimization, which must also consider supplier capability, capacity, and duty.
BRICs Are Moving to Buying, Not Just Making. Now differentials in workers’ pay are disappearing as countries like Brazil, Russia, India, and China (the BRIC countries) grow richer and develop into consumer giants. Supply chains have become a major source of competitive differentiation because they are difficult to copy.
We work at the intersection of sourcing, logistics, legal, finance, and government affairs, and I spend 25% of my time helping our GA team form trade affairs strategies. In the end, we have had to set up playbooks for each of these situations, which we do through our sourcing organization in China. This is all very real.
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