supply$chain$management in$emerging$markets:$...

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Supply Chain Management in Emerging Markets: New Perspec=ves

July 23 2010

Edgar E Blanco [email protected] Research Director Executive Director MIT SCALE Latin America

1 E. Blanco © 2010 MIT CTL . Do not quote without author authoriza=on

Tradi=onal Supply Chain Leaders


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SCM Lessons learned… •  Supply Chain Management is a long-‐term source of compe==ve advantage –  Physical flows –  Informa=on flows –  Financial flows

•  Process innova=ons are as important as technology innova=ons

•  Informa=on sharing & visibility enables collabora=on


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Why are Emerging Markets important?

Source: Wikipedia, World Bank 2006 Database

China 1,314M - $2k

India 1,113M - $0.8k

USA 300M - $45k

Mexico 104M - $8k

Brazil 187M - $4.7k

Nigeria 149M - $0.6k

Egypt 75M - $1.3k

Germany 82M - $36k

Russia 142M - $5.8k

Vietnam 84M - $0.6k

Japan 128M – $38k

Philippines 87M – $1.4k

Indonesia 222M - $1.4k

Pakistan 155M - $0.7k

Bangladesh 144M - $0.4k

Country Population – GNI per Capita

EU 459M - $34k

World 6,440M - $7.5k

E. Blanco © 2010 MIT CTL . Do not quote without author authoriza=on

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MIT Global SCALE Network Supply Chain And Logis=cs Excellence

E. Blanco © 2010 MIT CTL . Do not quote without author authoriza=on 5

  Interna=onal Supply Chain Management Curriculum taught across the globe (Master & PhD)

  Pla]orm for coopera=ve interna=onal exchange

  Support mul=-‐na=onal research collabora=on

  Create professional networks of alumni, industry and academics

  3-‐5 More Centers to be added (Asia, Africa, Middle East)

Acknowledgements first…


SECRETARÍA DE DESARROLLO ECONÓMICO

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Urbaniza7on •  High density •  Mega-‐ci=es •  Conges=on •  Environmental impact


Pu;ng density in Perspec7ve


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Localidad / Caracterís7cas Chapinero Ciudad Bolívar

Población 131.027 616.455

Ingreso >9.720.000 >324.000 Diario

< 560.000 – 796.000 <18.700 – 26.600

Estado Vías Vías Principales y alternas pavimentadas

Pocas vías principales / dijcil acceso

Transporte Automóvil /masivo No motorizados / Masivo

Hurtos personas Hurtos establecimientos Hurtos Vehículos

742 397 134

135 39 46

Comercio Grandes cadenas Autoservicios formales

Tiendas de Barrio Mercado informal

Diverse Ci=es


Fuentes: CCB + DANE

Fragmented Channels


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Diverse Channel Breakdown


Unique Partners •  Fragmenta=on •  Informality •  Low working capital


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Infrastructure •  Rural •  Limited investment •  Low coverage •  Regula=on •  Burocracy


Risk •  Poli=cal instability •  Vola=lity •  Tax complexity •  Corrup=on


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Tailored Products



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Mobile Technology Adop=on •  ~4 Billion mobile accounts worldwide

–  Fastest technology adopted in the history

•  2011 Forecast: 5 Billion accounts, 6.8 Billion humans

Source: Interna-onal Telecommunica-ons Union


Highest Growth in Emerging Markets

Fuente: The Economist


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Innova=ve research that will impact logis=cs

… driven by needs in emerging markets….



Principal Inves-gators: Jhonatan Rotberg, Edgar Blanco

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Hammock

•  Mobile Logis=cs Planning


Sana

•  Mobile Care for Remote Diagnosis and Screening – Open source pla]orm – Links nurses in the field with doctors


Principal Inves-gators: Leo Celi

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Human Mobility

Marta Gonzalez @ MIT

CarTel •  CSAIL

•  Distributed mobile sensor network –  Cars, smartphones

•  Commute & traffic modeling –  Portal –  Hardware –  High-‐speed databases –  Stochas=c modeling


PIs -‐ Hari Balakrishnan , Sam Madden

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Feeding a City

Source: J. Carulla, 2009

25 E. Blanco © 2009 MIT CTL. Do not quote without author authoriza=on


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Cartagena Market



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How to make the world flat?

Global Health Supply Chains Prof. Prashant Yadav @ ZLC


Health: The World is Not Flat

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Most diseases are treatable with exis=ng medicines


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Many of these medicines are however not available

Average availability was only 34.9% in the public sector and 63.2% in the private sector

Source: WHO, Health Ac=on Interna=onal, United Na=ons MDG8 Report


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Points of access for medicines in the private sector


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Points of access for medicines in the private sector

Non fixed structure retail store

Fixed structure retail store Drug store Licensed pharmacy

Drug hawker

Source: MMV

Structurally different supply chains serve each of these end retail points


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Source: Yadav, CHAI and UNZA in Zambia


Forecast Driven

Drug Substance Manufacturing

Current Push-‐Pull Boundary in Global Health Supply Chains

Co-formulating and Packaging

Pre-delivery Inspection

Shipping and Transport

Drug Substance Inventory

Final Product Inventory

Order Driven

Inventory /Order Interface

Source : Yadav, Sekhri and Curtis (2006)


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Risk Sharing shius the Push-‐Pull Boundary


Source: Existing McKinsey and JSI Deliver analysis; Dalberg analysis

Minimum Volume Guarantee Institution

Country Manufacturers Donor

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Donors and countries estimate annual purchasing volume for specified products

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MVG decides on volume of product and amount of risk to assume

Establishes master contracts with manufacturer based on volume / risk tolerance

3 Countries and/or donors each place individual orders under master contract

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Manufacturer ships products directly to countries

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Manufacturer informs MVG of unused volume

Secondary Markets?

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Sale or storage of unused product; potentially waste

Source: Yadav & Dalberg Global Development Advisors

So what?


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Research Vision


Economy SC Elements

Developed (US/Europe Centric)

Emerging (China/India/LatAm/Africa)

Basic (Cost, Service, Assets)

“Tradi=onal” Supply Chain

“Innova=ve” Supply Chain

Extended (Environment/Development)

“Sustainable” Supply Chains

“Sustainable & Innova=ve” Supply Chain

E. Blanco, MIT-‐CTL, Adapted from H. Lee, 2009

Success stories …


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Nestle: “Venta Directa a Changarros”


Complete logis=cs re-‐design •  24 months: 13 ci=es, 140.000

“changarros” a, 500 trucks

•  Structure •  Processes •  Technology •  EBIT = 19%


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The Wonder Of Dabbawallas Unfolded NUTAN MUMBAI TIFFIN BOX SUPPLIERS ASSOCIATION

Web Site : mumbaidabbawala.org

Sant Dnyaneshwar Lord Ganesha

Late Shri Mahadu H. Bachhe Founder Late Shri Dhondiba Medge

Sr. Member


ABOUT NMTBSA History : Started in 1890 Charitable trust : Registered in 1956 Employee Strength : 5000 Avg. Literacy Rate : 8th Grade Schooling Total area coverage : 60 Kms to 70 Kms Number of Tiffins : 2,00,000 Tiffin Boxes 400,000 transac=ons every day (including return) i.e. 400,000*25 days*12 months= 120,000,000 (120 million or 12 crore transac=ons per year) Time taken : 8 to 9 Hours Morning 3 Hours War=me

(9 A.M. to 12 P.M. for the Collec7on and Delivery)


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Thank you!


Edgar E Blanco [email protected]

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