1 June 2009
In emerging markets, the characteristics of a company’s operating environment bring special challenges in supply chain management. Harri Lorentz’s doctoral thesis Contextual supply chain constraints in emerging markets – exploring the implications for foreign firms explores supply chain management, particularly in Russia. The doctoral thesis in International Business will be defended on Monday 8th June at the Turku School of Economics.
A well-planned supply chain that supports company strategy is one of the key elements in the success of an international company.
– In the so-called emerging markets such as Brazil, Russia or India, many characteristics of a company’s operating environment might give rise to special challenges in supply chain management, says Harri Lorentz.
In his doctoral thesis, Lorentz explored the field of supply chain management, particularly in Russia, and mainly from a perspective of the foreign food industry.
– Based on this study, I tried to create a new understanding of the range of problems, which companies may face when expanding their operations into emerging markets, says Lorentz.
Problems and their effects
On the basis of the study, it was observed that the problem areas of supply chains can be divided into three. Infrastructure-related problems result, for example, from the poor condition of roads or the small capacity of ports. Examples of institution-related problems are varying customs legislation or the inability of organisations to co-operate. Network-related problems are concretised, for example, in a non-existent supplier network or complex structures for distribution channels.
The effects of these problems on international companies may be classed as being related to performance or to a business model configuration.
– Performance-related effects are evident, for example, in an increase in logistics costs or a reduced level of customer service in logistics. Business model-related effects are by nature strategic and are mainly realised through company decision-making. Examples of business model-related effects might be changes in main transportation routes and forms or the reorganisation of the network of facilities, explains Lorentz.
In the worst case, logistical incapacity resulting from bottlenecks or constraints might make a company’s normal strategy unfeasible.
Forecasting and continual assessment of key importance
Companies should invest in understanding flows of material, information and revenue in the supply chain.
– Companies should be able to assess and forecast the possible effects of problems on the supply chain and also on company strategy. This is of particular importance in emerging markets, where the operating environment and business structures are in a constant state of change, says Harri Lorentz.
The doctoral thesis can be read at: http://info.tse.fi/julkaisut/vk/Ae6_2009.pdf
More information:
Harri Lorentz
+358 50 502 7087, harri.lorentz(a)tse.fi