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Supply Chain Management in Emerging Economies
BUSI 613: Supply Chain Management
Emily Stogner
Liberty University
Author’s Purpose
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As countries like Brazil, India, China, and Russia begin emerging economically,
developed countries and their supply chains will expand to include them. There has been little
research done on how these new economies and their infrastructure struggles will affect already
developed countries. With the addition of these emerging countries, businesses are beginning to
see their supply chain altered by the relocation customers and suppliers. They are also seeing
them adopt supply chain programs such as lean management and agility (Avittathur & Jayaram,
2016). However, the author is not convinced that all of these developments will continue without
fault. The author of this journal states that “A greater share of the world economy does not
guarantee better supply chain management” (Avittathur & Jayaram, 2016). The purpose of this
journal is to analyze these changes and discuss the importance of supply chains in these
emerging countries and how it affects the world economy.
Application
A key component of supply chain management is outsourcing. The United States depends
on global outsourcing by relying on countries like China, their number one exporter (Young,
2017). Without this relationship business moguls like Motorola, Microsoft, Walmart, and General
Electric would not exist. Outsourcing comes with costs though. Some people see outsourcing as
the source of high national unemployment rates. This is a major issue for the United States and
continues to be analyzed by supply chain managers. Businesses must be wary of the
consequences of expanding their supply chain networks to emerging countries before doing
proper research on their strategy, cost, quality, deliver and cultures issues (Avittathur & Jayaram,
2016).
Another area of application is in the area of green supply chains which are the new trend
in global business ventures. Young states that “Being environmentally responsible has become a
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business imperative, and many firms are looking to their supply chains to deliver “green” results
(Young, 2017). Many of these emerging countries offer green resourcing by promising to reduce
waste, lower usage, or substituting products with greener or recyclable materials. By outsourcing
globally, businesses might be able to get greener results for their supply chain than by remaining
domestic in some areas (Mollenkopf, Stolze, Tate, & Ueltschy, 2010).
Background of the Issue
Globalization in the business field is a trend that has continued to be analyzed by
businesses in order to expand and outsource their supply chain to gain more efficiency in their
business. Many famous companies outsource parts of their supply chain. These companies are
businesses such as Apple, Walmart, Microsoft, and Motorola. In the textbook Young states that
this type of outsourcing is specifically common for “clothing, household products, furniture, and
computers” (Young, 2017). Businesses who have chosen to successfully outsource have seen
lower labor costs due to lower wages in emerging and some developed countries like Brazil,
Mexico, and Turkey. Taking a business global or merely outsourcing globally is a big step for
business. However, in agreeance with Avittathur and Jayaram, many guidelines and research
must be put in place before making a decisions due to the lack of knowledge behind the long-
term effects it has on the global economy, specifically when partnered with emerging economies.
Managerial Implications
When beginning to outsource globally, managers should always do research about the
countries they partner with. The journal states, “The supply chain environments tend to differ
from one country to another, affecting the operational effectiveness and efficiency of firms
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operating in that country, which in turn, affects the overall competitiveness of the country”
(Avittathur & Jayaram, 2016). Managers should be confident that their supply chain strategies
are not affected negatively by the possible lack of quality resources in some emerging countries
as opposed to developed countries. According to Young, managers should assess 4 things when
looking to begin business in foreign countries. Researching health and safety conditions, the
human rights environment, legal system, and political, economic, and social environment is
crucial as businesses make decisions about which country to extend their supply chain network
to (Young, 2017).
One of the takeaways from the article would be the support of hybrid channels as well as
the traditional physical and online stores. Managers should be advised that “hybrid or omni-
channels can be designed and implemented to take advantage of the enormous growth
opportunities of the retailing sector in general in emerging economies, and in particular, the
online segment” (Avittathur & Jayaram, 2016). They specifically see growth in emerging
markets with new online parties that team up with existing retailers to create an effective
relationship (Avittathur & Jayaram, 2016). Not only can businesses see a positive outcome with
expanding their suppliers globally, with the aid of hybrid and online channels they can expand
their customers as well. This supply chain management global strategy will have a holistic
approach to their business.
Summary
The single most important issue here is the premature outsourcing of businesses with
emerging countries. There have simply not been enough research on these economies to know
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how they affect the global economy in the long run. Therefore, businesses and supply chain
managers should be cautious when outsourcing globally. However, with the right tools and
guidelines, businesses can see an advantage to globally expanding their supply chain to meet the
needs and goals of the business.
References
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Avittathur, B., & Jayaram, J. (2016). Supply chain management in emerging economies.
Decision (0304-0941), 43(2), 117–124. https://doi-
org.ezproxy.liberty.edu/10.1007/s40622-016-0130-8
Mollenkopf, D., Stolze, H., Tate, W. L., & Ueltschy, M. (2010). Green, lean, and global supply
chains. International Journal of Physical Distribution & Logistics Management, 40(1/2),
14-41. doi:10.1108/09600031011018028
Young (2017). Supply chain management (Custom ed.). New York, NY: McGraw-Hill Create.
ISBN: 9781309072783.
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