Daily Archives: June 23, 2008

(Logistics) Flux Management

No, this isn’t an article about Flux Capacitor management and how to keep your DeLorean in peak condition, but about managing in emerging and developing markets when rising labor costs, increasing transportation costs, and shifting demographics are constantly chancing the success equation in these markets.

The inspiration for this post is a recent article in Logistics Management by Bill Read and Michael Tse of Accenture who noted that emerging and developing markets like China and India will be the key battleground for the years ahead for those multinationals eager to grow in the ever changing global economy. The reality is that the emerging middle class in the fast growing markets in China, India, Taiwan, Malaysia, Thailand, Indonesia, and the Philippines represent a significant opportunity for those companies poised to take advantage of global opportunities.

According to the article, mid-size companies need to build unique capabilities in four key areas in their efforts to ensure success:

  • Entry Strategy
    It’s not just about red-tape. Where are you going to get the resources and partners you need for success? Where are you going to launch? Chances are, the middle class aren’t just emerging in the tier one cities, but the tier two and tier three cities where populations are also exploding.
  • Channel Strategy
    The majority of people in countries like India, China, and Vietnam still reside in rural areas. Even though the countries are rapidly urbanizing, you could missing out on a large market segment if you just focus on the urban centers.
  • Supply Strategy
    How are you going to get your supplies and distribute your products? Building a new network from scratch can be a challenge – you’re likely going to need a local 3PL provider – but who?
  • Workforce Strategy
    Local talent is critical to the success of a market entry in Asia for a host of reasons, from language skills to market insight to just plain practicality. How are you going to attract and retain this local talent?

Each of these strategies is critical, and each comes with a host of questions that need to be answered. The article is definitely worth a read.