A Series of Trading Opportunities & Supply Chain Challenges in Emerging Market Trading
Historically, North American companies sought trading opportunities in Asia or Europe and less frequently looked at Latin American partners. In the first part of this series, we’d like to review trading opportunities as well as supply chain challenges among Latin America and Caribbean regions, a very potential partner of Canadian trade.
It’s undeniable that Latin America needs special treatments from multinational companies as its total gross domestic product (GDP) of US $5.5 trillion with exceeding half a billion in its population. In addition, the Latin American consumers seem to have bigger pockets than those in other developing markets as Brazil’s GDP per capita is 45 percent higher than that of China and three times that of India. Furthermore, its GDP is projected to rise 4 percent per year which is double that in the developed countries.
Not surprisingly, Latin America and Caribbean is a critical region for Canada with eight Free Trade Agreement (FTAs) and Foreign Investment and Protection Agreements as well as 30 air transportation agreements. Moreover, Canadian government invested an amount of $708 million as its international assistance to support Canadian businesses in this region in 2017 – 2018. In 2012, Latin America and Caribbean contributed USD $56 billion to Canada’s total trade and Canadian Foreign Direct Investment achieved CAD $80 billion, representing more than 50 percent of Canadian investment in developing economies.
Strategic Supply Chain Solutions
We have the honor of interviewing three experts who are coming from multinational companies and doing business in supply chains for many years. They will share market intelligence and how to tackle supply chain challenges above.
First and foremost, we are pleased to introduce Miguel Murphy, our supply chain analyst, currently working with Warehouse Transport Group (WTG) as Regional Supply Chain Manager, LATAM and Caribbean region. Before working for WTG, Miguel has many years of experience working within private and public sectors as a Co-Packer and Supply Chain Manager at Pepsicola Trinidad, a multinational company and the Area Manager for LATAM at Angostura Holdings Limited in Trinidad and Tobago. He also has a background in business development and Opex for improvement of bottom line operations.
● What is the biggest challenge companies face in Latin America & Caribbean with respect to their current supply chain system?
Latin America and the Caribbean face unique supply chain challenges. However, as a region, there are some common discrepancies within their supply chain systems. Some of the biggest challenges are the lack of efficient use of infrastructure coupled with the insufficient implementation of technology and lawlessness. This could be solved through the development and adaptation of globalization standards under one policy by these regions similar to that of the EU system.
● How did they cope with challenges by Covid or supply chain disruption in the past 6 months?
Covid brought unexpected and unforeseen circumstances which companies in these regions had to face in addition to their existing challenges. Initially, there was uncertainty as to the next steps to take with no typical model of solutions. However, some companies realized that they had to have a mind shift in their organizations via adjusting and re-building within their supply chain systems and processes in order to mitigate further losses and be able to maximize in the short term. Furthermore, triggering the creation of innovative processes in order to be economically viable. For example, they would have to review their stock inventory and supply contracts in place and the demand for their products and/or services.
● How is their supply chain strategy next year?
One of the main strategies for the Latin American and Caribbean markets would be the introduction of new innovations. Secondly, in order to increase the company’s responsiveness to changing market demand and develop more locally customized products, companies may begin to bring production closer to key markets. In addition, new, smaller production sites, but more flexible in design with digital solutions to help offset local production costs and increase capacity.
● What are the most important factors to make their supply chain success?
Some of the most important factors which should be considered for successful supply chain within these regions, especially in current times, include the use of data to more accurately predict local demand; the supply of products from various geographical areas and the flexibility to outsource the production of products; and finally, manufacturing and digital storage that allows route optimization.