Saturday, October 4, 2014

Challenges on Supply Chain Management in a Developing Country

For my last submission I would like to reflect on supply chain management challenges for the 21st century. However, I would like to make this analysis focusing on my country of origin (Argentina) rather than United States or other developed countries as its economy, infrastructure and sociopolitical condition makes these challenges different in nature. I think this will be helpful not only for me but for other international students whose countries are facing a similar situation.
I would like to start explaining how macroeconimic trends of this country impact on the supply chain. Over the last years, Argentina has gone through an inflation process –currently the inflation rate is around ~11% per month- and recession cycles [1,2]. These aspects not only translate into a decrease of demand but higher uncertainty, which forces companies to keep high level safety stock and reduces the opportunity to leverage the supply chain. In this sense, forecasting plays an important role to cope with demand uncertainty and optimize operations to reduce costs.
On the supply side, gas cuts to the industry are common during winter because of a lack of infrastructure to meet demand during this season [3]. This affects directly companies but also its upstream operations, f.e. an automobile manufacturer might see its production affected because plastic components are scarce as wet gas cuts affected the petrochemical industry production. Although Argentina is ranked 3rd in worldwide reserves of shale gas [4], it is less likely that Argentina will benefit from a shale gas boom like the USA in the short/mid-term.   
Moreover, the government also set restrictions on imports over the last years [5] in an attempt to boost the national industry. However, this decision has seriously affected the supply chain of many companies that resort to off-shoring, and in some cases forced to close because of lack of substitutes. Companies have adapted to this measure by diversifying supplier networks and including national suppliers to reduce risk and guarantee proper supply.
Argentina is also behind in terms of policy regulations for cloud computing. BSA provides the following information regarding this topic: “Argentina is committed to developing a strong ICT industry and updating its laws to facilitate cloud computing. Effective laws on cybercrime, electronic signatures, and data protection are already in place, although the implementation and enforcement of data protection regulation are limited.” [6]. Moreover, 4G mobile technology is not available in this country yet which inhibits cloud computing performance at its full potential.
Finally, this short analysis just scratches the surface of the variables that have an impact on supply chain management of companies located in Argentina and the specific challenges this country needs to overcome to provide the same benefits as a developed country. I would also like the reader to reflect on all these aspects I mentioned and think how these affect your own country.    




REFERENCES
[1] N.A. (n.d.), Argentina Inflation Rate Database, Trading Economics Webpage. Retrieved from: http://www.tradingeconomics.com/argentina/inflation-cpi (accessed 10/4/2014)
[2] Alexandra Ulmer (June 23rd, 2014), Argentina Economy Slips into Recession in First-Quarter, Reuters Webpage. Retrieved from: http://www.reuters.com/article/2014/06/23/us-argentina-economy-idUSKBN0EY2TB20140623 (accessed 10/4/2014)
[3] N.A. (May 27th, 2014), Argentina Promises No Gas Shortage This Winter, but Industry Hs Already Suffered The First Cuts, MercoPress Webpage. Retrieved from: en.mercopress.com/2014/05/27/argentina-promises-no-gas-shortage-this-winter-but-industry-has-already-suffered-the-first-cuts (accessed 10/4/2014)
[4] N.A. (June 10th, 2013), Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States, US EIA webpage. Retrieved from: http://www.eia.gov/analysis/studies/worldshalegas/ (accessed 10/4/2014)
 [5] N.A. (August 24th, 2014), Argentina to appeal WTO ruling on import restrictions, Retuers Webpage. Retrieved from: http://www.reuters.com/article/2014/08/24/us-argentina-trade-appeal-idUSKBN0GO0UH20140824 (accessed 10/4/2014)
[6] N.A. (2013), 2013 BSA Global Cloud Computing Scorecard, BSA webpage. Retrieved from: http://cloudscorecard.bsa.org/2013/countries.htm l (accessed 10/4/2014)

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