VIDEO: Why Value Chain Innovation in Developing Countries Matters to Multinationals

Not every business has the same resources to achieve an integrated supply chain, especially in developing countries where government and infrastructure issues can cause significant barriers.

There can be varying standards and reliability of service is not consistent across continents and this issue will be key to BRIC nations (Brazil, Russia, India and China) as they start to emerge as driving forces of the future global economy.

Brazil for instance, with a population of 170 million and the fifth largest country after Russia, USA, Canada and China, is a country with continental dimensions and with very dynamic manufacturing and services industry.

Although Brazil is not a leader in the area of supply chain management, the country is significant in terms of internal markets and international trade. Therefore, there are many international world class supply chain service providers that are present in the South American country.

In a part of the Stanford Graduate School of Business’s Insights series, Hau E. Lee (Professor of Operations, Information & Technology) offers insight on how those businesses in developing countries can overcome those barriers.  

Lee said: “Sometimes those barriers are because suppliers do not trust, or do not have the right information, or have their own constraints. So in helping them by collaborating with them, you overcome their barriers, which in turn unblock your own bottleneck.

“By going out and having the right information shared, having the right collaborations in place, having the right incentives in place can go a long way.”

As Lee notes, business students and current multinational corporations would also be wise to study and learn from the way that businesses in developing economies are innovating, growing, and building their supply chains.

Watch the whole video for more insight on how value chain innovation can help businesses grow no matter where it is starting out.