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.
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.