Supply Chain Strategies South of the Border

I really learned quite a bit reading about the supply chain challenges of Latin American in a recent Supply and Demand Chain Executive guest column. Sure, we might all know a thing or two about Hugo Chavez and his fascist / socialist ambitions for the area, but there are many other factors which procurement organizations should consider as well when it comes to Latin America. And that's because "the region provides low-cost labor and an attractive alternative for manufacturing goods destined for the North American market." Consider that Latin America has "heavy population centers scattered throughout the vast geography and an underdeveloped transportation infrastructure, physically getting goods to the right markets poses a significant hurdle. Approximately 75 percent of the region's population lives within 200 km of the coast in concentrated areas."

The column also notes the challenges transporting goods over topological and geographic boundaries as well: "aside from the sheer distance between these cities, one would face major geographical obstacles, including the Amazon River and the Andes Mountains." And that's not to mention a complete lack of financial "integration" between the many countries in the region as well. This and the "security concerns associated with low-cost labor produce a recipe for potential supply chain and financial disaster for the unprepared product company." So if you're debating doing business South of the Border, be prepared. Having said this, I believe that Brazil and other Latin American countries still offer significant export potential for the US (especially if the dollar rises, even just a bit).

Jason Busch

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