Supply Chain Frontiers Issue #27. Read all articles in this issue
Mobile phones are moving into supply chain management, particularly in emerging markets where companies need a communications technology that can cover a widely dispersed customer base. In Latin America, for example, mobile phones are improving supply chain visibility in highly fragmented markets.
When EXXE Logística, a Colombian third-party logistics company (3PL), was setting up its logistics operations the organization looked to mobile phones as its technology of choice. “For us, the ability to capture information in real time was critical to providing the service levels we wanted and to respond quickly to the variety of situations we face in our field operations,” said Juan Mejía, Chief Strategy Officer at EXXE. The 3PL have been using mobile technology for over five years in a wide range of activities including inventory management, promotion management, and product delivery. Similar experiences are found in India, China, and other emerging markets; mobile phones are becoming an increasingly important component of supply chain technology.
“If you design a modern supply chain in an emerging market, mobile phones need to be a central part of your information technology roadmap,” said Dr. Edgar Blanco, who leads a research initiative in Supply Chain Innovation in Emerging Markets at MIT’s Center for Transportation & Logistics (MIT-CTL). The statistics speak for themselves: there are approximately 3.5 billion mobile phones in the world, and by the end 2008 this number is expected to reach 4 billion units. There are approximately 10 mobile phones for each personal computer. In Latin America for example, mobile penetration has been estimated at 70% with countries such as Colombia, Venezuela, and Chile reporting penetration levels in excess of 85%.
“The fact that most individuals are familiar with mobile phone technology has some big advantages for supply chain operations; technology adoption rates are higher and training costs are lower,” said Blanco. Not to mention the advantages in operating in fragmented environments with a wide variety of conditions. “Logistics in Latin America is very complex,” said Maria del Mar Hermida, Public Relations Manager at the Bogota, Colombia-based Center for Latin-American Logistics Innovation (CLI). “Distribution channels are fragmented and basic infrastructure like phone lines or electricity is not always existent. But cell phone coverage usually covers vast regions.” Mobile technology opens the door to increased visibility throughout the supply chain; something very hard to achieve in emerging markets.
However, standards are just emerging. “A standard Mobile Commerce platform called mCommerce is being developed,” said Hermida. “This will provide companies with a standard way to develop applications and exchange information, like RFID, between business partners. It is not there yet, but it is moving very fast.”
New players like EXXE Logística are not standing still; they are embracing the mobile technologies. “Bigger organizations tend to be more conservative with regard to technology. The growth rate and challenges in emerging markets provides an opportunity to leapfrog existing operations and experiment with these technology shifts early on,” said Blanco. “And if they don’t others will.”
For more information on the development of mobile technology in emerging markets, and especially Latin America, contact CLI’s Public Relations Manager, Maria del Mar Hermida.