Assessing Global Supply Chain Operational Readiness: Part I

Editor’s Note: Theodore Stank, PhD; Mandyam Srinivasan, PhD; Kenneth Petersen, PhD; and Philippe-Pierre Dornier, PhD. This is the first part one of a two-part feature

Supply chain managers increasingly are pushed outside their comfort zones when making global supply chain decisions, rendering the ultimate success of global business initiatives as “hit-or-miss” propositions. The challenge for them is to be able to understand the intricacies of the supply chain environment of a specific region or country within a framework that can help them master issues such as supply chain design and key constraints that enable better decision-making.

Thus, supply chain managers can benefit from a methodology that will help them assess their options in supporting global initiatives, identifying the strengths, weaknesses, opportunities, and threats of the different regions in the world – a framework that can help managers manage supply chains in both emerging and mature markets.

The EPIC framework was developed by a team of global supply chain researchers at the University of Tennessee, Knoxville, and ESSEC Business School, Paris and Singapore to provide a structure that will help these managers assess the readiness of global locations to support supply chain operations based on four dimensions:

• Economy (E, the economic output of the country, its potential for future growth)
• Politics (P, the political landscape with respect to how well it nurtures supply chain activity)
• Infrastructure (I, the state of transportation, utility, and telecommunications infrastructure to support supply chain activities)
• Competence (C, the skill levels of both the work force and support industries available to perform supply chain activities.).

Each of these dimensions is evaluated using a number of variables to arrive at a weighted score for that dimension. In turn, the scores on these dimensions are used to arrive at a weighted score for the country.

The EPIC framework was used to assess 55 nations from ten distinct geographic regions, including East Asia, South Asia, Southeast Asia, Australasia, Middle-East and North Africa, Sub-Saharan Africa, Western Europe, Central and East Europe, North America, and South America. Findings from the assessment formed the basis for recommendations regarding the relative attractiveness of each nation and region for a variety of supply chain activities, including raw materials procurement, manufacturing, services, and finished goods distribution operations. The North and Central America region emerged as one of the more attractive options for all the elements of supply chain activities.

The nations of the North and Central America region, including Canada, Mexico, the USA, Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, represents approximately 27 percent of global GDP, with the U.S., Canada and Mexico ranking as the 1st, 13th, and 11th largest economies in the world, respectively, based upon percent of global GDP. The region represents just over seven percent of global population, again with the U.S., Canada, and Mexico forming the largest percentage of that total as the 1st, 35th, and 11th largest populations in the world, respectively.

Organizations seeking to establish supply chains operations to access the North American market as well as the burgeoning South American markets may well look to the emerging areas of North and Central America as locations for low-cost sourcing and manufacturing.

Next: The 10 key takeaways resulting from the EPIC analysis of the selected nations of North and Central America.

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