Driving IdeasIdeas move fast when their time has come.MANAGING GROWTHIN A HIGH GROWTH REGION:From Supply Chain Nightmareto Supply Chain Wonderland.atin America has a jaguar by theLtail. Led by Brazil, Colombia, Chileand Peru, the region is experiencingtremendous growth fuelled byhuge natural resources, lower than historicinflation, a strong manufacturing base, risingexports, increased foreign investment andmiddle class populations that are growingwealthier each year. But success doesn’t justbreed success, it can also breed opportunitiesand many Latin American companies are nowat a crossroads in their development.There are exciting national, regional and internationalopportunities for growth. As a result,productivity, efficiency and capital allocationare critical. There are also big challenges inmaximizing these opportunities with new assets,new equipment, new people or newly trainedpeople, because it all takes time. They needto get the most out of what they already have.People, structures, machinery, logistics, everyaspect of the business must be put under themicroscope to create an optimized, adaptable,growth grabbing organization.We like to describe it as having a certain sizedshirt when you were 5 years old and now you’re15 and you’re breaking out of it at the seams.Many Latin American companies have simplyoutgrown their old business model and needto design and implement a new one that betterfits their new size.Everything depends on your Supply ChainIn the older global economies, with little or nogrowth, supply is much higher than demand,so the challenge is to do the same with less,or less with much less. In Latin America,particularly Brazil, the exact opposite is true.Demand far outreaches supply, but satisfyingthat demand depends on an optimized SupplyChain and managing that Supply Chain hasbecome a complex challenge for many LatinAmerican companies.These companies need to adjust their operationalstrategy to develop a Supply Chain model thatis flexible enough to cope with even the smallestchanges in supply or demand and at the sametime optimizes their working capital, costs, cashflow and service levels. This requires OperationalExcellence in Supply Chain.To do this they first need to make sure they’reabsolutely customer centric, so they can alwayshave the right products, in the right quantities,in the right places, at the right time. That meansasking questions about every step of the process,from sourcing raw materials to designing theproduct all the way through the manufacturingenvironment and putting it before the endconsumer. How well are we really managingand collaborating with our customers and oursuppliers? How do we decide when to switchfrom ‘We do it ourselves’ to ‘Let’s source somereadymade product and customize it in country.’How do we build our talent factor? What newmanagement systems and new processesdo we need? And what’s our most effectiveorganizational structure to create long term,sustainable growth? It all goes back to whatthe operational strategy is because for manycompanies rapid growth has totally changedthe business model.Making working capital work harderAnother Supply Chain challenge that needs tobe overcome is the issue of working capital.In such rapidly expanding markets a lot oforganizations haven’t been disciplined enoughas they’ve grown. They have simply said ‘Right,let’s do it, we need to grow at all costs,’ andthen have realized that they have a significantdemand on working capital and that the cost ofgrowth is too much. They need to really focus ontheir working capital, optimize their inventories,cash flows and solve this problem.There are also the challenges brought on bynew or different sales channels. A number ofcompanies in Brazil, for example, have startedselling through the internet, which is quite anew thing. Others have decided that they’regoing to go direct to their end customers,rather than just sell through distributors.Some are even thinking of opening their ownretail stores. Their Supply Chains need to betotally flexible because it’s very different toship bulk product to Walmart than it is to shipproduct to perhaps 2,000 of your own retailstores. An added complexity is that not everysegment of your customer base has the sameneeds or wants from your product. So whatassortment flexibility are you going to carryin your product portfolio?Latin American businesses used to believe that theycould bring about all these changes themselves.There’s a much greater sense of urgency becausethey know they don’t have time to developinternally. Rapid growth has fuelled a hugedemand on talent within the business, so theysimply don’t have the capacity to assign teamsto work on internal Change Programs.Moving from a Supply Chain nightmare to aSupply Chain Wonderland requires vision, tenacityand a group of committed partners. <strong>Celerant</strong><strong>Consulting</strong> together with Tantum Group/Symneticsunderstand the challenges and has a globaltrack record of helping companies overcomethem and reach that promised land.44CLOSEWORK® GLOBAL REVIEW 2012
Many Latin American companies are now regional orglobal players, say Gustavo Rojas, Managing Directorat <strong>Celerant</strong> <strong>Consulting</strong>, Latin America and MathiasMangels, Managing Director at partner companyTantum Group / Symnetics. But they need to balancetheir rapid growth with sustainable internal change.‘ Success doesn’t just breedsuccess, it also breeds opportunitiesand many companies are now at acrossroads in their development.’CLOSEWORK® GLOBAL REVIEW 2012 45
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