The Role of Enterprise System Customizations in Achieving Market Dominance in Emergent Markets

These markets together constitute the world’s largest consumer market – a market that global brands are yet to tap fully, and yet a market with an increasing awareness and appetite for the same brands. For many of such markets the average GDP growth in the last 5 years has been significantly greater than the
G8 markets- a rate that is forecast by most analysts to not only continue but accelerate further in the next 5 years. Indeed, Goldman Sachs predicts that by 2050, China will overtake USA as the world’s largest economy, and India will be a close third. Markets of the future that, naturally, figure in the strategy sets of every global consumer goods business today.

However, as many MNCs who have rushed in to claim early stakes in these markets have realized from experience, the rules of the game in these uncharted markets are startlingly different from the ones by which they have played the game in the G8 worlds. Consider, for example, that nearly 87% of India’s 640,000 villages have population clusters of 2,000 people or below at least 20% of the nation’s population lives here. Leaving massive parts of this
landscape uncovered, organized distribution systems reach only towns of 5,000 or more people. Despite this, an enormous universe of around 3.6 million rural retail outlets exists, where the economics of “last mile” distribution and the very structure of the distribution system are radically different from the
developed worlds.

It is increasingly apparent now that how much market success a consumer goods business in emergent markets such as India achieves will depend on how well they are able to play locally, while thinking global.One of the critical elements that impact a CG organization’s ability to integrate local business best practices with established global ones is the nature of its enterprise systems and the degree of emergent markets customization that it allows for. Most leading enterprise system products, while providing significant global best practice based support for the consumer goods vertical, are still to introduce comprehensive support for emergent markets. This requires each CG business to invest very significant amounts of time, effort and money to custom build the necessary models into their ERP system. In many ways, the quality, speed, scalability and total cost of ownership of this one critical exercise can deeply
influence how the CG enterprise fares in its emergent market play – either providing it with a key competitive edge, or creating serious operating handicaps.

Designing and developing an effective consumer goods emerging market model for an enterprise system requires a marriage of several competencies, prime amongst which are domain knowledge, local market understanding and technical capability. A thorough grasp of the emergent market value chain is essential – from the unique 3tier TM&D (Trade marketing & distribution) market structure on the demand side to the complex demands of supply side realities of emergent economies, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others. The realities of distribution logistics introduce new complexities- factors such as seasonality, perishability, order lead times etc. assume new criticality,
and mandate specific features to manage the same.

Key elements that need to be custom architected include:

• A flexible distribution model, allowing for multiple channels and trade hierarchies involving stockiest,
C&F agents, distributors, wholesalers, and resellers.

• A new DRP (Distribution resource planning) engine and new optimization rules, to plan delivery schedules and quantities across partners, stock points and trade.

• Multiple local language support.

• Information flow management model across a large and diverse distribution and procurement network-hand held based access for sales teams, web access options, real time intelligence, etc.

• New models for trade finance management, territory planning, reporting.

• All these solutions delivered keeping existing infrastructural limitations in mind.