University of Southern California

Improving the Supply Chain in the Pacific Rim
A Study by Marshall MBA Team Provides Concrete Suggestions to Improve Trade
December 1, 2011 • by News at Marshall

A report by a team of USC Marshall MBA students has concluded that improvements in business supply chains—from improving communications infrastructure to simplifying documentation—could save Pacific Rim economies millions of dollars annually and dramatically improve trade.

The Marshall research team traveled to Hawaii in mid-November to present its findings to an advisory council of the Asia Pacific Economic Cooperation (APEC). APEC is an organization focused on promoting free trade and furthering economic growth among its 21 member nations spanning four continents, from Australia to China and Russia, from Chile and Papua New Guinea to the United States and Canada. APEC is the world’s largest regional cooperative, in a region that accounts for approximately 40 percent of the world’s population and nearly half of the world’s GDP.

The Marshall team represents the only business school invited to share its findings with the APEC Business Advisory Council (ABAC), a collection of 63 business leaders from each APEC nation, who meet to advise APEC on strategy.

According to Kevin Syslo MBA ’12, who led the Marshall team, the goal was to identify a series of chokepoints in supply chains and determine how addressing those chokepoints could have immediate effects on improving the ease of doing business between countries. The team conducted in-depth interviews with 181 APEC business executives, supply chain experts, and government officials as well as data from the World Economic Forum and the World Bank. Among the key findings of the report:

  • As a region, APEC is home to economies that lead the world in supply chain efficiency. It also has economies that lag world averages, and lag substantially. Where supply chains cross multiple APEC economies this becomes a collective concern.
  • Emerging economies lagged developed economies most in transparency, availability and use of online information technology systems, efficiency of customs, and transportation and port infrastructure. Developed economies have benefited most from moving to online IT based systems and improved customs efficiency and procedures. A lack of transparency and the presence of corruption burden emerging economies the most.
  • Improvements in port operations and custom services offer the opportunity for the largest immediate improvements. In emerging economies, improvements in both customs and port clearance efficiency will produce immediate time and cost saving.
  • Burdensome documentation requirements and complex regulations and standards disadvantage small and mid-sized enterprises. Business complained loudly about unnecessary and complex documentation requirements.

"We found that relatively simple improvements in areas such as documentation and IT could have the biggest impact," said Syslo. He said ABAC leaders have sent the Marshall report to trade ministers in their respective countries.

For Carl Voigt, professor of clinical management and organization at USC Marshall who serves as faculty advisor for the research team, the recommendations provide ABAC with pragmatic solutions to seemingly intractable problems.

"We know that enhancing roads and transportation will improve supply chains, but that is simply not possible in many emerging economies," Voigt said. "Our goal was to answer fundamental questions: Where are the unnecessary inefficiencies? Where can the improvements be made? I believe that we have provided APEC leaders with some viable options for improving trade."

About the USC Marshall School of Business
Consistently ranked among the nation's premier schools, USC Marshall is internationally recognized for its emphasis on entrepreneurship and innovation, social responsibility and path-breaking research. Located in the heart of Los Angeles, one of the world's leading business centers and the U.S. gateway to the Pacific Rim, Marshall offers its 5,700-plus undergraduate and graduate students a unique world view and impressive global experiential opportunities. With an alumni community spanning 123 countries, USC Marshall students join a worldwide community of thought leaders who are redefining the way business works.