2024-11-25 16:22:00
The French West Indies are experiencing a new crisis in the face of the cost of living. What structural responses should we provide? For territories that are massively dependent on imports from mainland France, optimizing the supply chain, particularly through technological tools, can help contain prices.
Overseas areas constitute a strategic specificity of France and the difficulties they encounter are a major challenge for the country. One of these issues, particularly pressing in the Antilles, is the cost of living. The high costs of consumer goods are notably the result of logistics costs which are reflected in the final price.
L’Institute for Research on Island Economies demonstrates, in fact, that improving the logistics chain is a major issue for remote or island territories such as the French West Indies (Guadeloupe and Martinique).
This summer, with Lou Malidor, a student at Kedge Business School, we conducted a study on the logistics of the French West Indies. However, for local businesses, the availability of products and the possibility of offering affordable prices were the two most important criteria to emerge from the study. These criteria have since become current issues.
The impact of insularity on supplies
The business supply chain in Guadeloupe and Martinique is inherently complex. To fully understand this complexity, it is essential to review the main difficulties, firstly of a geographical nature, encountered by these companies. According to INSEE, the Guadeloupe and the Martinique import 62 and 65% of their consumer goods respectively, often from mainland France. It is therefore crucial that the supply of goods is sufficiently anticipated to ensure the balance between supply and demand. Remoteness is seen as a source of vulnerability for local businesses.
Furthermore, the local infrastructure impacts business performance. To optimize supplies and reduce transportation costs, companies often wait until they reach full containers before shipping goods across the Atlantic.
In fact, the importer pays per container transported. Filling it therefore allows economies of scale. On the other hand, this forces it to order large volumes, which is paradoxical for “small” territories and often saturates storage spaces when the container arrives and, conversely, sometimes threatens to lead to shortages. of stock while waiting for the next full container. Inventory management is therefore a balancing act.
During interviews with experts and companies established in these territories, it was emphasized that inventory management is a fundamental pillar for an efficient supply chain. The importance given to product availability and affordability confirms that customer satisfaction remains at the heart of companies’ strategic concerns, but they are very difficult to maintain.
To maximize performance, companies must therefore invest in flow management technologies (traceability, Internet of Things, warehouse management, forecasting software, etc.) and develop good inventory management practices (order points, safety stocks, forecasts, etc.) while balancing their finances. Seizing these opportunities and addressing the associated challenges will create more efficient, resilient and competitive supply chains.
A riskier supply chain
Risk management is another major difficulty which explains the complexity of the supply chain in Guadeloupe and Martinique. This problem is particularly well illustrated by the case of the Guadeloupe University Hospital Center (CHUG). The challenges it faces are specific to the Guadeloupean territory, and different from those encountered in mainland France, particularly in terms of the supply of medicines. When a metropolitan hospital orders medicines, the delivery time and method are different from those in the French Overseas Territories. These specificities have led, for example, to the creation of a community of supplying pharmacists overseas which has enabled the development of risk mapping (stock shortages, long supply times, low number of suppliers, climatic hazards, etc.).
In addition, a crucial link in the supply process has proven to be the freight forwarder, that is to say the operator who manages the door-to-door transport of products, therefore sea or even air transport, customs procedures, etc. However, in the software used by the CHUG, which comes from the continent, this actor is not taken into account, because there is no need for it between two French sites. The orders are thus distorted. The supplier must systematically review each order to modify and adjust the quantities taking this specific step into account. The need to go through a freight forwarder, who manages flows between the continent and the Antilles, adds a link and complicates the chain.
Finally, climatic hazards further aggravate exposure to risks. A ship delayed due to bad weather can strain a drug supply chain to the point of shortage.
Digitize to improve supply chain efficiency
It also emerges from field analyzes that to improve the supply chain in Guadeloupe and Martinique, the digitalization plays a key role. Advanced technologies, such as supply chain management software that incorporates the specifics of freight forwarders and local conditions, can help automate necessary adjustments and predict climate disruptions. Additionally, the use of artificial intelligence and predictive algorithms can optimize lead times by anticipating delays and adjusting inventory plans accordingly. Too often, however, West Indian companies do not rely on the same level of digitalization as in mainland France, even though the distance would lend itself to this digitalization of flow management.
Of numerous studies, which our interviews confirmedshow that the digitalization of supply chains facilitates value creation while making chains more reliable, resilient and sustainable. But the process of digitalization of these channels involves many challenges. These are both technical challenges linked to network infrastructure and their compatibility, financial challenges linked to sometimes major investments, or even managerial challenges linked to the adoption and diffusion of innovation within the network. company and with business partners.
Local businesses are aware of these difficulties and the lack of time to manage these issues. They also realize how automation could benefit them. The time thus freed could be used to develop collaboration with suppliers, manage other problems or even improve work habits. The role of digitalization within the supply chain is undeniably strategic for companies in these territories.
In short, the digitalization of supply chains presents a significant challenge for companies, but it also offers numerous development opportunities and allows for lower costs. Additionally, it offers the prospect for local businesses to be reactive in the short term and proactive in the long term.
There is therefore a need for investment and certainly support for investment in training and infrastructure. These investments would be conducive to the development of effective strategies, and would help determine a long-term vision for the development of a digitalized supply chain. This would contribute positively to the performance of companies located in Guadeloupe and Martinique and consequently to the reduction of costs, which we see have a strong impact on the daily lives of fellow West Indians.
This article was written in collaboration with Lou Malidor, student at Kedge Business School.
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**What are the main logistics challenges faced by businesses in the French West Indies due to geographic remoteness?**
**Interview with Lou Malidor, Student at Kedge Business School**
*Date: November 25, 2024*
**Interviewer:** Lou, thank you for joining us today. Your recent research focused on the logistics of the French West Indies, particularly in the context of rising living costs. Can you share some key findings from your study?
**Lou Malidor:** Thank you for having me. One of the primary takeaways from our research is the critical role that supply chain optimization plays in managing costs in the French West Indies. Since these territories depend heavily on imports—62% for Guadeloupe and 65% for Martinique—the logistics costs significantly impact consumer prices. Improving the efficiency of these supply chains is vital to reducing the cost of living.
**Interviewer:** Interesting. What specific challenges did the businesses in these territories face in their supply chains?
**Lou Malidor:** The geographic remoteness creates several issues. For instance, businesses often need to wait to fill entire shipping containers before they can transport goods, which can lead to inventory shortages. Additionally, local infrastructure often can’t support rapid restocking, further complicating their operations. This balancing act complicates inventory management, which is essential for ensuring product availability at affordable prices.
**Interviewer:** You mentioned the importance of digitalization in your research. Can you elaborate on how advanced technologies could benefit the supply chain in the West Indies?
**Lou Malidor:** Absolutely. Digitalization through advanced supply chain management software can automate many of the adjustments that local businesses need to make. These tools can consider factors specific to freight forwarding and local conditions, which is crucial given the unpredictable climate challenges in the region. Incorporating artificial intelligence and predictive algorithms can also help anticipate delays and optimize inventory plans, improving lead times.
**Interviewer:** Why do you think there’s a disparity in the level of digitalization between West Indian companies and those in mainland France?
**Lou Malidor:** There are several reasons for this gap. Often, West Indian companies operate under tight financial constraints and may lack the resources or technical expertise to implement digital solutions. Additionally, there might be a level of resistance to change or a lack of awareness about the benefits that digitalization could bring, despite the geographical circumstances that make such tools especially necessary here.
**Interviewer:** That raises an important point about awareness and investment. From a policy perspective, what steps can be taken to facilitate better supply chain practices in the French West Indies?
**Lou Malidor:** I believe that targeted government initiatives and investments in digital infrastructure could significantly bolster these supply chains. Training programs for local companies to improve their understanding of supply chain technologies and offering financial incentives to adopt these systems could lead to a more resilient and efficient logistics network. Partnerships between businesses and technology providers could also help bridge the gap in capabilities.
**Interviewer:** Thank you, Lou, for your insights. It seems that addressing these logistical challenges through digitalization could play a pivotal role in improving not only the supply chain but also the overall cost of living in the French West Indies.
**Lou Malidor:** Exactly, it’s crucial for the future of these territories. By embracing technology, we can create a more sustainable and resilient economy. Thank you for the opportunity to share our findings.
