Strategic Sourcing Opportunities in Brazil

The following article comes to the Strategic Sourceror courtesy of Supply Solutions, a leading Supply Management services provider based in Brazil. 

Most executives in the world know that Brazil is a huge market, but less know why and how there are so many opportunities. Brazil is one of the largest consumer markets in the world, with a highly productive agriculture sector and a diversified economy, and it is the 7th economy worldwide and accounts for almost USD 3,0 trillion GDP (2014 basis).

According to consolidated data from the 1,000 biggest companies in Brazil produced by Valor Econômico (the largest local financial newspaper) in partnership with Serasa Experian and Business School FGV:

By the end of 2015, however, this table will be out of date because of a serious political and economical crisis. The GDP shall decrease as Brazil is facing a recession and investigations of corruption in the government.  It is directly affecting sectors like Gas & Oil and Electric Power (where there is government participation) as well as others such as Automotive and Construction & Engineering.

Still, there is some good news. The favorable exchange rate is making some companies take advantage and export more. In the domestic field, some companies expanded geographically and won market share as others decided to please class C consumers like some retail chains. Also drug retailers are thriving, particularly thanks to the aging population. Therefore there certainly are great opportunities of sourcing from Brazil at this time.

Supply Solutions 13 years experience has shown that Brazilian market has evolved fast. There is a comprehensive professional supply market available to meet demands in almost every segment. Most of them knows Strategic Sourcing Processes very well and already deal with customers using local or foreign SaaS solutions. It means that closing deals is becoming more professional over time.

There are still a lot of opportunities, of course. Many companies rode the successful wave of Brazilian growth during the periods of 2003-2008 and 2010-2013. Some grew very fast and others were born as a result of the merger or acquisition processes. The ones who seized the moment and improved their administration processes are now ready to face this complicated economic time.

There are however many that are facing difficulties and need to rethink their cost processes rapidly - but are still struggling to make a decision.  

The Brazilian government intervenes in business environment at its own convenience. It changes taxes and business rules, and creates an uncertain environment impacting on decisions companies have to make.  Even for multinational companies or highly professionalized local companies, decisions take more time because of the additional analysis that this uncertainty requires.

Local companies tend to be faster. They override this problem and just carry on. They tend to be smaller than their competitors and risk much more on almost all ways. The decision must bring quick wins and if not they just change it until they go right.

In summary it can be said that doing business in Brazil is not so complex - it just needs some knowledge about the business behavior and to be current about governmental measures on the sector - just like you need in any other country.