Supply chain leaders come in all forms.
Josh Meyer, writing in Quartz, pulls some supply chain-building insights from Joaquin “El Chapo” Guzman Loera, the head of Mexico's notorious Sinaloa Federation. Meyer introduces us (or at least me) to a new phrase, “deviant globalization,” coined by historian Nils Gilman and the co-editors of a 2011 book on the topic, Jesse Goldhammer and Steven Weber. From the article:
They describe a hidden and powerful underground economy that is growing globally at twice the rate of the legal economy. This vast commercial underworld rewards those who combine traditional business skills with the ability to operate in the spaces between the laws and enforcement agencies of various countries.
Meyer leans on a fascinating report from West Point's Combating Terrorism Center. It offers, among other things, insights on pricing dynamics in that particular supply chain:
The nature of cocaine as a product adds a significant amount of risk during transport, and the price of this risk is then passed along to the final consumer. For example, a route from Colombia to France increases the price for a pure kilo of cocaine significantly. There is a risk to move the cocaine out of Colombia and into Central America, likely Honduras, where it is stored until Guzman's men are ready to move it to Mexico.
Once the cocaine enters Mexico, it takes another jump in value due to the 'market pressures' of government and rival action. The kilo then makes a significant jump in price when it moves from Mexico into the European Union through West Africa, or perhaps Spain, and finally again when the sales price is placed in euros, not dollars. In some cases, the exchange rate increases the value; in others, such as in Australia, the street price of a kilo of pure cocaine is so high that exchange rates have little impact on the business decision to transport cocaine across the Pacific.
Wow. And you thought pricing components was tough!
The difference between El Chapo's supply chain leadership and leadership in the commercial world is pretty clear: In our world, we give out industry awards; in El Chapo's you become Public Enemy No. 1 and often end up riddled with bullets.