The Supply Chain of Cocaine - Essay Example

?The Supply Chain of Cocaine Table of Contents 0.Introduction 3 2.0.Overview of the Supply Chain in Cocaine Industry 4 3.0.Participants in the Supply Chain of Cocaine Industry 6 4.0.Effects of the Supply Chain in Cocaine Industry on the Nations 12 5.0.Conclusion and Recommendations 14 6.0.Works Cited 15 1.0. Introduction Cocaine was discovered in 1880s when a chemist of Germany named Albert Niemann extracted cocaine hydrochloride from the plant coca. Initially the drug was being utilized for surgery purposes in medical science. Within a few years, the production of Cocaine expanded to large agricultural business that subsequently led to the formation of Cocaine industry. In due course of time, the use of Cocaine evolved as a stimulant drug being used by various un-prescribed and unauthorized purposes resulting in many social and medical problems. The supply chain through which Cocaine is delivered all around the global as well as national markets comprises of manufacturers, distributors, retailers and customers. But due to the inclusion of traffickers that consequently increased legal barriers, the supply chain of the industry emerged to be complex and too challenging to be managed effectively (Karch, S. B., “A Brief History of Cocaine: From Inca Monarchs to Cali Cartels: 500 Years of Cocaine Dealing “). This paper will focus on providing with a comprehensive and elaborated description of the Cocaine industry in relation to its supply chain system. With this concern, the discussion of the paper will focus on the participants engaged in the supply chain of the industry along with the factors that tend to have a significant impact on the entire system. In addition, the current trends in the supply and demand for Cocaine will also be discussed in this paper. 2.0. Overview of the Supply Chain in Cocaine Industry The cocaine industry operates fundamentally in export-oriented markets, i.e. cocaine is principally produced for the purpose of export in other countries. The industry came into being after the invention of cocaine in the 1980s which was followed by huge demands in the pharmaceutical and chemical industry as well as in the stimulant drug market apart from heroine. The supply chain executed in the industry from the traditional period has been quite complex, cost consuming as well as time consuming majorly due to the lengthy process of travelling engaged with the distribution of the product. For instance, the coca leaves are cultivated in one location, i.e. the remote regions of a nation and are processed into coca base in other locations which are basically the urban and rural areas. These processing areas are also used for its storage. Similarly, until and unless the cocaine is received by the end customer, it travels through many places for storage and also for transportation (Castells, M., “End of Millennium”). One of the major differences between the structure of supply chain in the cocaine industry and that of the other industries can be observed as the inclusion of the financial experts in the trade dealings of this industry. These financial experts are engaged for handling the generated money from wholesale transactions of cocaine and are responsible for banking, handling drug profits and its laundering. Financers engaged with this industry, generally assure that a profit earned, is reinvested in the cocaine industry (Iron Crown Enterprises Staff, “An Eye for an Eye”). Although the major activities of the industry are handled by traffickers but the finances, the profits and the investments are tackled by the agents (Castells, M., “End of Millennium”). Cocaine industry involves high risk in its supply chain management. These can be illustrated as the market risks, business risks and operational risks. Market risks are caused due to the fluctuations in the ‘supply and demand’ flow of the industry. Due to the enforcement of strict legal measures in the manufacturing nations, the supply of cocaine has often been witnessed to fall without any prior information. Moreover, as an agricultural product, the production process also depends largely on the geographic factors. Similarly, the demand for cocaine also varies on the basis of social development in particular regions along with the spending capacity of the retail customers in the street-level markets. The business risk in the cocaine industry emerges due to elimination of proper strategies in segregating cash from the quantity of drugs. However, the highest and most influential risks involved with the supply chain of cocaine industry are the operational risks. These kinds of risks basically emerge due to legal barriers. Risk to reputation as a dealer and credit risk are also considered to be significant due to the unstructured configuration of the industry and also due to the unethical practices executed by the distributors in overpowering his competitors (Wilson & Stevens, “Understanding Drug Markets and How to Influence them”). 3.0. Participants in the Supply Chain of Cocaine Industry A supply chain is often defined by experts as a process involving various participants with the intention to deliver the product to its potential market. In other words, it is demonstrated as a network that facilitates the manufacturers to deliver the products to the ultimate customers and thus acts as a significant component in the industry relations (Hugos, M. H. “Essentials of Supply Chain Management”). The supply chain in the cocaine industry also acts as a network that relates the manufacturers of the product (cocaine) with the ultimate customers. The major participants engaged in the supply and distribution of the product in the Cocaine industry, are the manufacturers, distributors, retailers and the ultimate customers. With the inclusion of these participants, the supply chain of cocaine industry can be noted as composite involving various phases (Iron Crown Enterprises Staff, “An Eye for an Eye “). 3.1. Manufacturers The manufacturers of Cocaine can be recognized as the laborers and the processors engaged with the cultivation of the product from coca leaves. The laborers engaged in the production are generally small groups of peasants. Notably, the product is principally manufactured in remote areas. The collected coca base from coca leaf by the laborers is transported from the villages to laboratories where the raw materials are processed to cocaine hydrochloride. These processing laboratories are generally located in urban areas but can also be located in rural regions (Iron Crown Enterprises Staff, “An Eye for an Eye “). The major manufacturers in the industry are located in Columbia, Bolivia and Peru with the processing laboratories, for conservation of coca base, are located in Venezuela, Colombia and Brazil (Zaitch, D., “Trafficking Cocaine: Colombian Drug Entrepreneurs in the Netherlands”). This can be well explained through the diagram below. Figure 1: Major Manufacturers of Cocaine Source: (UNODC ARQ, “The Global Cocaine Market”) 3.2. Distributors The distributors engaged with the cocaine industry’s supply chain are often termed as traffickers. The main intention of these distributors is to deliver the processed cocaine products to the retailers from where the product can be rendered to the ultimate customers. The packages are carried on burlap sacks to a storage house often located near an airstrip or a sea port which is termed as ‘stash house’ (Gereffi, G., “Commodity Chains and Global Capitalism”). The distributors’ groups are divided in three categories, i.e. the international wholesalers, the national wholesalers and the local wholesalers. The international wholesalers intend to consume the product outside the native country with the purpose of selling those within the native country. Similarly, the national wholesalers are engaged with buying the products in bulk from the international wholesalers and manufacturers as well as processors operating within the country and sell them all over the nation. Local wholesalers are comparatively small distributors engaged with the bulk buying and selling of Cocaine in a specified geographical area (Wilson & Stevens, “Understanding Drug Markets and How to Influence them”). South America is regarded to be a major supply source and North America is regarded to be the major demand source of cocaine. Various ways of transportation were traditionally used for the supply of cocaine including roadways, human carriers and airways. But in the contemporary age, waterways are termed to be the most beneficial transportation modes for the distribution of cocaine all around the world (Castells, M., “End of Millennium”). The fact can be apparently observed from the diagram represented in the next page: Figure 2: Global Distribution of Cocaine Source: (UNODC ARQ, “The Global Cocaine Market”) 3.3. Retailers It has been witnessed that the retailers in the industry often tend to hire cocaine traffickers for the transportation purpose. In cocaine industry, the retailers are the main sellers to the street-level cocaine users. These retailers in the cocaine industry are majorly observed to operate only in one or more specific local markets in a nation. It is worth mentioning that the retailers in this industry play a significant role in determining the ultimate price for the product. In other words, the costs through which the product is availed by the retail customers are determined by these retailers on the basis of the risk and complexities faced by them in delivering the product. In major markets, it has also been observed that the retailers are directed by the distributors operating in international, national or in the local markets so as to reduce the costs engaged in the broadened supply chain of the cocaine industry, especially in terms of commission (Wilson & Stevens, “Understanding Drug Markets and How to Influence them”). 3.4. Customers The customers engaged in the cocaine industry tend mostly to be the young generation people belonging to rich families. Mid-aged people are also witnessed to take cocaine in large amounts. Studies have revealed that majority of the retail customers in the local markets are between the age group of 12 to 17. This certainly indicates the use of cocaine as a stimulant drug is quite hazardous for the socio-economic sustainable growth of any nation. It is in this context that the trafficking of cocaine is obstructed through the enforcement of strict legal barriers in almost all the countries all around the world (National Institute of Drug Abuse, “Cocaine”). The demand for cocaine in the global market has been witnessed to grow rapidly over the past few decades. The government records maintained top monitor the consumption of cocaine by the retail customers in the global market reveal the there has been a constant rise in the purchase quantity of the product in almost every country where the majority of the customers tend to include in the group of 15 to 17 year age (UNODC ARQ, “The Global Cocaine Market”). Figure 3: Growth Rate in the Retail Consumption of Cocaine in the Global Market Source: (UNODC ARQ, “The Global Cocaine Market”) 4.0. Effects of the Supply Chain in Cocaine Industry on the Nations The supply chain of cocaine industry has an adverse influence on the economy’s social and economic growth at large. The cultivation of coca for the manufacturing purpose of cocaine tends to clear crop fields and forests resulting in deforestation which in turn cause a negative impact on the environment. The cocaine industry affects the environment usually in four ways, such as deforestation, soil erosion, destruction of habitat, as well as air and water pollution. The pollution created by this industry for the production purpose also affects the health of the people residing in the nation and thus hampers the sustainable growth of the society. Moreover, as young people aged between 12 to 18 years are mostly engaged with the consumption and usage of cocaine, it also tends to infringe the future growth prospects of an economy (Clawson, P. & Lee, R. “The Andean Cocaine Industry”). This industry engages huge outflows and inflows of ‘black money’ which create difficulties in terms of financial control for the government. The transactions in cocaine industry are mostly conducted in US Dollars rather than in local currencies. It has been observed in this context that higher the utilization of Dollars, the lesser the use of national currency which results in the degradation of the financial structure in an economy. Moreover, the policies formulated by the government are generally not followed by the cocaine industry where the distribution is conducted in an unethical and illegal manner, thus hampering the democratic and republican view of the nations. It is due to these reasons that in recent times, the operation of cocaine industry is stated to be strictly against the law and has emerged as a vital political issue for governments in various economies (Clawson, P. & Lee, R. “The Andean Cocaine Industry”). To be precise, the supply chain in the cocaine industry influences the national economy of a country in three ways. Firstly, the cocaine industry promotes and enhances speculative investments in industries but simultaneously raises the inflow of ‘black money’ in the country. Secondly, it leads to fall of the traditional and own currencies as the cocaine trade involves transaction in Dollars. In other words, one of the major consequences led by the supply chain of cocaine industry is the problem of currency revaluation that causes the risk of declining value for the national currencies (Clawson, P. & Lee, R., “The Andean Cocaine Industry”). Prior studies have also revealed that the use of cocaine as a stimulant drug causes various in social issues including criminal activities, deterioration of families and work life, and other modes of violence. The growth of cocaine manufacturing and distribution worldwide tends to attract the young generation which further leads to increase in death rates across the country. The diseases caused by the un-prescribed or unauthorized use of cocaine are cancer, chronic respiratory problems, loss of sense of smell, HIV/AIDS and other blood-borne infections which affect the life of the people and their communities concurrently (Clawson, P. & Lee, R. “The Andean Cocaine Industry”). Considering the above mentioned facts, it can be stated that the supply chain in the cocaine industry not only affects the economic growth and its financial structure, but also tends to hamper its social development to a large extent. 5.0. Conclusion and Recommendations Cocaine was initially utilized for medical purposes, but nowadays it is being over consumed as a stimulant drug. Cocaine industry engages itself in a complex and lengthy network as its supply chain involving manufacturers, global, national and local distributors, retailers and the customers. Therefore, the supply chain network of cocaine industry is scattered worldwide connecting one manufacturing unit with the consumers of other nations. The supply chain in cocaine industry engages a lot of people and locations as well (Piers, C., “Personality and Psychopathology: Critical Dialogues with David Shapiro”). The cocaine industry is observed to be ruining the life of the people i.e. who are engaged in its production and consumption of the product to a large extent. The consumption of cocaine can lead to certain diseases including heart diseases and lung diseases which in turn degrade the social health of an economy to a large extent. Considering these consequences of the supply chain in the cocaine industry, the government of the nations, recognized to be the major markets of cocaine, should implement effective laws and policies so as to prohibit unauthorized activities of the industry. The citizens or the common people of a country can also prove to be quite beneficial in controlling cocaine trafficking to a large extent. The government should implement various education and training programs for youth as well as less educated people that can assist in generating their awareness regarding the consequences of consuming cocaine. This shall also reduce the consumption and the production quantity of the product at large (Hartman, D. E., “Neuropsychological Toxicology: Identification and Assessment of Human Neurotoxic Syndromes”). 6.0. Works Cited Clawson, Patrick. & Lee, Rensselare W. The Andean Cocaine Industry Palgrave Macmillan, 1998. Castells, Manuel. End of Millennium Wiley-Blackwell, 2000. Gereffi, Gary. Commodity Chains and Global Capitalism ABC-CLIO, 1994. Hartman, David, E. Neuropsychological Toxicology: Identification and Assessment of Human Neurotoxic Syndromes Springer, 1995. Hugos, Michael H. Essentials of Supply Chain Management John Wiley and Sons. Iron Crown Enterprises Staff. An Eye for an Eye Univ. Press of Mississippi, 2011. Karch, Steven B. A Brief History of Cocaine: From Inca Monarchs to Cali Cartels: 500 Years of Cocaine Dealing CRC/Taylor & Francis, 2006. National Institute of Drug Abuse, “Cocaine”. November 25, 2011. US Department of Health & Human Services, 2010. Piers, Craig. Personality and Psychopathology: Critical Dialogues with David Shapiro Springer, 2010. Stares, Paul B. Global Habit: The Drug Problem in a Borderless World Brookings Institution Press, 1996. Wilson, Laura & Stevens, Alex. “Understanding Drug Markets and How to Influence them”. November 25, 2011. The Beckley Foundation Drug Policy Programme, 2008. UNODC ARQ. “The Global Cocaine Market”. November 25, 2011. World Drug Report, 2010. Zaitch, Damian. Trafficking Cocaine: Colombian Drug Entrepreneurs in the Netherlands Springer, 2002. Read More