September 2005 | Commentary | Supply Chain Technology

As the World Shrinks, The Supply Chain Grows

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In Detroit, the good old days of General Motors viewing Detroit-based Ford and Detroit-based Chrysler as its main competitors are long gone.

Even the days when Volkswagen and Japanese auto manufacturers became apparent competitors to the Big Three's largely myopic corporate managers have disappeared. These were days of nostalgia and naivete; a great deal else has vanished. Look at the Yankees. On second thought, don't.

Today, it's a new ballgame, played by a new set of rules, business parameters, and metrics. And the new equipment consists of wireless electronic technology, laptop and handheld computers, Internet services, and specific web-directed, web-enabled applications for supply chain management, warehouse management, product lifecycle management, and ERP.

A person sitting in a thatch hut in Sri Lanka, holding a PDA, can run a business based in Milwaukee.

In the good old days, most of us thought of personal computers as a way to automatically record our writing when we mastered Word, and our figures and accounting when we mastered Excel. And of course we played our games.

We were also intrigued, at first, by our new ability to save and print data in ways far more efficient than we had in the past. It seemed a miracle, and to a degree it was. More miracles were to come.

Graphics soon became dominant. Then, as the Internet branched out from universities and government and consumed us all, computer use changed dramatically.

Hooked on Information

What was once merely a processor became a communicator, a research tool, and a business process controller. We were not just extended, we were hooked deeply into a world of information that is able to deliver both the research of the ages and information of the very minute.

We can hardly remember how we worked, or what we worked with, before these tools, networks, and systems. Did we work? The computer is no longer an object, a box on the desk; it is an available network to connect to. Writing and figuring have become second- or third-tier functions.

It is not merely that we can be anywhere, such as Sri Lanka, and function; we can be in motion in Sri Lanka and function well. We are functional without being rooted in an office or specific place. Real estate has little to do with getting business done.

Having a huge and impressive office means nothing when push comes to shove, or when push transforms into a company's demand-driven supply chain or logistics strategy.

We now know of demand from suppliers, customers, and associates electronically, and can react to it from anywhere, at any time, with complex responses that can be hooked to a data warehouse. The same warehouse or database that keeps our records may hold the data for an outsourced manufacturing operation. And, its attendant software can, with minimal help, keep manufacturing the goods while we surf the web, or surf the waves.

Globalization is by no means a simple concept. Columbus shrunk the world, as did the Wright Brothers' machine. Their shrinking is infinitesimal when placed alongside the Internet and the wireless technology we use to connect to it.

The opportunity to develop and maintain collaborative partnerships with whomever we want, at any point on the globe, is the greatest change brought about by the Internet. We now are able to tune into talent, bargains, assets, and markets never dreamed of in pre-Internet times.

The enterprise's playing field has been leveled in a way we hardly expected. Nationalism, geography, and distance have less and less bearing on the organization and execution of business processes. In these terms, the supply chain becomes not merely an adjunct to business, but its lifeline and greatest opportunity.

Tommorow's Leaders

Some companies have embraced this new world with great energy. In retailing, Wal-Mart remains a leader. It sources where it wants, what it wants, and places strict mandates, such as RFID, on its vendors in order to know where goods and products are. Wal-Mart also has embraced the use of modern distribution centers as the stage upon which its business processes succeed.

In manufacturing, Hewlett-Packard organized its server product in Houston, developed it in Singapore, and engineered it in Taiwan. The company sources server parts worldwide—from China, India, and Australia, among other regions.

And Apple designs its newest products in the United States, sources parts globally, and outsources manufacturing.

Need I mention Dell? Dell doesn't manufacture anything; instead it embraces a philosophy of demand logistics that satisfies customers with products assembled from global parts. Wal-Mart, Hewlett-Packard, Apple, Dell—these companies, and others, are today's models for tomorrow's enterprises.

Today, the game is to see your own operation, your own market, and your own logistics strategies in these new terms. Companies that intelligently move into this new environment will become the leaders of tomorrow. They will have the advantage of world resources, world-based collaborative partners, and a world-class supply chain that executes globally and functionally.

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