Introduction
The evolution of man has been supported by innovation and discovery.
- The invention of the wheel created a mobility that expanded regional boundaries.
- Water borne transportation opened unexplored horizons, enabling global discovery.
- Paper and ink enabled the sharing of information, although initially this was only available
to the privileged few.
The first true revolutionary technology, the printing press, unleashed a new age of discovery. The written word was now available to the masses—education created an environment where hierarchical structures were challenged and democracy was born. The core element that this technology enabled was mass communication. A phenomenon was expanded by other media, to include the telephone, the radio, television, and finally the Internet. Incremental innovation in the area of digitization has created a new dimension in the information revolution. The real virtuality of a connected global nation of individuals' has yet again created an environment where the hierarchical structure of nations and enterprises is in question.
Rather than fear the expansionist aims of commercial colonialism, the leaders of this new age are encouraged to explore the potential opportunities this creates. Corporate courage is required to face the future with honesty, recognizing that the business models of the past will not pass the test of time. The shifting sands of globalization have disrupted old boundaries, created new communities, and changed the perspective of a growing global community.
Recognizing that change is a constant is the first step to survival in this new economy. Identifying the changing nature of business partners—customers, suppliers, and service providers—is the second step. Finally, embracing change and developing a sustainable business strategy for a digital economy provides the final impetus for the future.
Information, in digital form, is the key to managing a new virtual world, where physical boundaries are transcended by the flow of data at the speed of light. Global communities of workers and consumers can be served from disparate global locations, through a network of manufacturing, distribution, and fulfillment entities. This new federation of enterprises' is a sustainable model for the future.
And the future is now!
Globalization—the new reality
It is official—globalization is alive and well and here to stay!
Actually, it has been here all along—we were all so busy with our regional issues, we failed to recognize that we have always been part of a global continuum.
The expansion of global products has created a homogenous youth culture—clothing, food, music—shared lifestyle trappings available through western branding. Digitization makes it possible to deliver music, video, and other communication media across the Internet, transcending physical boundaries. The world of commerce has a new dimension, a new language and a new set of rules for those who want to participate in this new age.
So what has that got to do with digital networks and data synchronization?
Consider the brief history of the world in the context of
global trade
It started when the first caveman decided to cross the mountain and discovered that there were people on the other side. Exchange of primitive goods and ideas enabled this early man to evolve into a species that harnessed the natural resources of the early times, nomadic tribes migrating across the four corners of the globe. Years passed and tribal cultures evolved into nations, with their own cultures and prejudices. Wars were fought and lands won and lost, creating the polarization of East and West, each convinced that they were the chosen, with a superior culture. Walls were erected to keep these cultures apart—both physical and cultural, lines drawn on maps identifying the boundaries created by man.
We are all aware of the first voyages of discovery by Western adventurers, crossing these boundaries and redrawing the maps in search of new lands and the extension of trade across regions. The wealth of these nations, in turn, created new markets—products that represented the cultures of the new lands were embraced by consumers in Europe and other Western' nations. Furniture, clothing, utensils, and food products from distant shores enabled an understanding of the people of the far off lands that created these items. Barriers that had once existed were slowly broken down and a global culture developed.
But still the nations of the world remained polarized—those that understood and embraced the richness of globalization and those who felt challenged by a universal culture and economy that did not take into account national, regional, and cultural differences. New languages emerged, as well as media to diffuse these across the geographical boundaries. The advent of the printing press was the first technology that enabled the masses' to have access to information in a format that was readily available. This created a medium that enabled individuals to learn and understand issues that transcended the boundaries of their immediate environment. This physical communication medium was enriched by the ability to communicate through verbal and visual tools, the telephone, the photograph, and ultimately the video technology that is globally ubiquitous. The pace of change that was facilitated by the communication media gained in momentum and speed. One of the by-products of this was the change in power—the leveling of the hierarchical structure of the haves and the have-nots.
There really are dragons out there—beware the Hydra—the many headed beast of turbo capitalism
The implication from a personal and religious perspective cannot be underrated—increasingly, nationalistic and religious fanatics are reacting to the new openness with aggression, as evidenced by the assault on western culture by Islamic fundamentalist leaders. And this is not limited to those on the lunatic fringe. Traditional governments are threatened by access to new ideas and perspectives, available to a growing population who traverse along the electronic highway National interests are overcome by individual aspirations, and ideological issues are subordinated by economic imperatives Television images of lifestyles beyond those that were taken as the status quo fueled economic growth of nations that had previously been satisfied to be carriers of water and hewers of wood. This global workforce embraced the tools of automation, creating new environments that enabled them to compete in a growing global economy. Trade between nations created polarization and authorities stepped forward to create boundaries where none had existed before—rules, regulations, and taxation were introduced to stem the tide of goods and services that was creating an increasingly homogenous global society.
Transcending boundaries through diffused information
The key to this information diffusion gained in importance as technology evolved, machines creating capabilities for humans to access and process data and new ideas. Innovation and productivity increased as a collective global wisdom translated new ideas and capabilities into products and services to meet the growing demand of consumers.
The personal computer created yet another groundswell in information diffusion—this accelerated as browser technology empowered users to make sense of the many sources of data that were now interconnected by the organic growth of the Internet. Implications of this increased digital brain' are far reaching. Unlike the industrial revolution that enabled the creation of products in a more consistent and high speed manner, the information revolution has created a truly new culture. An interesting side of this is the ability to share information in a networked manner, collective groups of individuals working collaboratively to design and deliver products and services irrespective of the place element. Global workforces can work in a true 24/7 manner, sharing ideas and translating these into goods and services at a rapidly increasing pace.
Aided by computer technologies, it is possible for global virtual teams to collaborate on the design of consumer goods, software products, and even life saving drugs. There is no limit to the potential that the combination of communication infrastructure and computing power has enabled.
Feeding the nations of the world— satisfying a universal intellectual hunger and thirst
The thirst for knowledge has created an energy in the nations of the world who want to learn more, to have more, and to share in the visions of prosperity made available to them over digital media. Self improvement is a constant mantra, shared by the workers once content to work for a rice bowl. And the spoils of the global economy are available to those who are prepared to work for them
It is no longer necessary to leave the shores of India or Vietnam in order to get a Western Education'—the passport to economic viability in a knowledge-based environment. On-line tuition and qualification enables those that toil in the factories in Asia and emerging economies during the day to gain new skills and capabilities by night. And the thirst for knowledge is surpassed by the drive to succeed. Unlike the youth of traditional western nations who take for granted the education systems and lifestyle that they consider to be their right, Asian scholars are prepared to sacrifice leisure time for the opportunity to move up a rung on the ladder of success.
The pendulum is swinging in another direction
Irrespective of the exciting and unlimited opportunities for the nations of the world that have been unleashed by the convergence of technologies, there are implications for those who have rested on their laurels' and assume that there is no end to the age of entitlement. Prices of consumer goods are in many cases going down—good news for those who are enjoying the added luxury of items that are now Made in China'—available at everyday, low prices. However, the workforces of the nations that are driving down the cost to manufacture, supporting the unstoppable trend to outsource' activities that historically drive national and regional economies, have access to a growing wealth of information and skills.
New paradigms—the end of the age of entitlement for the Western world
While the attention of many western nations was absorbed with regional and political issues, a sleeping giant arose and changed the face of global trade forever.
The combination of a disciplined nation of skilled workers, a government that writes the rule book to suit the moment, and a growing trend towards outsourcing, off-shoring, and cost reduction has altered the global status quo.
The China Factor—the unleashing of one of the oldest cultures in the world into modern times has created an overheated manufacturing frenzy. Factory cities erupt overnight, churning out clothing, electronics and household items in a 24/7 workplace. Natural resources of less industrious nations are supporting this explosive growth, creating shortages of steel, oil, and other commodities. Infrastructure is being put in place to support the flow of people, products, and cash, the new super power embracing capitalism with no holds barred. In contrast, traditional manufacturing nations are witnessing the closure of factories, distribution centers, and other evidence of their former glory. Unemployment rates are climbing rapidly in previously wealthy nations—students leaving university finding that the job market they thought would embrace them does not exist—they are finding that the positions they have trained for have moved off-shore'.
The compass does not matter any more—East is West and West is East—the globe is a continuum, which side is up?
The global demographic model has literally disintegrated. The World Wide Web has created a virtual geography. Activities that previously required travel, relocation, and physical movement of individuals in order to create teams and workforce units can now take place concurrently, with dispersed participants collaborating through a virtual workspace. An interesting thought—those that lament the fact that their jobs' have been outsourced and off-shored' are in fact in a unique position. It is not necessary for the brain trust of the Western World to stand on the sidelines and bewail the passing of opportunities—telecommunication capabilities and reduced costs have opened doors and borders, creating a seamless global community where the only boundaries are those that we create for ourselves.
Although most of the brick and mortar facilities that have literally moved off shore will never return, there are opportunities for knowledge workers located in Europe and the USA to join new teams and enterprises. This creates new opportunities for those who recognize them as such, traversing the electronic highway as commuters in a new age of employment.
The digital infrastructure that was the legacy of the dot.bomb era makes it possible for someone in Mumbai to assist travelers in the United States. Software engineers and designers based in Bangalore can collaborate with their global peers across broadband connection, eliminating the need for relocation to higher priced workspaces. Geographic boundaries blur.
The intellectual capital that has been so carefully nurtured by the Indian authorities has been enriched by education and research in the hallowed halls of the technical institutes of the United States. Graduates have returned to Bangalore and Mumbai, creating new entities that are building on the foundation of so called Western digitization, in many cases extending both the capabilities and rewards of existing technologies.
And this is not limited to high-tech industries—incredible advances in biotechnology are possible in an environment where innovation and creativity is not stifled by the prejudices of regional and national interests. An example of this type of breakthrough innovation was evidenced in May 2005 when a team of scientists in South Korea achieved breathtaking results' in their stem-cell research.
(Professor Song Chan-hun pictured at left)
Business models for a new age
This is truly a new age—an era where old values and measures have no place. Hierarchical structures based on privilege and tradition are irrelevant—this new age recognizes and rewards the individual, not the enterprise. Teams of individuals collaborate, creating new and exciting technologies, building on the open source concept where you take what you need and give back to the electronic community.
As traditionalists watch the structure of the old world crumble away, it is time to reevaluate old ways of thinking, and adopt a mindset that recognizes the freshness and energy of the new age of individual empowerment.
This, in turn, has changed the economic dynamic, with many technical implications. New skills have been learned, creating an economic force in countries that were not previously participants in the global economy of the past. These new age consumers have embraced the wireless world and web-based living spaces, exploring digital storefronts and creating a unique purchasing model.
New models for new consumers
The diffusion of technology has made it possible for individuals to surf the web' researching products and purchasing them, irrespective of supply location. These consumers never pass through the doors of the traditional brick and mortar store fronts, point of sale data does not exist at a tangible level. The point-and-click shopper of the future leaves a trail that is more valuable than those of the past. From a retail and manufacturing perspective, the focus needs to change from the product centric model—to the model with features and functions tailored to meet varying tastes through mass customization'.
A new approach, with the individual as the center of the process needs to be understood and adopted. Mass personalization' is achievable through rule and role based information systems, enabling those that satisfy demand for goods and services to skillfully create new value propositions for the market of individual consumers. The key to success in this new paradigm is information—deep, rich and specific information related to a global marketplace of individual consumers, all of whom have different wants and aspirations.
Building on the initial models pioneered by Amazon.com and others, it is possible to create an intimate relationship with individual consumers.
Irrespective of their geographic locale!
All this new technology and openness has vast implications for manufacturers and consumers alike. Data related to consumers and their potential buying behavior is available through data mining, cookies, and subliminal prompts. Shoppers can be recognized, their preferences known and catered for by a global community of brand masters, solution providers, and concierge type services. Mass personalization takes the concept of mass customization to a higher plane, the intersection of demand and supply creating an environment of total customer satisfaction. Exciting concepts—but is this real virtuality a sustainable model that the enterprises of the future need to plan for?
The answer is yes. With a twist—this new accessibility to information is bidirectional. Accountability and sustainable business models are creating new challenges for manufacturers and distributors alike. Corporate entities are also being watched by nations of consumers who use technology to communicate with peers, alerting them to products that are potentially harmful, either to users or to the environment. These silent lobby groups are a death knell to irresponsible manufacturers and their supply chain partners. In a reversal of roles, it is time for the seller to beware'.
Changes to consumer preferences, monitoring areas of potential risk, controlling the sourcing and manufacturing process, securing the supply chain—these challenges keep executives pacing across their board rooms in search of solutions.
The impact of this social and economic change should not be underestimated. The future is now and those who fail to recognize the implications of this change have no role to play in the new global economy. Old models are no longer applicable; those who fail to see the writing on the wall—or the digital equivalent—will be left in the wake of the economic tsunami of the new world.
This article is from Parallax View, ChainLink Research's on-line magazine, read by over 150,000 supply chain and IT professionals each month. Thought-provoking and actionable articles from ChainLink's analysts, top industry executives, researchers, and fellow practitioners. To view the entire magazine, click here.
About the Author
Carla Reed heads ChainLink's Global Logistics and Distribution practice. Ms. Reed brings deep hands-on experience, having design and managed numerous global distribution networks and warehouse facilities around the world. Before joining ChainLink, Ms. Reed founded New Creed, a business process and enabling technology consulting group which focuses on the global supply chain, linking evolving technologies and concepts to global business issues in existing and emerging markets. Ms. Reed was previously Director, Logistics Solutions for Sterling Commerce, General Manager, Sales and Marketing for Premier Freight, Johannesburg, South Africa; and has held various other positions in the international freight management area.
ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.