The Playing Field Is Being Leveled

Recently read a very insightful and informative book on Globalization 3.0 named ‘The World Is Flat.’ The first chapter of the book has a description of Bangalore, India describing it as India’s Silicon Valley with presence of companies like IBM, Microsoft, HP, Texas Instruments etc. Further the author talks about the ultra modern Infosys campus with its state-of-the-art technology global conferencing center with the help of which Infosys can hold a virtual meeting of the key players from its entire global supply chain for any project at any time on a supersize screen. Reading all this description on India in the very first chapter of an International bestseller should make Indians extremely proud.

The book by Thomas L. Friedman analyzes globalization, in the early 21st century. The title is a metaphor for viewing the world as a level playing field in terms of commerce, where all competitors have an equal opportunity. Countries like India are now able to compete for global knowledge work as never before. It gives a whole new meaning to the phrase, ‘the playing field is being leveled.’

Freidman has described 10 ‘flatteners’ that have flattened and are still flattening the world even as we speak. Few of the flatteners which I personally found very interesting to learn about are as follows:

Open Sourcing - Self-Organizing Collaborative Communities

Describes shareware programs which are developed by a bunch of geeks working online in some kind of chat room. He talks about the open-source movement, which involves thousands of people around the world coming together online to collaborate in writing everything from their own software to their own operating systems to their own dictionary to their own recipe for cola-building. The word ‘open-source’ comes from the notion that companies or ad hoc groups would make available online the source code - the underlying programming instructions that make a piece of software work - and then let anyone who has something to contribute improve it and let millions of others just download it for their own use for free. According to the author, the geeks do it for the psychic buzz that comes from creating a collective product that can beat something produced by giants like Microsoft or IBM, and even more important - to earn the respect of their intellectual peers. This seems to be a powerful movement. If given a proper direction might give the Microsofts of the world a run for their money.

Outsourcing

Outsourcing means taking some specific, but limited, function that your company was doing in-house - such as research, call centers, or accounts receivable - and having another company perform that exact same function for you and then reintegrating their work back into your overall operation. This section mainly describes the growth of outsourcing in India and how over capacity in fiber optics, created during the dot com bubble benefitted India. Talks of how India’s education system has finally paid off resulting in a rich pool of talent which now India can use to its advantage. The opening up of the economy in 1991 further boosted India’s growth. The Y2K crisis proved to be a great opportunity for India. The Y2K upgrading work was humongous and tedious. India with its ample of software engineers from the IITs and private colleges was in the perfect position to carry it out. Y2K introduced India to the rest of the world. Since then there has been no looking back for India.

Offshoring

Offshoring is relocation of a company's manufacturing or other processes to a foreign land to take advantage of less costly operations there. This flattener is mainly related to events in China. China's joining the WTO took Beijing and the world to a whole new level of offshoring - with more companies shifting production offshore and then integrating it into their global supply chains.

Supply Chaining

The author states Wal-Mart to be the pioneer in building an extremely efficient supply chain with 108 distribution centers around the US serving some 3000 Wal-Mart stores. While other retailers guarded information, Wal-Mart shared it. Wal-Mart approached its suppliers as if they were partners. By implementing a collaborative planning, forecasting, and replenishment (CPFR) program, Wal-Mart began a just-in-time inventory program that reduced carrying costs for both the retailer and its suppliers. In its supply chain innovation it has introduced RFID tags to replace barcodes.

Insourcing

Heard of United Parcel Service (UPS)?? This company and more like it are no longer only delivering packages. They are in fact managing the global supply chains of companies both large and small. For example, if you own a Toshiba laptop computer that is under warranty and it breaks and you call Toshiba to have it repaired, Toshiba will tell you to drop it off at a UPS store and have it shipped to Toshiba, and it will get repaired and then be shipped back to you. But here's what they don't tell you: UPS doesn't just pick up and deliver your Toshiba laptop. UPS actually repairs the computer in its own UPS-run workshop dedicated to computer and printer repairs at its Louisville hub.

For years, the bane of most Ford dealers was the auto maker's ultra slow system of transporting cars factory to showroom. Cars took as long as a month to arrive, that is, when they weren't lost along the way. And Ford Motor Co. was not always able to tell its dealers exactly what was coming, or even what was in inventory at the nearest rail yards. After UPS got under Ford's hood, UPS engineers redesigned Ford's entire North American delivery network, streamlining everything from the route cars take from the factory to how they're processed at regional sorting hubs - including pasting bar codes on the windshields of the 4 million cars coming out of Ford's U.S. plants so they could be tracked just like packages.

Insourcing is different from supply chaining because it requires a more intimate kind of collaboration. ‘This is no longer a vendor-customer relationship. We answer your phones, we talk to your customers, we house your inventory, and we tell you what sells and doesn't sell. We have access to your information and you have to trust us. We manage competitors, and the only way for this to work, as our founders told Gimbel's and Macy's, is “trust us.” I won't violate that. Because we are asking people to let go of part of their business, and that really requires trust.’

By Sakshi Prakash

Ref.: The World Is Flat by Thomas L. Friedman