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October 2, 2007

Flattener #7: “Supply-Chaining”

Filed under: Uncategorized — yoddha @ 7:33 am

Supply Chaining is a method of collaborating horizontally – among suppliers, retailers, and customers – to create value. It is a huge flattener because as supply chains proliferate, the acceptance of standard protocols between different units increases. It helps bringing different companies to the same level.

Giving the example of the “Wal-Mart Symphony”, Friedman tells us how a company which does not produce any goods of its own has used new technologies and become the biggest retail company in the world. Any supply-chain unit has to face two major challenges – finding reliable, low cost services and predicting the customer demand in advance. Wal-Mart faces this challenge by replacing inventory with information and ensuring that with modern technology innovations, mobile and efficient communication is maintained between different parts of the supply-chain.

Latest introduction to Wal-Mart chain is RFID (Radio Frequency Identification) chips which, at any time, tells the status of the item it is attached to. It tells the expiry time, current status in the supply chain and so on.

Unfortunately, the same factors that helped Wal-Mart improve constantly got it into trouble recently. Wal-Mart’s collaboration with Chinese rather than American companies, its labor rules and other reasons have helped flattening the world but also led it into receiving end sometimes.

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