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October 2, 2007

Flattener #8: “Insourcing”

Filed under: Uncategorized — yoddha @ 8:01 am

Friedman, using the examples of Toshiba Laptops servicing and Papa John’s Pizzas, explains the meaning of this flattener first. Consider a small company which wants to reach its global customers but can not afford a complex global supply chain. Also consider a large company which wants to concentrate only on its core competency rather than supply chain. Such companies take the help of logistics managers such as UPS (United Parcel Service) and FedEx. This kind of third-party collaboration requires intimate association between UPS, its clients and its clients’ clients to create value for the company. In this relationship, UPS engineers analyze your company’s manufacturing and delivery processes and then redesign and manage whole supply chain.

This is a huge flattener because it makes small companies become big and thus levels the competitive field even more. Again, it helps big businesses become small by reducing the delivery and the processing time for goods. Friedman explains this collaboration again by giving example of eBay Buyer, PayPal, UPS and eBay seller.

UPS today has research division for new innovations. It has meteorologist and threat analysts to prepare the team in advance. It has a finance arm to help small business grow. It is the largest private user for Wireless technology. The evolution of ‘End of Runway Services’ (Bring the differentiating factors into the end of supply chain so that it provides full value to the customers) has played a big role in introducing this flattener.

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