Supply Chains Are ‘Inventory in Motion’ – Rajesh Subramaniam

FedEx Senior VP, International Marketing, FedEx Services discusses supply chains and explains how access is enabling new players in the global marketplace.

December 2007

Tags: ,

Increased access to information and physical goods — the collapsing of time and space to deliver something into your hands — has really started to take shape in a truly global way. The benefits of Access have been accruing for 30 or 40 years, but it’s only been in the last decade that we’ve started to see a worldwide change in how and where people live and work, where personal opportunities are, and how companies are changing in shape and size because of it.

From a macroeconomic perspective, we can see that 30 percent to 40 percent of global GDP now stems from trade, a substantially higher percentage than just a few decades ago. This trend is inexorable, especially when it comes to high-value goods and services, which flow across borders easily. Supply chains have become much more efficient — they are really inventory in motion. If you have access to that inventory in the form of information while it flies across the sky in a FedEx plane, then you don’t really need warehouses.

It’s critical to understand the scope of the opportunities created by these changes. Although companies of all sizes have benefited, what’s incredible is the extent of the opportunity for smaller companies. By understanding the possibilities and taking advantage of them, small companies are using Access to enormous advantage and becoming bigger than at any point in history. For example, we now think of Dell as a large company. But from the beginning, what drove Dell’s rapid growth was its ability to use Access better than big competitors — to source monitors from one place, keyboards from another, CPUs from a third, and tailor them to the customer in record time. We see examples like this in all industries: Smaller companies are using Access to acquire new capabilities and create new business models, rather than merely perfecting existing ones.

The Global Startup

I remember when I was working for FedEx in Asia in the late 1990s, when e-commerce was just starting to blossom. My boss called one day, saying he had a friend in Singapore with a big problem. His friend had started his own business, and he’d been trying to market it to the locals. But then his first order had finally come in…from Austria. He had no idea what to do with that, and we helped him. The lesson is that every business today has a global market, whether you’re ready to tap into it or not.

We can take this idea further. Perhaps every company today, down to the tiniest startup, is a budding global company. Look at a company like Motion Computing, which makes a tablet PC used all over the world. Its manufacturing operations are in Shanghai while its headquarters is in Texas and its customers are scattered across North America and Europe, all of whom receive their orders directly from China. It’s all possible because of the rise in Access — everyone has the ability to build and manage a supply chain that spans the world, no matter where they started out or where their company is based today.

Organizations are changing shape to better pursue the opportunities that Access has created. The traditional model — with the headquarters in the United States and the manufacturing facility in Asia, serving customers worldwide — is one great way to do it. But there are others. We’re not just seeing U.S. companies become more global, but entrepreneurs everywhere — in China, India, Africa, South America and more — want a worldwide reach. We’re also seeing situations where companies are manufacturing pieces of their products across continents and bringing them together only at the last step, sometimes in a FedEx facility just before they’re sent to customers.

New Players Change the Game

Once again, these changes have a far greater impact on economies and societies than just a smoothly running supply chain. As more and more people have realized that the old barriers to entry have vanished, they’ve clamored to become players in the global marketplace.

I can give you another personal example: Two cousins of mine, a brother and sister, went to Harvard Business School and received their MBAs, along with some great job offers in America. They relocated to India instead. They started a company there that serves customers in the United States. They even bought a couple of companies in the States. At the age of 27, they have become a global company. When I was 27, I was just trying to land a job with a global company, not to become one myself. And all of this has become possible only in the last 15 years.

Through increased Access, people have become more global in general. I was born in India, worked in China, then in Canada, and now in the United States. I think I’ll become more of the rule than the exception. As people become more and more global in their mindset and transfer their skills across the world, this will become the norm.

Along the same lines, another growing trend is employees who work from wherever they want and live wherever they want, and there’s no “office” they report to every day, really. I’ve seen an increasing number of people do this, and it would never have existed without Access. People are now so mobile that there are many different concepts of an office for those in a “knowledge business.” There are networks of computers, telephones and temporary spaces wherever you go, and as a result, we’re seeing not just new companies and ways of working, but new environments and dynamics that never existed previously.

Add a Comment

Please note, your comment will not appear until approved, and all fields are required. Your email address will not be published.