Wrinkling out the world to be ever so flat

With a vast array of large companies moving their factories to China where labor and healthcare are cheaper, its no wonder that offshoring has been so good for companies to lower the cost and in return lower their price to the consumer. But ask yourself why is it different than outsourcing, which they were doing before? It’s simple really! Outsourcing is taking something that you make and sell and paying someone else to make it for you. So they could pay less to the factories in China than the ones they owned in the US. But with offshoring its taking the factories that you own and moving all the equipment to some place overseas. The company still owns the factory instead of paying another company to do the work for them.  This allows them to still control their chain of supply. But as far as chains of supply go no one has found a better way to do it than a company that started Arkansas, and has spread all over the world. That company is Wal-Mart. This company knew the only way to sell items cheaper than their competitors was to get it cheaper. This started with them cutting out the middle man and buying direct from factories and setting up their own distribution centers. Then having the same truck that taking items from those centers to stores driving a little more to pick up the items at the factories cutting the delivery cost. Then introducing a system that shares sales with the manufacturer so they know when to up production and when to slow down so that the right amount of any given product is on the shelf. All these, plus many more have cut the cost of doing business. Which in turn Wal-Mart has used this tactic to under sell the competition and drive them out of business. This has changed how all companies are working to the point that others have even tried to mimic Wal-Mart and their chain of supply. But Wal-Mart’s supply chain is not the only factor that’s had an impact on business. Another force that made companies change is Google. The way that a consumer can look up info on anything they want in so many different languages has made the consumer an intelligent well informed buyer and able to find the product at the cheapest place, while the book doesn’t go into detail on this, many stores like Wal-Mart have to price match on-line stores found on Google. Google helps the buyer in multiple ways, you can read the reviews left by people who have purchased this product, find stores in your area that carry the product and which one has it for the best deal and finally they will even give you a map and directions on how to get there.

The digital age has made great improvements to the way we work.  However, this was not always the case.  When companies first utilized computers, it made individual departments work better within themselves, but the programs within the company departments did not interface.  This slowed the individual departments because they had to wait for the paperwork to be physically shared before they can continue working.  This caused a need for programs to be written in a way that they could understand each other.  For this to happen a set of standards were created so all programs would read and write information in a form that they could all understand. These standards created workflow software, a program that enabled a project or design started in one department to be continued in another until a finished product was sold whether they were in the same building or on the other side of the world. I currently work in the Air Force and we use a program called share point and Combat Ammunition System (CAS).  Both allow us to share everything we do with every other base.  Share point is a simple database to track who is at work, out sick, etc. as well as the status of equipment, no matter where it may be.  Then CAS is another program that tracks our munitions and create shipments, requests, and inventories world wide in real time.  These work flow programs created something that also helped the digital age.  The standard that allowed programs to share and manipulate the same information, also allowed a community to create something together.  This open forum created new programs were the code itself is shared for all to see. This community of programmers comes together to create something that is better than what is out there already.  The main example of this that I knew reading the textbook was Linux.  I think the idea of a free OS is great and I currently run Linux on my desktop plus I am a little bias and not a fan of Windows.  Every time I see a “new” feature to their OS most of the time, it’s a copy from Linux. Why you may ask, the open source allows user/programmer to see something that they think would improve the system and make it easier for all.  With the code available, the new lines of code for the improvement can be written in and then uploaded for all as soon as its done. Instead of having, to submit a comment to the company and waiting for them create “new” features into the next version and charge for it.  Open source allows for constant upgrades without the need to create enough add-ons to be worth it for the consumer to purchase. The same thing goes for my iPhone, I jail broke (unlocked) it to be able to access other market besides the one apple approves of.  I noticed the community came out with new features that made to phone better and simpler to use then months later an update would come out and have a lot of the same features built into it.  While the updates were free, they would not happen as fast as the community would. 

The world of outsourcing has changed they way products are sold. It allows companies to have factories in other countries where cost of living is cheaper allowing for lower wages.  Lower turns into lower cost of production allowing for lower final cost to the consumer or bigger profit for the company if savings are not trickled to the consumer.  The book shows how an accountant in India is paid about $100 US a month to do American taxes.  So a company such as HR block could collect all your info and email it, then have the taxes done over night with the time change.  So the person collecting your info is paid a small amount compared to an accountant in US to collect your W-2s and email them to someone around the world who processes them and sends it back. This person is paid a fair wage for their countries standards, but it is even less than the person that collects the info. Creating the one thing every business owner wants high profit margins.  Another example of this would be small hospitals that cannot afford to have a radiology specialist doctor on every shift.  They can out source the consult with the nightingale company.  Allowing a small hospital to email the MRI, cat scans or any other images to a doctor on the other side of the world to look at it and give the general physician a consult based on an image that was emailed to them without ever needing to see the patients themselves.

 

The flatting of the world is an interesting metaphor, but one that works for this story. While the earth maybe be round and will never really flatten out, the advancements made by the different generations have leveled the playing field as Friedman points out in his book.  With information, being transferred just as fast as it is created the world is now without dividers, walls, or distances that once stood in the way. The fact that computers have allowed people to share their own content with everyone has made it so that everyone and anyone could publish their ideas to the world.  A feat that in the past could not be accomplished with out the big companies help, which never came cheap.  However, the World Wide Web and the Internet have made it so that anything and everything can be shared easier and faster.  It has changed the way we live and the way we work.  These changes could not have occurred without the work that of great minds.  One grand thing that allowed the spread of ideas to happen so easily was the creation on Netscape.  While the Internet was around and in use before the creation of this revolutionary program, it was limited to the nerd’s and geeks that fully understood Internet protocol on limited networks.  This program allowed information to spread easily, so whether you knew the computer that you where trying to get it from or not it was accessible.  Netscape allowed more people to get info with simple a search feature.  This made it that anyone with access to a computer could do a quick search and get the information they were looking for.  Further making the world a small flat even playing field, that anyone could step up and quickly make themselves globally known. Friedman points to a good example of this with the self made news networks.  Bill Ardolino from InDC Journal created his own page and posts stories himself and has people logging into to his page to read his views on stories as well as his interviews.  The best part about this is that he was able to do the entire thing with a minimal set-up.  Just a simple MP3 voice recorder and the camera on his cell phone, and this is when this book was written.  Now someone could do the exact same thing with the standard recording app that come on the iPhone and Androids and the built in camera that gets better with every new model.  The spread of knowledge did not start with the web or the Internet though, one great big break though for knowledge was just that a break in the wall.  The falling of the Berlin wall did more than just reconnect a city.  It showed a communist half the ideas of freedom and democracy.  These ideas took root and caught on like wild fire ultimately ending the USSR. Again, these ideas could not have happen without out prior globalization.  As Friedman describes there were three eras of globalization and he breaks them down as 1.0, 2.0, and 3.0.  The first, 1.0 started with Columbus setting sail in 1492 with his three ships.  Shrinking the world from large to medium then came 2.0 that was from1800 to 2000 where it shrank again from medium to small.  The key factors in this era were the multinational companies and advancements like the steam engine, telegraph, phones, PCs, etc.  Finally was globalization 3.0 which differs from 1 and 2 in that it empowered the individual to be able to do everything that was done by the big multinational companies from 2.0 with the help of programs like Netscape.