World Trade - October 2008 - (Page 41)

sized U.S.-based firms hoping Still, those who to date have to improve their supply chain been reluctant to dip their toes arrangements. Monica says, “I have into international waters may be a sense for their level of sophisticaﬁnding some justiﬁcation in their tion. Some smaller owners have an hesitation. The soaring price of entrepreneurial sense about them; fuel and the dropping U.S. dollar the reason they embark on this have combined to bring about a business opportunity is because of near-doubling of the cost [in U.S. globalization and what they think dollars] of moving a container they can leverage. Then there are from Asia to a North American some who have been established port. Noting this, Paul Dittlonger and they are most parochial mann—a University of Tennessee in their line of thinking.” professor who is a supply chain Monica makes his point with advisor to numerous U.S.-based a football analogy. He once asked enterprises—suggests that U.S. his brother, who played college ﬁrms may respond by reining in ball, how big the ideal college tight their supply chain commitments. end would be. Monica says he He cites one toy manufacturer “Small players are expected an answer of something with whom he works, a $700 millike 6-foot-4 and 230 pounds. lion enterprise that aggressively wrong if they don’t Instead, his brother said, 50 feet outsourced its production to tall and 2,500 pounds. The point, think that opportunities China. Facing burgeoning long he says, is that many remain too distance costs, that company is inclined to think in terms of their now thinking: Might Mexico be exist to capitalize on previous experience. a better option? Monica adds, “A smaller enterThe shift in fuel costs and the globalization to improve prise is right to think that globalfall in the U.S. dollar have been their business.” ization is driving the big players. quite sudden by the standards of But they’re wrong if they don’t trends in trade: “I’m not sure that think that opportunities to capitalthe mindsets and the corporate ize on globalization to improve their business—improve strategies change that rapidly.” Dittmann anticipates that their speed to market; improve their cost base; improve when the world of trade accepts these changes as givens, their supply chain—exist for smaller customers.” some shift will occur in the direction of keeping remainIf globalization is deﬁned narrowly, one expert observes, ing production in or closer to the U.S. Still, he adds, “Then companies that don’t see an international competi- “Having said that, I do think there will be something on tor may feel they are outside that world. But if you deﬁne the table for all companies to continue to look offshore.” globalization more broadly—which most economists Companies that have not yet gone global need to do—it’s not just who you compete with in your immedi- address some basic questions: ate space, but who may be competing against you in your • Would cooperation with prospective international space without your being aware of it.” partners add value to a company’s products? Others cite two fundamental shifts. • Would it add—or protect—proﬁtability? First, globalization is creating a world labor market, • What are the risks of losing current market share to one to which smaller enterprises are increasingly an offshore competitor, or through the Internet? exposed. Rob Quartel, founder and chairman of the VirPaul Dittmann notes that when thinking about globalginia-based FreightDesk Technologies, which markets ization, most ﬁrms initially think in terms of ‘offense’—that trade-related software, says, “We would not exist with- is, should they go overseas to sell their wares or source on out the ability to obtain local labor. Call it outsourcing more favorable terms? At the same time, however, such if you will. But, the fact is we would not be in business ﬁrms need to think ‘defense’—about an offshore competiif we were not able to buy IT talents from an Indian off- tor coming in and taking their business away. shore source. This meant we were able to get a company There are, Dittmann reports, “example after example off the ground with just a handful of people.” of this. If anything, they might want to consider globalSecond, geography matters less. At one time, a com- ization to protect themselves. If you’re the ‘general,’ you pany would develop its products and mature in a local have to looking to opening another front on the other market before looking further aﬁeld. But in an electronic guy’s home turf, rather than just ﬁghting on your own. world, that no longer holds. Quartel comments: “It’s a Otherwise, you’re providing your opposition with sancmindset; I think it’s because they haven’t thought about tuaries elsewhere in the world.” it. Think of a phenomenon like eBay, where you have And, far from being a forbidding world, the globalall these businesspeople and entrepreneurs. If people ized economy might well be an easier one for many ﬁrms. thought about it, they would likely ﬁnd that many of Quartel comments: “I think that small companies can their customers and competitors are global, but they may ﬁnd it easier to compete in a foreign than in a domestic not actively think about it.” market. In existing markets, you’re better known, it can WWW.WORLDTRADEMAG.COM 41 http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - October 2008

World Trade - October 2008 Contents Tune Up Your Supply Chain Globalization: The Real Competitive Threat Supply Chain Watch Tradewinds Shippers and Providers Collaborate to Take on a Challenging Economy Tweaking the Supply Chain to Optimize Value and Minimize Cost Supply Chain Software Morphs Into Enterprise Management Can Warehousing Really, Truly Be Strategic? Everybody is Global Between the Devil and the Deep The Hidden Costs of ‘Free’ Translation Blowing Smoke

World Trade - October 2008

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