Tuesday, March 6, 2012
How Information Technology changes global supply chain?
The outsourcing trends started with manufacturing in 1990s and then this trend happened to software industry. This trend helped the software industry grow really fast, creates a lot of entrepreneurs that can only have a small fund to invest. Through freelancers and outsourcing websites, small entrepreneurs can cut cost and outsource parts of their projects to China, Vietnam or India to get their work done with almost the same quality.
And now, this trend has been back to manufacturing industry, where small companies and entrepreneurs can outsource the works of manufacturing to China. Do you have a good idea? No problem, you outsource to China to produce some amount of the products, as small as hundred or thousand products for a tiny cost. There is no need to have a factory and the inventory. You only need them when you have the customer orders.
This new trend will bring more innovation from anybody within the U.S., as long as you have a good idea.
Easier to access the workers
In the past, to get your idea implemented, you need to have at least hundreds of thousands dollar initially. It is also much more risky when you have to order at least tens of thousands of products so that the factory can start manufacturing your products. Lots of people fail when they do not have enough money to start or they could not sell all of their products.
Now, things have changed. Based on sites like alibaba.com, U.S. entrepreneurs could get access to a pool of talented manufacturers. These manufacturers accept to work on anything, ranging from a small contract of 100$ to 10,000$ and they could deliver your products quickly. This lowers down the barriers of entry for new entrepreneur and creates more chances for people to step in.
Alibaba business-to-business model has been a huge success, with around 500 companies do their business in alibaba.com. The revenue of the company has grown from 48 million USD in 2004 to 183 million USD in 2006 and it still keeps growing up. The platform of Alibaba allows U.S. companies to hire any Chinese manufacturer they need for a tiny cost. An instant translation service will help both of them communicate with each other accurately.
Lowering down the cost
This not just helps the entrepreneurs but also the small and medium enterprises as well. This lowers down the cost as well as the risks for any companies to invest into their new ideas.
Bdier, a graduate student at M.I.T Media Labs, quitted her job to become a new-age manufacturer. She designed a protocol for making electronic components into Lego-like bricks that could be used by anybody. She then gave the protocol design to the Chinese manufacturer to make it for her.
There are more case studies that people can work on their garage has a good design and then send it to a Chinese manufacturer to make the actual product. This could save these entrepreneurs a lot of money and they can finally create what they love.
Easier to sell and do marketing
Due to the nature of the Internet, it is now easy for a good product or idea to spread out. Facebook, Twitter, Gmail and Youtube now help companies to do viral marketing with a very small cost. People observed the success of many small companies that have cool products and do not need to spend much money on marketing.
Google, Alibaba, and then Dropbox has been successful in the same way. They make good products and then give it out for the world to try it. Then people will tell their friends, and the product grows by word-of-mouth.
-Why the Chinese web portal is giving up its stockmarket listing, So Long, For Now, The Economist, viewed on March 6, 2012 <http://www.economist.com/node/21548253>
- Secret of Alibaba’s success is team work, sense of mission, Monster and Critics, --Business News, viewed on March 04, 2012
- Giridharadas, N, 2011, The Kitchen-Table Industrialists, The New York Times, viewed on March 3, 2012