The world is becoming flatter as more people are taking advantage of the technologies being developed. Small businesses, smaller countries and individuals are stepping up to the level of bigger companies and trying to find ways to compete. The things everyone is looking for, big or small, are cheaper and easier ways of conducting their business. In search of help, more of them are turning to outsourcing and offshoring.
The difference between outsourcing and offshoring is the effect they have on the jobs left at home. Outsourcing takes a part of a company, like paperwork or service calls, and contracts a different company to do it for them usually for less money. The advantage is that both companies are more productive. The domestic company frees up the labor for different or more skilled jobs, and the other company has specialized workers to focus on the one major task fully. Another advantage is that a lot of outsourcing goes over seas, so much of the work can be done in the night during the down time of the companies in the U.S.
Offshoring could have a bigger effect in either the positive or negative direction for us, I think, because it is affecting a bigger part of the business. Usually dealing with manufacturing, when a company offshores it lets another company completely handle a process of the business to get cheaper costs. Materials can be processed to a rough degree quickly and cheaply and then shipped to the U.S. for the precise finish work that requires more skill and training. Just like outsourcing, the advantage is getting more done for less and supposedly reserving the more educated workers jobs at home. The difference between the two is that outsourcing is supposed to streamline a company’s productivity while offshoring removes a large portion of the company and gives it to someone else. I am skeptical about the benefits this will have on American companies in the future but I do agree with Friedman that as it boosts other countries’ economies that it will in turn bring more money our direction. The U.S. just has to stay on top of its innovation and continue being a major producer.
There was a time when all the inventory a store had was what was on the shelves. Wal-Mart created a system that was a never ending inventory and adapted quickly to change. It designed a supply chain system to get goods to the consumer from the supplier as fast and cheap as possible and they are always updating and improving it. The idea is to keep a low inventory by predicting what and when people will buy and then getting that product to the shelf as efficiently as possible. The less extra costs go into warehouses and extra shipping, the less the price is. The amazing thing is that Wal-Mart never makes anything themselves. They find the supplier and figure out the best way to get the product to the stores. Wal-Mart’s advantage is that they can sell anything from anyone and it opens up the world of producers and consumers to their business.
The advances through communication and collaboration digitally over the internet has stimulated the economy all over the world and provoked brand new thoughts from people. I think fifty years ago everybody thought an electric calculator was cool but nobody could imagine what the world would be like today. Just like then, it’s hard to think about the world getting much more advanced than we already are, but it is the ability to learn at a high rate that will push innovation further. Google is one resource that is affecting the future this way. It is so easy to find information about anything we want and even things we didn’t mean to find. The knowledge and inspiration available to us now will continue to grow and we will build off of each other to improve business models and realize new ideas. Google is like a big instruction manual for the future, but once you finished the first billion steps there is twice as many new ones that weren’t there before.
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