The World is Not Flat - Now What?
With rising fuel costs and inflation continuing to run in double digits in countries like India and China, the falling dollar, and rising oil prices pushing up transportation costs, is the world really flat as Thomas L. Friedman claimed in 2005?
With the cost of shipping a container from China to the USA nearly tripling by some reports from $3,000 to $8,000 and cargo ships dropping their top speeds by 20% during the crossing to save fuel (decreasing speed to market and just-in-time capabilities), will companies continue to globalize their supply chains?
Will some companies reverse the globalization of their supply chains?
And, of course, the most obvious question for readers of this blog...
Does this introduce new innovation opportunities for companies and advisors who can envision ways to profit from these new market characteristics?
Of course it will. Entire methods of production for different manufactured goods may be completely revised, only to be revised again if the price of oil and the dollar suddenly move in the opposite direction in a big way.
So maybe the opportunity here (if it has not already been implemented), is the transformation not from a global manufacturing process to one with fewer shipping points, but from a more rigid process to one that can be more flexible. Creating the ability for a manufacturer to switch between multiple manufacturing scenarios depending on what is most cost-effective. For example:
USA (raw materials) -> Vietnam (raw material processing) -> China (bulk assembly) -> Mexico (final assembly) -> USA (retail)
to
USA (raw materials) -> China (all processing and assembly) -> USA (retail)
to
USA (raw materials) -> Mexico (raw material processing) -> China (all assembly) -> USA (retail)
to
USA (raw materials) -> Mexico (all processing and assembly) -> USA (retail)
Thoughts?
With the cost of shipping a container from China to the USA nearly tripling by some reports from $3,000 to $8,000 and cargo ships dropping their top speeds by 20% during the crossing to save fuel (decreasing speed to market and just-in-time capabilities), will companies continue to globalize their supply chains?
Will some companies reverse the globalization of their supply chains?
And, of course, the most obvious question for readers of this blog...
Does this introduce new innovation opportunities for companies and advisors who can envision ways to profit from these new market characteristics?
Of course it will. Entire methods of production for different manufactured goods may be completely revised, only to be revised again if the price of oil and the dollar suddenly move in the opposite direction in a big way.
So maybe the opportunity here (if it has not already been implemented), is the transformation not from a global manufacturing process to one with fewer shipping points, but from a more rigid process to one that can be more flexible. Creating the ability for a manufacturer to switch between multiple manufacturing scenarios depending on what is most cost-effective. For example:
USA (raw materials) -> Vietnam (raw material processing) -> China (bulk assembly) -> Mexico (final assembly) -> USA (retail)
to
USA (raw materials) -> China (all processing and assembly) -> USA (retail)
to
USA (raw materials) -> Mexico (raw material processing) -> China (all assembly) -> USA (retail)
to
USA (raw materials) -> Mexico (all processing and assembly) -> USA (retail)
Thoughts?
Labels: Braden Kelley
posted by Blogging Innovation at 8:42 AM
3 Comments:
Hello
I am a new inventor and I have an invention , This invention is a new device for building fire escape. Without any help and rescue, it can help us escape from the burning buildings successfully and timely by ourselves. and I have been looking for investors for this device all around the world. now I am very puzzled because I don`t know what to do next .Though I work hard to try to promote it ,but so far it still seems hopeless .
Is an invention really a nightmare for one poor inventor? Are all inventions always "fool`gold" for inventors ?
What shall I do ?
http://jinshi.selfrescue.googlepages.com/
http://docs.google.com/Doc?id=dgr98hxs_10dmdk4r
Thanks for your time.
Hello anonymous,
The first question every inventor must answer for themselves is:
Do I have an invention or an innovation?
An invention is something useful, either only to the inventor or potentially to other people. But, people may see the usefulness and still not be willing to invest in it or pay anything to purchase it when realized.
An innovation has compelling value that people are willing to trade money to get rather than purchasing an alternative. Unless your invention can deliver enough value to be the compelling choice amongst alternatives, it won't be successful.
The first step beyond what you are doing is to construct a prototype and show people the value in what you have created.
The drawings and text may demonstrate something useful, but I personally have a hard time imagining exactly how it is a compelling alternative.
The second step is to begin trying to communicate with the people who have the greatest pain that your invention can solve.
Do you know who they are?
Do you know how to reach them?
Answering these questions and pursuing these steps will help you move along the process if your invention is something truly valuable.
Through the lense of value innovation, your idea must:
1. Be divergent
2. Be focused
3. Have a compelling tagline
Good luck!
Hi Kelly,
Actually I got your link from one of your other posts (Nokia) from the Forbes site, and then took that link to join the Innovation Community. I have started a discussion called the Food Dialogue which deals with a similar issue, biofuels and other industries which use possible food products as raw materials.
The Industry and the US and possibily the rest of the world will still benefit if we consider this in totality. As you said one goes and another big opportunity crops up.
Consider this, an American company evangelize and support poor farmers (in India, Africa, etc) who are not able to procure good seeds, fertilisers,to grow corn.
Process it to to ethanol or whatever, and then ship it back to the US.
Maybe we just not look at the carbon footprint , but a wholistic ecological footprint. Everybody stands to gain in this business.
The poor farmers are either commiting suicide or dying of hunger in India. Maybe take back 75% and leave the rest for the food chain, all at market prices, there is still a sustainable business model here.
You are spending higher on the shipping, but you are spending much less on the capital (when compared to growing the same in the US)which is being shipped.
I think there is always an opportunity because of the difference in levels rich - poor, forward - backward, developed - developing, Eastern - oriental;and like water and electricity, the potential difference will always encourage flow!
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