Global sourcing in a world less flat
I recently cam across an interesting piece on the McKInsey – What Matters website on globalisation. It highlights that globalisation is not a new concept and that deglobalisation is a possibility in these troubled economic times. I added my tuppence worth as follows:
Interesting piece and thank you for not making reference to Globalisation 2.0! There are almost too many scenarios to contemplate. At one extreme we all enter the supply chain of a handful of mega suppliers, such as Wal-mart. Another extreme is that the West becomes the main source of low cost labour as the affluence of the East grows. As we flit from inflation to deflation at ever greater clock speeds, it is truly a fool that builds an organisation on anything other than chaos theory.
In my view the level of business agility needed to operate in an increasingly perturbed global market will lead to fragmentation of the mega corporations into more nimble and decoupled value-amplification units.
There may well be a holding company for the purposes of generating share capital. But each unit will have to win the business from the holding company. For a given market scenario the owner-buyer may well choose an alternative unit. Similarly the sell-side unit is free to pursue business beyond the parent organisation.
There are parallels here with the software development industry as it moves from the rigid functional decomposition model through to a loosely coupled service-oriented architecture.
Both have their strengths and weaknesses. But in a world where strategy, perhaps like capitalism, will increasingly be a topic of only historical interest, those that can think fast and execute fast will be most likely to survive.