Quality and the Great Contraction

From the July 6, 2009 issue of Business Week:

“A new world order is dawning – one in which the West is no longer dominant, capitalism (at least the American version) is out of favor, and protectionism is on the rise… the era of laissez-faire economics is over, and statism, once discredited, is making a comeback – even in the U.S…. global trade is set to fall this year, for the first time in more than two decades.”

We have been conditioned to think that the notion of space – geographic space – does not matter in the new economy. We have the Internet, and ideas can zing from one place to another with ease (and nearly instantaneously, for that matter). Add to this videoconferencing with Skype, and keeping up with your contacts on Twitter and Facebook in near-real time, and it’s no wonder that people have also become accustomed to assuming that materials can move from one place to another with similar relative ease.

Space does matter. We know this when we are designing facilities and plant layouts, for example, because one of our common considerations is to minimize traffic between areas and departments. More often than not, we do this to minimize the time spent moving people or equipment around a plant, so that time is not wasted. But the same concept could apply to our supply chains. Why aren’t we minimizing the time that components or goods spend traveling through the supply chain, when it could lead to reductions in energy costs? Furthermore, why aren’t we shortening our supply chains to strengthen local and regional businesses, and train the next generation of skilled workers (who can actually do something useful for the regional economy)?

The logic has been something like this: energy is cheap, therefore transportation is cheap, and transportation is easily available and accessible through third-party providers like FedEx and UPS. But I can’t shake the feeling that “supply chain status quo” is not good for quality in the long-term – because it encourages us to source the products and components that are most affordable, rather than the ones that might help us cultivate a quality consciousness in our local areas.

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