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The Supply Chain Lesson

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DQI Bureau
New Update

As we move

toward commoditization of IT products, particularly PCs, margins assume paramount

importance. With competition gaining pace in Asia and the difference between one brand of

PC and another fast disappearing, what really matters is the efficiency with which the PC

is produced and reached to the consumer who demands it, quickly, faultlessly, and

efficiently. The demand satisfaction chain has to be finely tuned and ruthlessly

efficient. In many global PC vendors, this is the real competitive edge, not of getting a

fatter margin by selling at a higher price but rather by selling at a lower price but

simultaneously manufacturing at a far lower price and thus earning margins. Across the

corporate boardrooms of PC companies, the corporate strategy is supply chain management.

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This is not just true of PC companies, but

also of other non-IT enterprises which are using IT as a key factor of production. In many

an FMCG company, the main differentiation will be efficiency of production and

distribution rather than a higher sticker price per unit. Competition has seen to it that

the latter will rarely be possible in most markets.

This is another and possibly a very good

reason why investment in IT is not only necessary but also a survival strategy. In most

companies where market forces dictate terms, a faster response to customers and a more

efficient manner of production and delivery are actually deciding whether the company

stays around or not.

There is a lesson here. In the

not-too-distant future, the Compaq-Digital type of deals are likely to happen in India

too, as in many sectors, not excluding the more well known public sector, where our

efficiencies are nothing much to talk about. If we are to compete in the global market

(not that we have a choice), then faster induction of IT in our enterprises and our lives

is pretty much a given. Failure to do that will mean extinction or acquisition of Indian

entities, saffron belligerence notwithstanding.

May be then we might learn. Again, we might

not.

L Subramanyan

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