Module 3

Offshoring and outsourcing are two similar concepts in modern business.  Outsourcing is the subcontracting of part of a business process to another company who returns the result to you.  Usually this is done to reduce in-house costs of training, labor etc. so that the business can focus more on its core products.  Offshoring is where a company moves part of its business to another country to take advantage of lower wages, weaker environmental restrictions, lower taxes, reduced healthcare costs, etc.

The two concepts are not mutually exclusive however.  A great example of this is where a company in the U.S. would both outsource and offshore part of its business, such as a customer support call center, to another country like India.  This allows the U.S. company to save even more than if they outsourced to another U.S. company and with today's telecommunication infrastructure this is more than feasible.  Offshoring, while it usually does reduce costs, it also extends a company's supply lines with results in reduced reaction time.  This can be trivial or critical depending on the industry the business is in.

The supply chain is the system by which goods get to the consumers.  From innovation to design to manufacture to shipment to sale, the whole process is the supply chain.  It involves suppliers who manufacture goods in bulk for purchase by retailers, the shipping companies who move those goods, and the retailer itself who sells to the end consumer.  Wal-Mart is the king of supply chain management.  Their one-two combo of distribution centers tied to a distributer-accessible IT infrastructure allowed for the super efficient command and control of the whole supply and disbursement system.  Since the manufacturer knew how many of item X were being sold, they knew how many they needed to produce to resupply the retail stores.

This Just-In-Time system that I'm assuming Wal-Mart adopted from Toyota's production system is the principal reason they were able to grow from a single store to the global powerhouse they are today.  The JIT system is where the components needed in order to manufacture something like a car are delivered just as they are needed for assembly which reduces the need for on hand inventory.  Auto makers in Japan sell cars the way HP and Dell sell laptops: they let the customer pick and choose the features they want on their model, and build it to suit for that specific customer.

I'm not sure if Google was the first to do so, but they definitely brought targeted advertising into to forefront of marketing.  By targeting ads based on the contents of a user's searches or emails Google generates more hits than blind advertising would.  Also by making most of the world's public knowledge easily searchable, Google allows consumers to find a multitude of products, see reviews on them, and locate sellers faster than driving to a local retail outlet who would have a lower selection, no way to determine the quality, and higher price if you did buy.

Google, eBay, and Amazon have made brick and mortar stores for many products, especially electronics and other small volume high value goods, obsolete.  I haven't purchased a video game, computer part, movie, anime, or music from a physical store in over five years.  It's just cheaper/easier/faster to do it online and Google facilitates that by putting all the information I need at my fingertips.  Why drive when I can click?