Bandwidth, Redundancy and Fidelity in Supply Chain Communications
Businesses exist and survive by reducing transaction costs, don’t believe me check out Ronald Coase he got a Noble prize for saying it. Even if it is not the sole intent, it is reasonable to point out that successful businesses work to streamline transactions in terms of both speed and cost. It is not only massive value oriented brands like Wall-mart that benefit from improved logistic systems, information systems and communications, we all enjoy the lower costs and fast delivery time of modern logistics. We can track the progress of our new laptop from the production in Asia to your doorstep. Your local supermarket can place an order to restock a shelf in the time you’re walking from self checkout to the parking lot.
The drive for transactional efficiencies not only occurs at the retail level but also between businesses and within business supply chains. Recently, the streamlining of supply chains is being seen as a place where economic development agents at many levels can help struggling manufacturers and nascent startups.
These programs focus on supplier selection and verifying various compliance requirements. While this information is a useful where markets and requirements are easily predictable or change little over time, it is decidedly less useful for the dynamic and disruptive industries that lead to real economic growth.
You might point out that social media, rewards cards and credit card tracking have created volumes of customer data. The problem is that no amount of buying pattern data can alone lead to repeatable innovation. We have yet to develop an algorithm that can glean the next disruptive products from the records in a database.
So is there a down side to faster and smoother transactions or is it just nostalgic pangs for a simpler time? By using RFID, bar codes and containerized shipping do we lose some of the parts information required to innovate, and what can be done to replace it.
By systematically driving out the rich multi-variant and personal transactions that created tacit knowledge about what customers value we loose a major source for organic innovation. Tacit knowledge about markets and customers are the enabling factors that permit inventors and entrepreneurs to develop innovations. The Thomas Edison model of the inventor as rogue R&D explorer is rare compared scores of entrepreneurs that take a known technology and mix in a unique customer insight to create advantage in the market and a disruptive business.
The double bind of rapid but vapid communication.
When it comes to what people want, what does it mean when we know so much less about so much more.