More than 500 years ago, an Italian explorer called Christopher Columbus pleaded with Spain's King Ferdinand and Queen Isabella to finance an expedition that would speed access to Indian markets.
Columbus's vision for quick access to key markets went against the prevailing scientific view that the world was flat. Columbus thought it was round.
Now, an American author named Thomas Friedman has written a best-selling book concluding that the world is flat after all.
And I very much agree with Friedman, who says in his book The World is Flat, that technology and fast access to Asian markets are levelling the global playing field - creating, in effect, a "flat" world. I view technology as the key enabler of the global economy.
In a "flat world", nations - like companies - are becoming more specialised and assuming certain areas of expertise. For example, China is known as a manufacturing base, while India is considered the low-cost information technology and financial services hub.
This has led companies to take advantage of this specialisation to outsource parts of their operations to appropriate countries. This increased collaboration - with technology as the catalyst - means that instead of companies competing against companies, by 2010 supply chains will be competing against supply chains.
Historically, the competitive advantages of a company's supply chain were underrated. Companies competed on products and services, not processes. But those days are over. The intensity of global competition is forcing companies to compete on the strength of their supply chains.
Growth-oriented leaders understand what is at stake. They know that supply chain strategy is really business strategy, and vice versa. In the past decade, process and technology improvements in supply chain management havelowered total US business inventories by billions of dollars and helped reduce order-to-cash cycle times by 10 per cent.
Dell, for example, engineers systems in design centres in five countries. It operates seven factories - three in the US, one in Europe, two in Asia and one in South America. It has a supplier network involving a few hundred companies across the globe.
Internet-enabled links between Dell's supply chain partners have allowed better co-ordination and collaboration among the various supply chain segments - and providers. The company is famously efficient because of its direct-to-customer, build-to-order business model - just-in-time manufacturing at its best.
What is less known, however, is how Dell partners with other companies for its service parts logistics process. This allows technicians to call a number staffed by its supply chain solutions provider and request a part or parts needed to service a machine. In the market for computer repair services, a four-hour commitment on parts delivery is often essential.
In another example, Dell set out to improve visibility of its shipments as they moved through the supply chain.
Dell and its logistics provider worked on a system that would achieve this as the parts packages were loaded into the trailers at their distribution centres all the way through the freight and small package networks to the destination. The system eliminated an 18-hour manual process and increased service reliability and outbound visibility.
Supply chains now also run up against customs requirements and other complexities and processes that accompany shipping around the world between a company's locations and with outsourcing partners.
Security and compliance initiatives, trade agreements, customs regulations, duty rates, and import and export processes can make it more difficult than ever to conduct trade internationally. And non-compliance with government regulations can bring potential fines, penalties, and even legal action.
According to a 2005 Aberdeen research report, nearly two-thirds of companies still rely heavily on spreadsheets or paper-based systems to manage global trade.
But companies can no longer afford to treat global logistics, trade compliance, and trade finance activities as separate functions. They need to outsourcesolutions that will tie these functions together across their companies and synchronise the process with regulatory agencies, logistics service providers, and trading partners.
For example, US-based companies now need to comply with the US Customs Trade Partnership Against Terrorism (C-TPAT) initiative, a government-business initiative designed to build relationships that strengthen overall supply chain and border security.
Through this initiative, US Customs and Border Protection (CBP) can provide tight security in co-operation with the ultimate owners of the supply chain: importers, carriers, brokers, warehouse operators, and manufacturers.
The challenge for a company is first knowing how its global supply chain measures up against the requirements set forth by C-TPAT, then measuring timeline achievement and establishing follow-up reminders with the customer's supply chain partners to ensure the company meets the requirements. This sharpens the need for new technology-based controls and record-keeping tools to reduce the added complexity.
Ultimately, no company can compete in a global economy alone and the increasing reliance on outsourcing and partnerships has reduced room for error. These relationships require trust, collaboration, visibility, and a focus on results to make them successful.
Technology is the tie that binds, allowing companies fully to synchronise their supply chains and grow in a flattening global economy. Just like the Nina, the Pinta and the Santa Maria, technology is sailing into a brave new world.
*Dave Barnes is chief information officer for UPS
