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0:04
The concept of networking has started
getting close attention in globalization literature.
Fung, Fung, and Wind coined the term as network orchestration,
explaining that businesses in order to be successful in today's ever-competitive world,
coupled with consumer empowerment,
should have flexible organizations with quick-response manufacturing.
They should be able to produce what the consumer
wants in a given period of time and this could only
be attained if companies are able to orchestrate a series of network relationships.
0:37
Fung, Fung, and Wind,
give the example of a US retailer placing an order of
300,000 pairs of men's cargo shorts with Li & Fung,
saying that the company owns no factories,
no weaving machines, no dye,
no cloth, no zippers.
Because a quick delivery was needed,
the order was divided among three different factory sites,
but every pair of shorts had to look as if they were all made in the same location.
If the order had come in two weeks later,
it would have resulted in a completely different supply chain using
different partners from a network of 3,800 suppliers around the globe.
1:18
Another worth-mentioning example refers to a UK case.
The UK company purchases whitefish in Norway,
freezes and transports it to China,
where it is defrosted and cut into fillets,
frozen again and transported back to the UK.
This was initially done for cheaper labor in China.
Later, the UK company found out that if the work was done by humans,
the yield increased by 20 percent.
In this new world,
the whole globe becomes the factory, transcending any geographical boundaries.
Hence, global companies move towards a dispersion of labor away from the division of labor.
In other words, a vertical integration ceases to exist.
