When Hi-tech Meets Low-tech

Recently, I’m working on a project to help a Chinese tissue culture company to break into U.S. market. Something totally different from my past supply chain experience,  but it’s quite an exciting experience for me to visit trade shows across the country to learn a new market and its customers.

I’m first of all surprised to see that nursery industry is a little bit “low-tech”  comparing to all those industries I have been worked with. I would think that U.S. has far more advanced in bio tech than China, but I was constantly told in the trade show that “tissue culture is too high tech to us.” Then I realized that many of the target customers, the growers, don’t provide emails in their business cards. I know emailing is my bad habit, but it surprised me that many are quite resistant to new way of communication when I live in the era of smartphone, Twitter and Facebook. Perhaps nursery industry is quite different from others so I need to adjust, or I should not consider those, who resist e-communication or social media, as the target customer because the tissue culture will be too high tech for them. Oh well.I might be too new for this industry to make comment, but I feel the frustration of when hi-tech meets low-tech.

One more thing blows out my mind is when Sales of some companies told me that: I’m Sales, not procurement (so, don’t talk to me). OK, then it’s not right, not only because of their impolite attitude. So, Sales don’t communicate to Procurement regarding using new product or adapting new technology? So, Sales never discusses with Procurement regarding what they’re looking for to be competitive in the market? So, Procurement will make their purchasing decision and Sales will try to sell whatever the Procurement develop? It seems that lacking of communication among “supply” and “demand” can be a huge potential issue for those companies, which indicates that they won’t be an ideal business partner as well.

Technology and communication are two essential components for a business to stay competitive; otherwise, newbies will soon catch up and get the lagged one out of the market.

My sentimental feeling for Dell

A few weeks after Dell announced the sale of its Tennessee plant to Genco, Dell stated that it will close the facility and cut 900 workers in North Carolina. Dell describes its decision to close the facility as “part of an ongoing initiative to enhance the long-term value it delivers to customers by simplifying operations and improving efficiency.”

As a former Dell employee, this news gave me a little feeling of nostalgia. I joined Dell China as their pioneer staff, with employee ID 49, when Dell just got their feet wet in the Chinese market. I experienced the most glorious time of Dell when their stock was traded more than $100 and split again and again. I witnessed the Dell China factory grew from a leased temporary factory to a campus of new factories with advanced technology.  I even had a hand-shaking photo with Michael Dell when he visited the China plant. Being a young professional out of college without a lot of experience, Dell gave me a great opportunity to learn the management of a western company and opened the door for me to supply chain management.  When I came to the States to pursue a degree in supply chain management, I read so many cases and articles about the innovated manufacturing and supply chain in Dell, and how their “U” shaped manufacture display was one of their core competencies to enable production flexibility for their made-to-order business model.

However, after a decade, the core competency is not core anymore. Dell sold its former world class manufacturing in order to create more value for the customers.  In a Harvard business blog article “Why the U.S. Tech Sector Doesn’t Need Domestic Manufacturing”, David B. Yoffie says

HP has become the world’s leading computer company by focusing on sales, marketing, and distribution of computers made at very low cost in Taiwan and China. In comparison, archrival Dell, which was widely celebrated 10 years ago as one of the world’s best manufacturers, is now saddled with high cost factories and is struggling to compete.

What has been changed in the past decade?

Technology advancements have made personal computers a commodity and changed consumer behavior significantly. In the past, customization and capability of “made-to-order” created huge value to computer users. Customers enjoyed selecting from the different capacity of parts to customize computers meeting their price and usage requirement. At that time, Dell’s flexible manufacturing had a huge advantage over its competitors, and their made-to-order and ship-direct business model were the most innovated and successful supply chain practices.

However, a few years ago, Dell started to sell their products through distributors such as Staples, Best Buy and even Wal-Mart. Their ship-direct strategy slowly started shifting to a traditional made-to-stock distribution channel.  Computers become such a commodity that consumers can pick up any model at different price levels in a store and be happy with the standardized capacity. There is no need for consumers to place customized order online and wait for delivery. So, the flexible manufacturing designed for made-to-order is fading away.

Time changes, consumer behaviors changes, and technology changes. In 2005 Dell was valued at $100 billion, or more than HP and Apple combined. Today, it’s worth $30 billion, less than a third of its rivals’ market values. (Businessweek, Dell’s Extreme Makeover) If Dell wants a makeover to catch up to its rivals in this rapidly changing business environment; if Dell doesn’t want to become an OEM of PC manufacturer; it’s the right move for Dell to get away from its traditional production efficiency and cost cutting modal and focus on marketing, customer service and innovation.

Even I am not using a Dell computer nowadays. However I wish my former employer, who taught me the best supply chain practice and changed my life and career direction, can achieve its makeover goals.

Me and Michael Dell in China, 1998
Me and Michael Dell in China, 1998

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