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Aug 04, 2020

Point-to-Point: The Radical Impact of the Internet on the Global Supply Chain

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Innovation and technology are changing everything we do. No industry, no institution, and no social structure is unaffected. Of course, innovation and technology are not new forces in the world. But there are times in the human story when we leap to a new plateau, and the introduction of the internet is one of those times.

The internet is a platform, and the innovation and other technologies that have followed the internet are currently reinventing our economic and social systems globally, nationally, regionally, and locally. And that’s just it. The internet is useful at any size or scale. It is the great leveller. 

What the internet does so beautifully well, and better all the time, is simply to connect relevant points. You type in a question, it delivers an answer. You type in anything, and it connects you to that immediately. 

Therefore, a single person in a small town in a small neighborhood in the midwest can create and publish a single piece of content and another person, who is connected somehow, can experience it instantly. Traditional factors (like physical distance between the people, for example) and traditional infrastructures do not apply. 

By traditional infrastructures, I mean the channels by which people get information. Before the internet, how on earth would that random midwesterner ever have gotten that piece of information or comment to that other person, wherever they are. They would have needed to be interviewed by the news media and played on TV to millions in hopes that that other person would hear. 

The internet subverts all of that by simply connecting relevant points. Anybody can post. Anybody can react. It’s all equal (in theory). Each point (each person, each business, each organization) is a single point and can participate. It’s more democratic than anything the world has ever seen before.

Just look at the impact of internet-linked camera cell phones on the proliferation of the Black Lives Matter movement happening currently in our nation. Individuals, and groups of individuals, on the streets can post videos to a self-organizing internet that allows millions to see the videos within minutes. These videos have incited riots, and they have inspired organized peaceful protests. They have exacerbated social divisions, and they have pulled together millions of Americans of all colors, races, and creeds across the nation in cities large and small.

The individual’s ability to capture footage and post it, plus the cumulative impact of so many people doing so, has shown to America a reality that is not on the television or magazine covers. The story of anyone can now be taken up by millions, regardless of the traditional media infrastructure. 

My point here is that information distribution systems of the 20th century are being subverted and reinvented by the point-to-point connectivity provided by the internet. 

And it’s not just the information distribution systems. It’s our trade systems as well. Point-to-point is rewriting the rules of the supply chain, allowing individuals and small businesses to participate as an equal points where they would have been locked out before (due to factors like size, scale, distance, etc.). 

So, for an example… 20th century infrastructure would have us regular folks go to a store to buy a product. The bigger that store, the more ability they have to sell inventory at a reasonable price. They have to be big organizations, and they have to be plugged into the global supply chain, which means layers of employees, real estate, truck bays, shelves, cash registers, and more. A seemingly endless list of costs that would support the ability for me to walk into a store and see a range of products that I can buy. 

The costs of such infrastructure are so great that they only work on giant scale. If I’m in a store looking at a T-shirt for $20. Think about the global network of materials, production, shipping, handling, stocking, retailing, legal, administrative, etc. that went into getting me that shirt, and the retailer probably paid $10 for it. To just make one shirt would be undoable. The cost of the shirt would be astronomical. The only shirt on a ship. 

That’s the economic trade infrastructure of the 20th century. 

But nowadays, when I want a t-shirt. I design it on my computer, and I upload the art to a t-shirt website. I then order just one of them for twenty dollars. Then, it comes to my house in the mail. 

I went directly to the manufacturer with my own design and made one product. Just consider how much of the global supply chain (predominantly in services) that I just eliminated from the process.

Now, I still needed the shirt to get to me, of course, which takes the 20th century infrastructure of planes and trucks and roads and such. But I cut out many of the organizations that would be traditionally involved. 

So, the economic lesson here is this: Because of the level of point-to-point connectivity in our new economy, each person or business can participate in the global supply chain, regardless of size or location.

Allow me to use my own business as an example. I have a small marketing agency (currently six full timers plus a small recurring cast of freelancers and vendors). We are a services business and we do all kinds of creative marketing projects. 

Traditionally, such a service business is not bringing new money into the community. It is instead part of the transactional economy that is shuffling the same money around the same community. Local service providers.

But my little company has clients all over the US. We don’t have many clients, as we are a small agency. And we’re nowhere near the revenue of a manufacturer. We’re more akin to a local small business in that regard. But, it is a regular part of our operations to bring money from other parts of the nation into our business and then into our local community. 

We then spend the money next door at Rock Hill Brewing and Millstone Pizza. We buy homes. We pay local taxes and fees. And we enjoy our community as a community of choice. Because if we didn’t like it here, then we wouldn’t be here. 

One project we do is about selling guitars. It’s called The Local Pickup. The guitars we sell are being 

  • Designed in Canada, 
  • Manufactured in Korea, 
  • Stored in showroom warehouses in Chicago and Liverpool, 
  • Sent to us in South Carolina for us to create marketing media (videos and photos), 
  • Listed by us online for sale, 
  • Purchased by the customer from somewhere in the US, 
  • Then, shipped to the buyer directly from one of the afore mentioned warehouses.

So, we are working point-to-point with the guitar manufacturer (in Canada) on the one hand, and we’re working with the online selling platform on the other. We’re the bridge between the two. Thus, my tiny company participates in a global supply and demand ecosystem right from my 2100 sq ft office in Old Town Rock Hill. And we bring in enough revenue for a small group of people to spend locally and live happily in our beloved little town. 

As small as we are, we can plug into a global supply chain by subverting the traditional infrastructure of that industry in a way that provides benefits to the buyer or sellers or both. 

Look at the 20th century food production chain. You have inputs, then production, then processing, then distribution, then retail, then preparation.

These different roles are meant to be linear in a giant process of a grand scale. But the first thing I think is, How likely is it that the family sitting at that table having dinner at home has had direct contact with the farm that grew the food they are eating? 

At my house, it’s pretty likely. My wife likes to list the points of origin of the items on the plate with a great sense of pride. She’ll say, “The tomatoes are from Black’s Peaches. The chow chow came from Bush-n-Vine. And the corn was grown in Uncle K-Dog’s garden by Little Marshall. Oh, and the beans came from the grocery store.” 

My wife can do this because she has point-to-point contact with these farms. She stops by there on her way home because she enjoys the experience. She also has direct contact with them on the internet. She orders prepared fresh food from their website as easily as she orders a small item from Amazon (an item that was manufactured on the other side of the world). She does this in just a few minutes while at work. Then, the next day she swings by the farm to pick up our prepared dinner, and when she gets home the Amazon package is on the porch.

She used the internet seamlessly for her needs both locally and globally. She subverted the global food production and supply chain with ease. She navigated the world to find the best pricing on a manufactured good. And she arranged delivery of both products to be in her hand within 24 hours. And she didn’t break even alter her day but by a few enjoyable minutes.

I mean, wow.  The world has changed.

When businesses are exploring how to be successful in the new economy, they are looking at how to capitalize on point to point connectivity. When a community looks at being successful, it should be doing the same thing.

In this spirit a community needs to focus on broadband access. Such access is fundamental infrastructure for human success and productivity in our new economy. And, a community should be aware that the new economy will bring a large variety of service-based businesses that function in varying global marketplaces through their own innovative use of point to point technologies. Nurturing these businesses with policy and amenities is a good economic development strategy moving forward.

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