Crossing the Digital Divide

Multinationals are leveraging Internet technology to build bridges to suppliers in developing economies

For years, large multinational corporations have adopted an effective strategy of offshoring key operations to countries with advantageous labor environments to remain competitive in international markets. In doing this, many of these companies have been forced to "surrender" the world-class supply chain practices they've implemented, or aspire to implement, throughout the rest of their enterprises.

These large multinational companies have gained access to the developing world's labor pool and successfully transitioned and enlarged their supply chain community without sacrificing quality, surety of supply or customer loyalty. But there has been an unintended consequence. They have created a digital divide.

Bridging the Gap

On one side of the divide is the ability to implement world-class operational systems and processes that require the engagement of trading partners. On the other side are the sustainable development requirements and licenses-to-operate practices necessary to sustain the low-cost country operations, which are dependent upon local suppliers and service providers. As these large companies focus on Six Sigma activities to drive competitive differentiation and advantage, the greater the divide grows because their local partners struggle to keep pace with the level of process and technology sophistication. Inherent in this "divide" is the gap in infrastructure, knowledge and business cultural barriers.

But now the Internet, along with advances in software and services, is enabling local companies to become proficient in the digital world and bridge this gap. Technology and the Internet are providing opportunities to drive world-class business processes out to local entities in developing countries.

There are several identifiable benefits for large companies that engage and support exemplary business processes with their local partners. Streamlining parallel systems and processes drives clear measurable efficiencies and opens the path to higher level process engagement and economic returns. Supporting small micro-entities (SMEs) as they engage these new processes goes a long way towards fulfilling sustainable development needs and supporting local/regional license-to-operate requirements in these developing markets.

But these are not the only benefits that companies can bank on; in many cases the support and advancement of a company's local/regional supply chain partners help drive greater alignment with national governments that have demonstrated an interest in developing their SME business communities. Another added benefit is stronger, more profitable suppliers, decreasing the companies' risk of engagement and creating future opportunities for price adjudication.

Building "Digital Bridges"

As these large multinational companies are compelled to play a critical role in enabling developing-world countries to grow and prosper, the need to find and promote creative solutions to a diverse network of suppliers will intensify. Building "digital bridges" within these markets can only be achieved by adopting solutions and strategies that meet local needs. Here are a few examples:

In rural South Africa, many small companies don't have computers, and those that do often have old models with limited Internet access and bandwidth. The multinationals operating in this region have built sophisticated systems that utilize high-speed, computer-generated communications to buy goods and services and optimize their supply chains as part of the leading-practice processes that make them more efficient. By working with the country's Small Enterprise Development Agency, Quadrem and its partners have brought mobile information centers to rural areas.

Now suppliers can use Internet kiosks, cell phones and fax machines to receive purchase orders and accept these orders in an automated way using smart data transformation techniques that "translate" the fax images into the appropriate XML computer language and send the data directly into the multinationals' supply chain management systems.

In Peru and Indonesia, global corporations with operations located high in the mountains or on remote jungle islands are buying goods and services from small vendors who were formerly farmers or fishermen but who now have made the transition to become goods and service providers. Quadrem works with large companies that develop new entrepreneurs by teaching them to use computers proficiently and making it easy to log onto the Internet and access highly usable, powerful software systems. They also teach the local people basic business processes.

These are just a few of the actions that corporate leaders are taking to bring many thousands of small vendors into a global commerce environment, and the numbers are growing exponentially each year. More can be done and will be done as global leaders who implement tier-one business systems and processes worldwide begin to beat their competition.

The bottom line is that bridging the digital divide is about more than just the bottom line, but the bottom line benefits are there as well.