The
U.S. and nearly every other developed nation face continued, severe economic
problems. Despite
being years into ‘recovery’, few solutions actually work. Why?
The Real
Question
Almost everyone in the G-20 nations is using the Internet. What does the Internet do? It serves as an efficient public
infrastructure or platform for the whole information process.
Before the Internet was introduced in 1996, we
could only develop individual private software for something to improve
efficiency and also create effectiveness at the same time. However, afterwards, on the basis of that
efficient public Internet, we could create numerous effectiveness-oriented
applications. Accordingly, we created
numerous new businesses and jobs, but only in the Internet and IT sectors of
the economy.
Then, why haven’t we also developed such an efficient
public infrastructure or platform for the real market (or supply chain)
process? Not
even a single one in the whole world?
A Serious
Mistake Made in Developing Real Market Process Systems and the Real Cause of the Current Economic Crisis
There are two main ways to develop a process
system between multiple providers (or information sources) and multiple customers
(or information recipients) by using information technology. One indirect way is to develop transaction
systems first for functions by
manipulating —that is, classifying or limiting—the constituent factors of the
transactions such as products, services, providers, and customers, and then networking those systems as an integral process for
efficiency. The other way is directly
constructing a public process infrastructure or platform.
Only four basic requirements exist for constructing
an efficient public process platform between multiple providers (or information
sources) and multiple customers (or information recipients):
1.
The rules and standards for transactions are
simplified and transparent.
2.
Fair conditions permeate competition.
3.
The responsibility line for every participating
member is clear from the start.
4.
It should be applicable everywhere.
Because information consists of digital codes,
its transactions have
not only been freed from the restriction of time and space but have
done so in accordance with a fair rule and standard. Therefore, by developing the protocol for clarified responsibility
lines and the World Wide Web for ubiquitous applicability, the Internet as an
efficient public process infrastructure or platform developed in information
with few hitches—but only in information markets.
On the other hand, the distribution and delivery of real (physical) products
and services are directly restricted by time and space. So, many different and complex rules
and standards evolved in many incompatible IT systems for real transactions (or distributions) between single providers and multiple customers
(internet sales), or between single customers and multiple providers (private
supply chains).
To simplify those many different and complex
rules and standards and impose fair conditions for competition, what must be done? Information technology must
directly overcome the restriction of time and space to directly improve the
conditions of real-world processes.
Unfortunately, nobody has tried this, and as a
result no efficient public process infrastructure or platform for real markets has developed.
This was a serious oversight or mistake, and I
believe it must be the real cause of the current economic crisis. Let’s see why!
A Hidden Critical Flaw in Our Economy and the Changed Economic
Environment
Only private real market (or supply chain)
process systems have developed for both improving efficiency and creating effectiveness at the same time under each individual’s responsibility by using information technology, mostly by
big companies and only for their own benefit.
Because supply chains have been constructed by
networking (or integrating) their function transaction systems and developed by manipulating the constituent
factors of their transactions, (1) the number of transactions
and functions in the process has shrunk remarkably—as with Wal-Mart,
e-buyer, e-seller, and e-auctioneer systems, and existing e-marketplace systems
in the real market process—and (2) numerous collaborative activities to
increase efficiency of function have arisen in nearly all industries of the economy.
In this situation, the businesses of small- and
medium-size companies (SME) have unavoidably weakened and over time been
destroyed, and many jobs in SME have disappeared. Moreover, because entry costs to markets rose too much, new business creation has fallen.
Actually, all electronic real market process
systems ever developed in the Modern Information Age have served as ‘Job-Killing
Systems’ or as ‘New-Business-Creation Blocking Systems’. This is the hidden critical flaw in our
economy, the infamous ‘Unintended Consequence’ of runaway IT exploitation in a
system lacking a fair rule for competition.
More seriously, these real market process
systems as tributaries of the market have caused an alteration in the economic environment by seriously
weakening employment conditions all over the supply side. Correspondingly, the self-generation
capability of the market has dried up, seriously and continuously, over time. All streams flow toward ‘efficiency’.
In this situation, can we solve the current
economic crisis only with powerful expansionary economic policies and stimulus
plans? No, it will be almost impossible,
structurally, and a strong case can be made that further gross, untargeted
stimulus can only worsen market conditions in real goods and services. We already know such huge stimulus has not
created jobs or businesses.
A New Inter-Supply-Chain-Net as a Solution
The Inter-Supply-Chain-Net is a game-changing efficient public platform for the whole real market
process which directly overcomes the restrictions of time and space through
information technology.
To simplify the rules and standards and create
fair conditions for competition, the market will be divided into multiple limited
market ranges for directly overcoming the restriction of
time and space, not for
manipulating the constituent factors of transactions. Such a system would replace
the feeble supply chains of SME by consolidating them (at modest cost) within
limited market ranges.
Some basic supply functions, similar to digital
codes in information, will be
automatically established in each limited market range with voluntary
participation of outsourcing service providers for business functions through a
third party IT brain – centralized volume through centralized communication.
Then, finally, all four basic requirements will
be satisfied for constructing an efficient public real (physical) process
infrastructure or platform (the Inter-Supply-Chain-Net) between multiple
providers and multiple customers.
On the basis of this efficient public Inter-Supply-Chain-Net,
we will also be able to create numerous effectiveness-oriented applications in
the real market by using various outsourcing service providers. Accordingly, we will then be able to create
not just a few but numerous new businesses and jobs in the real economy by
lowering cost of entry. In sum, the
Inter-Supply-Chain-Net has the potential
to induce a Supply Chain Revolution in real markets, similar to the Internet
Revolution in information.
I believe this is the most effective solution
for the current economic crisis.
By Ho-Hyung ("Luke") Lee
