Competing in a Flat World: Building Enterprises for a Borderless World

9. Capture the“Soft $3” by Looking Beyond the Factory

Although companies have focused on squeezing the last penny out of manufacturing, whole dollars are at stake in better managing the supply chain. A plush toy might cost $1 out of the factory door, yet it retails for $4. How can companies use better supply chain orchestration to capture this “soft $3”?

Manufacturing processes have improved dramatically in recent decades; now the biggest opportunities for cost improvements are often outside the factory. These opportunities come from looking across the supply chain, shifting from focusing on squeezing pennies from the “hard” manufacturing processes in the factory to recouping the “soft dollars” in the rest of the supply chain.

The opportunities ...