9.3.6 The Growing Importance of Reliability
The trend towards globalisation should entail development that will induce significant positive effects on developing countries. Exposition of the economy to foreign
competition imposes stricter requirements, particularly on the reliability and quality
of most activities, including infrastructure services, compared to local demands or
those prevailing in a closed economy.
Industrial competition has changed with new international rivals emerging with
leading advantages in costs, productivity, or government support. Rapidly changing
technology in production and communications has renovated the competitive
dynamics of the world economy. Although price competition stills remains significant in this new competitive environment, quality, delivery time, marketing, services and the ability to adapt quickly to demand fluctuations are becoming critical to
capturing and preserving markets.
Developing countries need significant improvements in infrastructure quality if
they wish to participate effectively. These improvements are essential given that
more than 80% of their exports go to developed countries. Physical infrastructure
such as roads, rail, air, and marine transport, telecommunications, power, becomes a
pre-requisite for productivity growth (see also Chap. 2) and successful international
competition.
Market globalisation has been complemented by new production processes that
depend on minimal inventory by using the just-in-time inventory system. Just-intime systems require closer relationships between buyers and sellers because buyers
anticipate, not to say, demand, perfect quality and absolutely reliable delivery. The
production of an airplane requires components from several countries, and thus the
supply lines for them have to be extremely well co-ordinated. Similarly, changing
fashions in Europe are transmitted to producers in the Indian Ocean a few weeks
before the selling period. Again, quality and reliability are of prime importance
because the supplier must respond quickly to the buyer’s strategy of reacting quickly
to frequent changes in fashion.
Studies of specific export commodities confirm that the three important product
criteria for sales are price, quality, and on-time delivery. Reliable, complete deliveries enable retailers to take advantage of seasonal sales peaks and fashion periods.
Given that these peaks and periods may be very short, delivery delays of even only a
few days can entail lost sales and substantial markdowns. In the electronics industry,
international completion necessitates not only low production costs, but also high
quality and rapid delivery times. The sales and advertisements for computers and
smart phones are very indicative of this competition. These require a sturdier
infrastructure than most new entrants possess.
Constraints in logistics may present a difficult challenge to developing countries.
How much does it cost to get the products to markets, is an important parameter.
The causes for delays and high costs comprise power shortages, port capacity
constraints, roads, railways, and warehousing, and poor telecommunications
9.3 Importance of Quality and Reliability
263
The trend towards globalisation should entail development that will induce significant positive effects on developing countries. Exposition of the economy to foreign
competition imposes stricter requirements, particularly on the reliability and quality
of most activities, including infrastructure services, compared to local demands or
those prevailing in a closed economy.
Industrial competition has changed with new international rivals emerging with
leading advantages in costs, productivity, or government support. Rapidly changing
technology in production and communications has renovated the competitive
dynamics of the world economy. Although price competition stills remains significant in this new competitive environment, quality, delivery time, marketing, services and the ability to adapt quickly to demand fluctuations are becoming critical to
capturing and preserving markets.
Developing countries need significant improvements in infrastructure quality if
they wish to participate effectively. These improvements are essential given that
more than 80% of their exports go to developed countries. Physical infrastructure
such as roads, rail, air, and marine transport, telecommunications, power, becomes a
pre-requisite for productivity growth (see also Chap. 2) and successful international
competition.
Market globalisation has been complemented by new production processes that
depend on minimal inventory by using the just-in-time inventory system. Just-intime systems require closer relationships between buyers and sellers because buyers
anticipate, not to say, demand, perfect quality and absolutely reliable delivery. The
production of an airplane requires components from several countries, and thus the
supply lines for them have to be extremely well co-ordinated. Similarly, changing
fashions in Europe are transmitted to producers in the Indian Ocean a few weeks
before the selling period. Again, quality and reliability are of prime importance
because the supplier must respond quickly to the buyer’s strategy of reacting quickly
to frequent changes in fashion.
Studies of specific export commodities confirm that the three important product
criteria for sales are price, quality, and on-time delivery. Reliable, complete deliveries enable retailers to take advantage of seasonal sales peaks and fashion periods.
Given that these peaks and periods may be very short, delivery delays of even only a
few days can entail lost sales and substantial markdowns. In the electronics industry,
international completion necessitates not only low production costs, but also high
quality and rapid delivery times. The sales and advertisements for computers and
smart phones are very indicative of this competition. These require a sturdier
infrastructure than most new entrants possess.
Constraints in logistics may present a difficult challenge to developing countries.
How much does it cost to get the products to markets, is an important parameter.
The causes for delays and high costs comprise power shortages, port capacity
constraints, roads, railways, and warehousing, and poor telecommunications
9.3 Importance of Quality and Reliability
263