The importance of proximity

Remember how computers and the information revolution were going to make geography irrelevant? How the ability to do business

. Well, a funny thing happened on the way to the future. Proximity, geography, and location matter now more than ever in business and especially in manufacturing-precisely because of the information technologies that were supposed to eliminate them. This puzzling truth is composed of three Proximity Paradoxes, each with significant implications for CEOs and senior executives managing for customer value:

Proximity Paradox No. 1: As computers speed the flow of information between companies, shipping and logistics become more important than ever. IT may dramatically reduce the time needed to complete a transaction, but it does little or nothing for getting those pesky atoms from here to there. Yet think about it: If you've taken all the time out of a transaction except for shipping and logistics, where should you focus your improvement efforts? More and more manufacturing customers are insisting that their suppliers co-locate, either by building a facility or warehouse next door or by locating within the customer plant itself. At the very least, your customer will expect you to be focusing intently on shipping and logistics, so that the distance between you doesn't become even more of a liability.