The (Economic) Ties that Bind... Have you ever heard of the Dell Theory of Conflict Prevention? "No two countries that are part of a major global supply chain, like Dell's, will ever fight a war against each other as long as they are both part of the same global supply chain."

That's Thomas Friedman writing in his provocative new book,
The World Is Flat: A Brief History of the Twenty-First Century. To demonstrate our economic interdependence, Friedman traces the creation his own Dell laptop (pp 414-419).

Dell computers (about 150,000 are sold each day) are built in one of six factories around the world: Ireland, China, Brazil, Malaysia and two in the U.S., Tennessee and Texas. Friedman's was built in Penang, Malaysia.

Surrounding each factory are supplier logistics centers (SLCs) operated by thirty major Dell suppliers. Every two hours a factory e-mails nearby SLCs the parts needed in the next 90 minutes!

After the parts arrive, it takes about six hours to build the computer, download the software and box it for delivery. Dell flies chartered 747s, each loaded with 25,000 laptops, from Penang to Nashville six days a week. Flowing smoothly, each laptop arrives in the U.S. just four days after it's been ordered.

Key components of Friedman's laptop were delivered by a "supply chain symphony" involving hundreds of companies located in dozens of cities around the world in China, Costa Rica, Germany, India, Korea, Japan, Malaysia, the Philippines, Taiwan and Thailand.

Now consider the real estate implications. How could you sign long term leases for facilities supporting Dell's supply chain? Conversely, how could you build these facilities without long term leases?

--Peter Pike