That prediction is exactly the opposite of what has unfolded. On the hardware side, logistics have become the critical issue. Whether a company is shipping direct to consumer or needs to meet the timing and cost requirements for OEMs, geography is a critical factor in the cost and customer service equation. Integrating our operations geographically furthers this advantage. By expanding to Tennessee rather than staying in Texas, Canup argues, Dell took advantage of Tennessee's central location from the point of view of population, and therefore customer density.
Operations tend to grow where they're created.
Companies live with the inherent conditions, at first, and make them work. Dell sets a precedent other computer companies will probably follow, to use better logistics as a site selection model. Dell is in the process of opening a second Tennessee manufacturing plant in Lebanon, and adding a line of notebook computers to its existing Davidson County plant. For Logistics Power Down at the chips level of computer manufacturing, logistics costs are driving a site location equation that's looking more and more like the apparel industry's strategy. Chips are so inexpensive to ship, explains Canup, that they can be sent to Asia to be imprinted and back to the United States to be finished, much like a pair of jeans can be cut, sewn and finished in three different locations.