In-Depth

A Virtual Fable

• By Michael Guttman, Jason Matthews
• July 24, 2001

It is 8 a.m., and you have just sat down at your desk at Forever Footwear, sipping your first café latte of the morning. Forever, with just nine employees, was once a little shoe factory in your a pleasant little Maine hamlet. Now a virtual corporation, Forever controls 3% of the worldwide market for fashion shoes, hosiery and legging accessories through its deals with eight major suppliers and four large retail chains. Forever sold off the last of its own stores five years ago. And the old shoe factory -- it is now located in a chic shopping mall full of other outlet stores where you shop from time to time.

Overnight, the worldwide electronic Meganet has processed your overnight electronic mail according to your personal specifications of the evening before. In the middle of the big screen above your desk is a picture of Martin, your counterpart at Just Leggin's, one of your major suppliers in Singapore, and your top priority today.

The icon in the corner below indicates that Martin is already in and specifically waiting for your arrival to discuss the proposition he sent off last night. With a wave of your hand, a preconfigured signal to your computer's visual recognition system, you are instantly connected to Martin. His video image begins to move and talk.

Martin is trying to close a deal to buy three more manufacturing plants in Brazil, but these currently make sports clothes and have substantial inventory he does not need. He called you because he knows you sell sports clothes and might want the inventory. Your possible purchase of the inventory is critical to his acquisition financing, which he must complete by this afternoon.

Martin has regular access to your leggings management software and database, which he uses, along with those of his other customers, to project -- and automatically process -- orders. But Martin has no regular authorization to access your sports clothes information system, so he needs your help. With the help of your respective computer systems, and the Meganet, he hopes you can work out a deal by noon, his financing deadline.

You need to know how much the inventory is really worth to you, based on such information as pending orders, sales history and so on. This must be matched against the actual inventory, currently controlled by an inventory management system on a computer in Brussels that leases capacity to the current owners of the Brazilian plants through the Meganet. From these owners, Martin has the security authorization to connect to the Brussels system, authorization he now passes on to you.

Your system immediately links to the Brussels system, passing along the security key. The Brussels system connects you to the Brazilian inventory software and database, which your own sales and inventory systems query to figure out its current value to you. While you chat with Martin, your system computes a pricing structure and communicates it back to you. The pricing structure includes a number of variables to be resolved at the time of actual sale, including one based on available cash on hand.

Martin's no dummy, and he has already checked out similar leads with other customers, and across the Meganet global market board. Along with their quotations, your price offering is fed into his plant acquisition application, which he constructed on the fly over the weekend from bits and pieces of an applications library he bought from a software house specializing in acquisitions, plus Just Leggin's own software library. The program suggests a confidence level for your bid being optimum at likely time of sale.

The deal is set to close at noon, assuming certain conditions are met. But by noon market conditions have changed, and the deal is no longer attractive to Forever because of changes in your cash flow position in Europe. Automatically, the system connects you and Martin, who is visiting the office of another customer at this time.

No problem, however -- Martin has full access to all his information at the customer's computer system, since the customer's system signed him in with a retinal scan when he entered the room.

On the basis of the new data, being updated graphically in realtime on both your and Martin's screens at once, you and Martin finagle a bit. You both decide to include in the purchasing formula some price breaks in the purchasing formula for you on his company's leggings over the next three months; the value of those price breaks is gleaned from the interaction of his leggings information system with yours.

Martin also brings some pressure to bear over the Meganet on Just Leggin's London banker to assist you in easing your European cash position until the transaction can be completed. The deal closes immediately, and the inventory is yours.

Of course, your inventory, sales and purchasing systems are updated automatically, and the goods are forwarded to the warehouse of one of your customers in Vancouver. As your sales system figured, the goods will arrive exactly in time to fill an expected order for that customer.

Your customer's own computing system in Toronto is, of course, informed of their upcoming arrival and a new lower-than-anticipated price. This lower price automatically generates a future retail price drop in his system. Tomorrow, several of his ads will appear prominently in specialty electronic newspapers distributed to selected consumers near his major stores in Ontario. Those ads will announce a special sale price on certain sports clothes for the next two weeks.