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just the everyday low prices; but the wide aisles; the big pallets of household goods; 
the huge signs displaying the lowest prices in each category; and the Wal…Mart 
supply…chain computer system so that store managers can quickly adjust stock。 
I asked Seiyu's CEO; Masao Kiuchi; why he had turned to Wal…Mart。 〃The first time 
I knew about Wal…Mart was about fifteen years ago;〃 explainedKiuchi。 〃I went to Dallas 
to see the Wal…Mart stores; and I thought this was a very rational method。 It was 
two things: One was the signage showing the prices。 It was very easy for us to 
understand。〃 The second; he said; was that the Japanese thought a discount store meant 
that you sold cheap products at cheap prices。 What he realized from shopping at 
Wal…Mart; and seeing everything from plasma TVs to top…brand pet products; was that 
Wal…Mart sold quality products at low prices。 

〃At the store in Dallas; I took pictures; and I brought those pictures to my colleagues 
in Seiyu and said; 'Look; we have to see what Wal…Mart is doing on the other side 
of the planet' But showing pictures was not good enough; because how can you understand 
by justlooking at pictures?〃 recalled Kiuchi。 Eventually; Kiuchi approached Wal…Mart; 
and they signed a partnership on December 31; 2003。 Wal…Mart bought a piece of Seiyu; 
in return; Wal…Mart agreed to teach Seiyu its unique form of collaboration: global 
supply…chaining to bring consumers the best goods at the lowest prices。 
There was one big thing; though; that Seiyu had to teach Wal…Mart; Kiuchi told me: 
how to sell raw fish。 Japanese discounters and department stores all have grocery 
sections; and they all carry fish for very dis141 
criminating Japanese consumers。 Seiyu will discount fish several times during each 
day; as the freshness declines。 
〃Wal…Mart doesn't understand raw fish;〃 said Kiuchi。 〃We are expecting their help 
with general merchandising。〃 
Give Wal…Mart time。 I expect that in the not…too…distant future we will see Wal…Mart 
sushi。 
Somebody had better warn the tuna。 
Flattener #8 
Insourcing 
What the Guys in Funny Brown Shorts Are Really Doing 
One of the most enjoyable things about researching this book has been discovering 
all sorts of things happening in the world around me of which I had no clue。 Nothing 
was more surprisingly interesting than pulling the curtain back on UPS; United Parcel 
Service。 Yes; those folks; the ones who wear the homely brown shorts and drive those 
ugly brown trucks。 Turns out that while I was sleeping; stodgy old UPS became a huge 
force flattening the world。 
Once again; it was one of my Indian tutors; Nandan Nilekani; the Infosys CEO; who 
tipped me off to this。 〃FedEx and UPS should be one of your flatteners。 They're not 
just delivering packages; they are doing logistics;〃 he told me on the phone from 
Bangalore one day。 Naturally; I filed the thought away; making a note to check it 
out; without having any clue what he was getting at。 A few months later I went to 
China; and while there I was afflicted with jet lag one night and was watching CNN 
International to pass the wee hours of the morning。 At one point; a commercial came 
on for UPS; and its tag line was UPS's new slogan: 〃Your World Synchronized。〃 
The thought occurred to me: That must be what Nandan was talking 
142 
about! UPS; I learned; was not just delivering packages anymore; it was synchronizing 
global supply chains for companies large and small。 The next day I made an appointment 
to visit UPS headquarters in Atlanta。 I later toured the UPS Worldport distribution 
hub adjacent to the Louisville International Airport; which at night is basically 
taken over by the UPS fleet of cargo jets; as packages are flown in from all over 
the world; sorted; and flown back out again a few hours later。 (The UPS fleet of 270 
aircraft is the eleventh largest airline in the world。) What I discovered on these 


visits was that this is not your father's UPS。 Yes; UPS still pulls in most of its 
36 billion in sales by shipping more than 13。5 million packages a day from point 
A to point B。 But behind that innocuous facade; the company founded in Seattle in 
1907 as a messenger service has reinvented itself as a dynamic supply…chain manager。 
Consider this: If you own a Toshiba laptop computer that is under warranty and it 
breaks and you call Toshiba to have it repaired; Toshiba will tell you to drop it 
off at a UPS store and have it shipped it to Toshiba; and it will get repaired and 
then be shipped back to you。 But here's what they don't tell you: UPS doesn't just 
pick up and deliver your Toshiba laptop。 UPS actually repairs the computer in its 
own UPS…run workshop dedicated to computer and printer repairs at its Louisville hub。 
I went to tour that hub expecting to see only packages moving around; and instead 
I found myself dressed in a blue smock; in a special clean room; watching UPS employees 
replacing motherboards in broken Toshiba laptops。 Toshiba had developed an image 
problem several years ago; with some customers concluding that its repair process 
for broken machines took too long。 So Toshiba came to UPS and asked it to design a 
better system。 UPS said; 〃Look; instead of us picking up the machine from your 
customers; bringing it to our hub; then flying it from our hub to your repair facility 
and then flying it back to our hub and then from our hub to your customer's house; 
let's cut out all the middle steps。 We; UPS; will pick it up; repair it ourselves; 
and send it right back to your customer。〃 It is now possible to send your Toshiba 
laptop in one day; get it repaired the next; and have it back the third day。 The UPS 
repairmen and …women were all certified by Toshiba; and its customer complaints went 
down dramatically。 

packages delivered or goods repaired quickly anywhere in the world; you can act really 
small。 
In addition; by making the delivery of goods and services around the world 
superefficient and superfast…and in huge volumes…UPS is helping to level customs 
barriers and harmonize trade by getting more and more people to adopt the same rules 
and labels and tracking systems for transporting goods。 UPS has a smart label on all 
its packages so that package can be tracked and traced anywhere in its network。 
Working with the U。S。 Customs Service; UPS designed a software program that allows 
customs to say to UPS; 〃I want to see any package moving through your Worldport hub 
that was sent from Cali; Colombia; to Miami by someone named Carlos。〃 Or; 〃I want 
to see any package sent from Germany to the United States by someone named Osama。〃 
When the package arrives for sorting; the UPS computers will then automatically route 
that package to a customs officer in the UPS hub。 A computerized arm will literally 
slide it off the conveyor belt and dump it into a bin for a closer look。 It makes 
the inspection process more efficient and does not interrupt the general flow of 
packages。 These efficiencies of time and scale save UPS's clients money; enabling 
them to recycle their capital and fund more innovation。 But the level of collaboration 
it requires between UPS and its clients is unusual。 
Plow & Hearth is a large national catalog and Internet retailer specializing in 
〃Products for Country Living。〃 P&H came to UPS one day and said that too many of its 


furniture deliveries were coming to customers with a piece broken。 Did UPS have any 
ideas? UPS sent its 〃package engineers〃 over and conducted a packaging seminar for 
the P&H procurement group。 UPS also provided guidelines for them to use in the 
selection of their suppliers。 The objective was to help P&H understand that its 
purchase decisions from its suppliers should be influenced not only by the quality 
of the products being offered but also by how those products were being packaged and 
delivered。 UPS couldn't help its customer P&H without looking deep inside itsbusiness 
and then into its suppliers' businesses…what boxes and packing materials they were 
using。 That is insourcing。 
146 
Consider the collaboration today among eBay sellers; UPS; PayPal; and eBay buyers。 
Say I offer to se

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