The Pro's and Cons of Managing Supply Chain 'Clusters' of the Future

While there are the obvious disadvantages of "clustering", some studies have shown that similar businesses located together do demonstrate seemingly better results through increased productivity via shared technology and knowledge, easy access to employees, training programs and research and academic institutions.

Competitive advantage comes with the close proximity of customers and suppliers making end-to-end optimization easier, and more direct customer relationships allow businesses to recognize new innovation opportunities and share resources, intellectual property and information. Also, modern high-tech clusters often group around high profile universities to leverage research. Silicon Valley is near Stanford University, and similar high-tech clusters gather around MIT close to Boston in the United States and around Cambridge University in the United Kingdom. The Silicon Valley cluster has now evolved beyond technology to become a hotbed of activity for the development of a wide range of disruptive business models.

But are these clusters sustainable when you strip away the support provided by regional bodies and agencies offering industry friendly incentives and a range of other benefits?

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