A technological advance may involve an idea that allows more output to be produced with the same inputs, or an equal output with fewer inputs. A good example is just-in-time technology. Before the modern era, auto manufacturers kept large stocks of components in their production facilities, but developments in communications and computers at that time made it possible for manufacturers to link directly with their input suppliers. Nowadays assembly plants place their order for, say, seat delivery to their local seat supplier well ahead of time. The seats swing into the assembly area hours or minutes before assembly—just in time. The result is that the assembler reduces his seat inventory (an input) and thereby reduces production cost.
Such a technology-induced cost saving is represented by moving the supply curve downward or outward: The supplier is willing to supply the same quantity at a lower price because of the technological innovation. Or, saying the same thing slightly differently, suppliers will supply more at a given price than before. This is but one example of how “supply chains” are evolving in the modern globalized world. Computer assemblers are prime examples of the same developments.
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