Building Value Chain Networks

Not all value chain initiatives are successful. Failure often teaches us more than snccess. The most well-known case studies of failure are Coca-Cola s creation of Coca-Cola Enterprises, Walmart s introduction of RFID, and the launch of the Boeing 787. Each story is a testimonial that despite the hype and promise of new ideas, what lasts is the bnilding of trne value in the value network. It has to be based on a sustaining win-win value proposition with trading partners. 

DEMAND NETWORK FAILURE COCA-COLA ENTERPRISES (CCE) 

Coca-Cola Enterprises Inc. (CCE) was spun out of the Coca-Cola Company in 1986. The goal was to consolidate the many independent bottling groups in the Coca-Cola system. The secondary goal was to improve the asset efficiency of the parent company. On Eebruary 24,2010, just four years after the creation of CCE, the Coca-Cola Company and CCE entered talks to sell CCE s North American division to Coca-Cola. Coca-Cola paid more than 15 billion dollars to reacquire CCE in North America, including redemption of Coca-Cola s 35 percent shareholding in CCE. 

This was a public admission of demand network failure. With the creation of Coca-Cola Enterprises in 1986, Coca-Cola was the darling of Wall Street. The company divested assets to improve its return on assets and financial fundamentals. What was not obvious then—and is all too clear now—was that when a company sheds assets, it must redesign to sense and shape demand to drive market performance. The more extensive the supply chain and the more third-party nodes, the greater the challenge and the more critical it is to sense demand and service a network. Form needs to follow function. Alignment and strategy are essential. 

Coca-Cola learned this the hard way. Battered by retail feedback (five years of falling scores on retailer surveys in North America), declining market share, and rising costs, Coca-Cola declared, Enough It announced the repurchase of the bottler. There were three fundamental supply chain issues underlying the defeat  

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THE BALANCED SCORECARD BUILDING SERVICE VALUE CHAIN NETWORKS... 

Today, with 30 years of supply chain history behind us, companies no longer have to stumble forward. Instead, they can harvest the insights from the pioneers and build value networks to drive lasting value. 

How Do I Transcend Supply Chain Design Concepts to Build Value Networks ... 

Supply chain processes are characterized by industry. The processes are very specific. As value chains are built, industries are coupled together to build extended supply chains. When industries focus on value-based outcomes, it is termed value networks. 

Build capabilities for network orchestration. While you can outsource value chains, you cannot outsource the risk of the value chain. As the supply chain is outsourced, staff for value chain orchestration and process coordination. 

The supply chain leader sees CSR as an opportunity, while the supply chain laggard complains about the burden of corporate social responsibility initiatives for its supply chain. For all, it is an opportunity to build value networks brick by brick. 

Building value-network effectiveness. In the extended supply chain, what should be the role of the corporate and regional teams In our organization, what does global mean What is the right structure for governance ... 

Constraints similar to Equation 5.1 arise in supply chain network design, where a company has the option to build warehouses of different capacities. In that case, x, is the quantity of product x stored at that location, xx is the square footage occupied by one unit of product x and by by b are the three potential warehouse capacities. Using binary variables, one for each b value, we can represent Equation 5.1 as a linear constraint. Define 5i, 82, 83 as the binary variables such that when 8j = 1, the RHS value is by Then Equation 5.1 can be written as. 

The value chain is a systematic approach to examining the development of competitive advantage. The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organization. To analyse the specific activities through which a firm can create a competitive advantage, it is useful to model the firm as a chain of value-creating activities. A value network is a business analysis perspective that describes social and technical resources within and between businesses (Porter 1985). 

In a wider sense, functionality distribution also means combination of reactive groups of one kind (for instance, hydroxy, or carboxyl, or isocyanate groups) of higher and lower reactivity in one precursor molecule. By this combination, the network build-up can be effectively controlled. For instance, one less reactive A group out of three in a trifunctional monomer in a RA3 + R B2 system promotes chain extension in contrast to branching and shifts the gel point to higher values [30],... 

Brick 3 Knowledge Building Effective Supply Chain Processes. Putting Value in value Networks... 

As a result, the focus of supply chain processes is shifting from inside-out to outside-in. To connect a network of smaller networks of suppliers, logistics providers, and third-party manufacturers, there is a shift from a vertical focus or building functional excellence in operations to the building of horizontal processes to connect value networks. In this transition, compaiues learn that they must break... 

Here we discuss the journey from extended supply chains to value networks. We start with the discussion of how to move from a cost to value and then share insights on how to use this focus to build the right relationships. We then share lessons from the pioneers. 

To be effective at market sensing, companies have to build strong horizontal processes to connect downstream and upstream data. Traditionally, supply chain processes have evolved from vertical processes. These functional silos—source, make, and deliver—gave birth to supply chain management. However, this silo approach, and a focus on vertical excellence, is both a barrier and an enabler to maximize value and build strong networks. It is a conundrum. Companies need to build strong vertical silos to deliver operational excellence but at some point in their maturity, they must "break the glass" and shift their focus to build horizontal excellence. 

The questions surrounding outsourcing and the building of strategic relationships through value networks are answered in the development of the supply chain strategy. This is easier said than done. It is ongoing. Most supply chains are complex. 

To extend the supply chain from an internal to an external focus requires skills, incentives, resources, planning, and leadership. There are many stops and starts. Relationships need to be treated differently based on importance, capabilities, and strategic alignment. Before companies can build successful value networks, they have to be clear on what determines value in the supply chain strategy. 

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