Value Chain Concept Is No Longer Relevant, Researchers Conclude

SupplyChainBrain (7/30, Capgemini Consulting) – Consulting in conjunction with the University of Edinburgh Business School … [shows that] best-in-class manufacturers are replacing [vertical supply chain] models with actively managed, globally networked value circles. These value circles have the following characteristics:

• Customer relationships that lead innovations to generate a value circle rather than a linear chain;
• Close collaborative relationships for design, supply and customer satisfaction;
• Highly complex network relationships with customers, suppliers and competitors worldwide;
• Value creation reflecting intricate combinations with the value circles of other manufacturing networks worldwide;
• Active management involving advanced use of IT approaches.
  

As a result of this research, Capgemini has developed a global networked value circle model. It says the best-in-class firms operating in this environment display three essential abilities:

• The ability to identify realistically global competencies (and retain only these competencies in-house);
• The managerial and IT ability to form, manage and exploit relationships (despite these becoming more profuse, more global and more complex);
• The foresight to identify relationships that will become strategic assets (since many are available, but only a few will deliver competitive and strategic advantage).