Platt Perspective on Business and Technology

Interoperability, third party provider support and first mover advantage – 4

Posted in business and convergent technologies, outsourcing and globalization by Timothy Platt on March 2, 2012

This is my fourth installment in a series on unique value propositions and sources of unique value in individual businesses, with a focus on businesses as they function in supply chains and larger value chains, and in complex business and economic ecosystems (see Outsourcing and Globalization, postings 15-17 for parts 1-3.)

So far I have taken a more traditional approach to the concept of unique value propositions, looking at them strictly as they reside within and offer value to specific owning organizations. And with that, much of what I cover in the title of this series is overlooked. I did that to build a foundation for what is to follow, starting with this installment. And as I stated at the end of Part 3:

• I will more explicitly consider the way business models have to change as we work in a more globally interconnected world and in globally, ubiquitously interconnected business and market ecosystems.
• Consider supply chains and larger value chains that businesses operate in and compete from within. I am going to switch to the development of unique value propositions, and particularly in processes connecting together supply chains that are emergent to that level of organization and that do not reside, strictly speaking within any single business in the supply chain.

And as I frequently do in this blog and in general, I start with the fundamentals and build from there.

• Businesses enter into organized, formal supply chains because these arrangements provide stability, consistency and reliability that allows for and supports greater efficiency. Supply chains confer added value and to all participants when they work as intended.
• As such, it is in the best interest of the businesses and organizations working together in a supply chain, to make this larger organizational entity work, and work as cost effectively and efficiently as possible.
• Some individual businesses – UPS comes immediately to mind here, specifically build logistics support capabilities and best practices into their core business models as individual businesses but even when supply chain participants such as this company are involved, the most effective supply chains offer greater value to all participating businesses than they would receive from simply operating without this type of organized business to business collective effort.
• Some businesses, and here I find myself thinking of Li and Fung explicitly organize and manage supply chains, bringing businesses together to create greater efficiencies and new business and marketplace opportunities. And the supply chains they build are dynamic and mutable, formed and functioning when specific opportunities present themselves that would call for a given supply chain structure, and with that structure disassembled when it is no longer needed. They work with a community and a business ecosystem of manufacturers and distributors, and other supportive businesses that enter into and work in these temporary and here and now effective supply chains with them, to drop out of them as their specific need and point of effectiveness is past. The same principles I have been writing of as to shared value applies for these more transient supply chains that would be found in effective longer term business collaborations and long-term stable supply chains.

And with that, I come to the core issues to be discussed in this series installment:

• When businesses function in supply chain systems and compete in their marketplaces from within them, a measure and even a very significant measure of their competitive strength can usually be found in the supply chain systems that support and sustain them, as individual businesses.
• In effect, the key competition for market strength and position can be between supply chain systems that reach out to address those market needs.
• And differentiating value that would confer greater strength to one supply chain over another that is in effect competing for some same market and market share, can come from two different types of source.
• This can come from the individual producing businesses in this system – the businesses in the supply chain directly producing and offering the products and services that the marketplace trades in.
• But this can also come from strength and capability that is centered in the supporting businesses that facilitate those producers in reaching their markets. And as soon as differential value arises there in the supply chain, opportunity arises for creating and exercising best practices and unique value propositions that functionally connect and coordinate supply chain transactions and supply chain functioning as a whole – sources of unique value that reside at the level of the supply chain itself and that do not explicitly reside in any one member business alone.

I am going to look into some of the details of these emergent supply chain level best practices and unique value propositions in my next series installment and that is where the terms “interoperability”, “third party provider support” and “first mover advantage” will come in, and explicitly at this higher organizational level. I will simply note here that they take on different meanings in that context than would generally apply when using them from the perspective of the individual company as it deals with and responds to its outside world.

You can find this posting and series at Ubiquitous Computing and Communications – everywhere all the time and at Outsourcing and Globalization as the supply chain and value chain business ecosystems that are discussed here are increasingly global in reach and participation. You can also find related postings at Business Strategy and Operations and its continuation page, Business Strategy and Operations – 2.

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