Platt Perspective on Business and Technology

Interoperability, third party provider support and first mover advantage – 5

Posted in business and convergent technologies, outsourcing and globalization by Timothy Platt on March 10, 2012

This is my fifth 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 15-18 for parts 1-4.)

In my first three series installments I focused on organizational and business process innovation, and on unique value propositions and their sources as they arise within individual businesses and organizations. But as I noted in Part 4, businesses all exist and function in complex contexts. It is rare to find a business that stands and operates entirely on its own and facing a single simple marketplace that only turns to it for the types of value propositions that it offers. Businesses exist and function in coordination with other businesses, in supply chain and larger value chain systems and in multiple-demographic competitive marketplaces. And as I discussed in Part 4 of this series, when businesses participate in supply chain systems and depend at least in part on their success in doing so, a measure, and even at times a major proportion of their competitive edge can arise at the supply chain level. Competitive advantage can go to the most effective and responsive supply chain and much of the competition for market share and marketplace strength can be between competing supply chain systems. So as I noted in Part 4, sources of unique competitive advantage and unique value propositions can and do arise at the level of the individual business – as traditionally conceived, but they can arise at the level of the supply chain too, and not reside specifically in the individual involved businesses.

My goal in this installment is to at least briefly outline some of the parameters and qualities that would go into defining value for a unique value proposition that is emergent to the level of the supply chain itself. And I begin with a basic, general qualification.

• A supply chain level unique value proposition offers value to and within the supply chain to the extent that it provides explicit competitive advantage and returns on investment to its member businesses.

Collateral to that, I add:

• When this positive value is disproportionately shared through the supply chain that limits the overall stability of the supply chain as an ongoing organizational structure.
• And if any one participating business perceives itself as being left out of this or of losing advantage while its supply chain partners are gaining special benefits they will withdraw and that supply chain will simply collapse – and probably with an afterglow of ill will.
• So for stability in long term supply chains all participating business members have to see the supply chain as offering their business value, and generally relatively equally shared value.
• And even for short term and on the fly supply chain arrangements, participating businesses need to see these systems as offering them their share of the overall value created if they are to so participate with these business partners again in the future.

Supply chains manage and organize the collective inter-business transactions and processes that go into production, packaging and distribution, marketing and sales and with all supporting services included. The same business organization can simultaneously be participating in several and even many different, distinct supply chains and certainly as it addresses distinct marketplaces and customer bases. And even when a business participates in at most one specific, formally organized supply chain at any given time they might with time serially enter into and participate in many.

One source of value to potential supply chain partners that a business can bring to the table is its past successes in working in and bringing value to supply chains and to their supply chain partners. This can mean collecting a tools and resources library of best practices that they can share with and coordinately participate with others in, to increase the success likelihood for the supply chain as a whole.

And this brings me to one of my favorite supply chain companies: Li and Fung. One of their primary in-house best practices capabilities is in developing and sharing best practices and unique value proposition capabilities for the supply chain level, for more effectively and competitively working with other businesses for the mutual and collective benefit of all.

I was initially planning on going further in this discussion in this posting, but I have decided to end this here. I have been writing about the creation and equitable distribution of value and benefit from supply chain participation, and I will build on that in my next installment to explicitly discuss the issues of interoperability and operational connectivity, third party provider support and support between member businesses within the supply chain, and first mover advantage and at both the business and supply chain levels.

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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