Showing papers on "Value chain published in 2015"

Thriving in an increasingly digital ecosystem

Abstract: The business world is rapidly digitizing, breaking down industry barriers and creating new opportunities while destroying long-successful business models. Given the amount of turmoil digital disruption is causing, authors Peter Weill and Stephanie L. Woerner of the MIT Center for Information Systems Research say its time for companies to evaluate these threats and opportunities and create new business options for the more-connected future of digital ecosystems. In recent research, board members at large companies estimated that 32% of their companys revenue would be under threat from digital disruption in the next five years; 60% of board members felt their boards should spend significantly more time on this issue next year. Despite the threats from companies including Uber, Airbnb and Amazon, increasing digitization offers opportunities for companies to leverage strong customer relationships and increase cross-selling, the authors argue. The authors offer a framework, supported by examples, for helping managers think about their competitive environments. The combination of moving from value chains to ecosystems and increasing consumer knowledge, the authors write, provides business leaders with four distinct business models, each with associated capabilities and relationships. Companies can choose to operate as (1) suppliers, (2) omnichannel businesses, (3) modular producers or (4) ecosystem drivers. The authors found that businesses focused narrowly on value chains were at a disadvantage compared with those that thought more broadly about their business ecosystems. Companies that had 50% or more of their revenues from digital ecosystems and understood their end customers better than their average competitor saw 32% higher revenue growth and 27% higher profit margins than their industry averages. As they prepare for growing digital disruption, companies have two major decisions to make. First, they need to decide the extent to which they want to control the value chain or become part of a more complex ecosystem. Second, they need to decide how much they want to invest in knowing their end customers. Companies with ecosystem drivers as their dominant business model had the highest margins and growth of all the four options in the companies the authors studied

Cutting Food Waste through Cooperation along the Food Supply Chain

Abstract: Food produced but not used for human consumption is a waste of natural resources. In order to prevent and reduce food waste, the main causes have to be identified systematically along the food supply chain (FSC). The aim of this study is (1) to shed light on the causes and effects of food waste through the analysis of 44 qualitative expert interviews examining the processes and intermediaries along the German food chain and (2) to find methods to reduce it. Results indicate that food waste occurs at all stages in the food chain. Thus, there is no single culprit to be blamed. Besides, the identified reasons for food waste differ between product groups; not a single solution can cause notable change. Furthermore, the analysis demonstrates that the causes and effects of food waste are to be found at different stages of the value chain. Hence, it is of high importance to improve communication and to raise a new appreciation for food among all stakeholders of the food supply chain in order to develop a more sustainable food system. Information on the topic of food waste needs to be shared among all actors of the supply chain. They need to share responsibility and work together to reduce food waste.

Servitization and Competitive Advantage: The Importance of Organizational Structure and Value Chain Position

Abstract: Servitization represents a business-model change and organizational transformation from selling goods to selling an integrated combination of goods and services. Competitive advantage is one outcome of this shift. During servitization, companies follow stages to realize services as an opportunity to differentiate from goods and achieve higher customer satisfaction. This study analyzes this transition from base, intermediate, and advanced services by presenting results from 102 senior executives in multinational companies. Our results suggest increasing interest in service-led strategies in manufacturing companies. The results also show that increasing differentiation and high customer satisfaction are fundamental to achieving competitive advantage and superior performance with services. The analysis also indicates the importance of a company’s position in the value chain and the organizational structure it selects to support services in successful servitization.

Resources and Capabilities of Triple Bottom Line Firms: Going Over Old or Breaking New Ground?

Abstract: Supported by a qualitative study of triple bottom line (TBL) firms—those that simultaneously prioritize economic, social, and environmental objectives—we investigated the market logic and practices of TBL firms to better understand how they fulfill their mission and achieve their goals. We explored if and how TBL firms may differ in their approach to stakeholders and the management of their resources, including dynamic capabilities. We employed a research design that emphasizes the iterative comparison of narrative data within themselves and with scholarly literature [i.e., resource-based view (RBV)] to develop new theoretical insights. Because the RBV is commonly used to theorize how firms achieve competitive advantage, we explored whether TBL firms achieve competitive advantage differently from what RBV theory would predict. Our data suggest that how a firm defines value has a significant influence on the capabilities it creates and how it treats its resources. We find that TBL firms redefine value to not only focus on the end product or service but also to include the systemic cost of delivering goods. As a result, TBL firms differ from prevailing scholarly thought in RBV. They strive to have resources that are sustainable and therefore imitable, commonly found, and substitutable. Moreover, they are not only transparent in their processes but also collaborate with others in the value chain and in their sector. In doing so, they deliberately create new markets from which other firms can benefit. Rather than focusing on competitive advantage, they focus on collaborative advantage.

Servitization and Competitive Advantage: The Importance of Organizational Structure and Value Chain Position: A Survey of Multinational Companies Shows That Increased Differentiation and High Customer Satisfaction Are Fundamental to Achieving Competitive Advantage with Services

Abstract: Manufacturing strategy has traditionally been based on one, or a combination, of three paradigms: vertical integration of supplier-buyer production and delivery of processes for controlling and predicting the flow of inputs and outputs, investment in research to bring to market products that are superior to the competition's, or the generation of a sustainable market position to strengthen economies of scale (Wise and Baumgartner 1999). As manufacturers move to service-focused strategies, which require additional and valuable capabilities for firms and reshape value creation channels, those foundations must be revisited. The addition of services, or the reconception of products as services, allows manufacturers to create value across the entire product life cycle and capture it, not just from the firm's current position in the value chain but along the entire value chain, generating new revenue streams (Vandermerwe and Rada 1988). From this perspective, servitization of business can be seen as a strategic alternative that generates superior performance. However, it is not clear how servitization strategies are related to performance. We undertook an extensive quantitative study to explore the mechanisms by which servitization delivers improved performance and sustainable competitive advantage. Background Servitization is an organizational change process that generates new revenue streams through the provision of services associated with a firm's traditional goods (Vandermerwe and Rada 1988). Firms are increasingly exploring the value of integrating goods and services (Baines and Lightfoot 2013), motivated by anticipated improvements in profit margins and the prospect of locking competitors out of their customer base (Bustinza, Parry, and Vendrell-Herrero 2013). Servitization offers the opportunity to generate sustainable competitive advantage, since it frees firms from competing on cost alone (Porter and Ketels 2003), allowing for greater differentiation and increased customer satisfaction. As a special issue of International Journal of Production Economics (Baines, Bustinza, and Vendrell-Herrero, forthcoming) makes clear, recent studies analyzing the relationship between servitization and performance have shown a complex relationship between various performance measures and developing service innovations. Suarez, Cusumano, and Kahl (2013), analyzing the performance of 464 US software firms from 1990 to 2006, found a U-shaped relationship between service revenue and profit margin, with initial service sales leading to growth in profit margins followed by a dip in margins as service sales grow and a subsequent return to growth as service offerings mature. Kohtamaki et al. (2013) found a similar U-shaped relationship between industrial service offerings and sales growth. Kastalli and Van Looy (2013), looking at 44 subsidiaries of a multinational firm for the period 2001-2007, also found a complex relationship between service sales and performance: initial increments of service sales had a positive impact on the subsidiary's performance, but this effect gradually decreased with the growth of service sales and then increased again once service sales became large. All of these studies reveal a positive, though nonlinear relationship, between an increasing scale of service inclusion and a company's performance. Overall, researchers generally agree that moving to a services focus can provide long-term advantages for manufacturers. Generally, companies provide services at three broad levels (Baines and Lightfoot 2013): base (product/equipment provision, spare parts provision), intermediate (help desk, training, maintenance, repair, overhaul), and advanced (customer support agreements, outcome-based contracts). Kastalli, Wiengarten, and Neely (forthcoming) argue that coupling servitization with product innovation processes, as advanced service offerings would require, can enhance long-term profitability. …

Internalizing Global Value Chains: A Firm-Level Analysis

Abstract: In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antras and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.

Gender, assets, and market-oriented agriculture: learning from high-value crop and livestock projects in Africa and Asia

Abstract: Strengthening the abilities of smallholder farmers in developing countries, particularly women farmers, to produce for both home and the market is currently a development priority. In many contexts, ownership of assets is strongly gendered, reflecting existing gender norms and limiting women’s ability to invest in more profitable livelihood strategies such as market-oriented agriculture. Yet the intersection between women’s asset endowments and their ability to participate in and benefit from agricultural interventions receives minimal attention. This paper explores changes in gender relations and women’s assets in four agricultural interventions that promoted high value agriculture with different degrees of market-orientation. Findings suggest that these dairy and horticulture projects can successfully involve women and increase production, income and the stock of household assets. In some cases, women were able to increase their control over production, income and assets; however in most cases men’s incomes increased more than women’s and the gender-asset gap did not decrease. Gender- and asset-based barriers to participation in projects as well as gender norms that limit women’s ability to accumulate and retain control over assets both contributed to the results. Comparing experiences across the four projects, especially where projects implemented adaptive measures to encourage gender-equitable outcomes, provides lessons for gender-responsive projects targeting existing and emerging value chains for high value products. Other targeted support to women farmers may also be needed to promote their acquisition of the physical assets required to expand production or enter other nodes of the value chain.

The water-energy-food security nexus through the lenses of the value chain and the Institutional Analysis and Development frameworks.

Abstract: A number of frameworks have been used to study the water-food-energy nexus; but few of these consider the role of institutions in mediating environmental outcomes. In this paper we aim to start filling that gap by combining insights from the Institutional Analysis and Development (IAD) framework and value chain analysis. Specifically we study food, energy and water value chains as networks of action situations (NAS) where actorsʼdecisions depend not only on the institutional structure of a particular situation but also on the decisions made in related situations. Although the IAD framework has developed a solid reputation in the policy sciences, empirical applications of the related NAS concept are rare. Value-chain analysis can help drawing the empirical boundaries of NAS as embedded in production processes.Inthis paper we first use value-chain analysis to identify important input-output linkages among water, food and energy production processes, and then apply the IAD-NAS approach to better understand the effect of institutions within and across those processes. The resulting combined framework is then applied to four irrigation-related case studies including: the use of energy for water allocation and food production in an irrigation project in Spain; the production and allocation of treated water for food and bioenergy production in Germany; the allocation of water for food production and urban use in Kenya; and the production and allocation of energy for food production in Hyderabad, India. The case analyses reveal the value of the framework by demonstrating the importance of establishing linkages across energy, water and food-related situations and the ways in which institutions limit or facilitate synergies along the value chains.

Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry

Abstract: In recent years, both researches and practitioners have devoted attention to environmental sustainability of supply chain (SC), while firms have modified their marketing strategies highlighting green practices in productive and logistic processes among the features of their products. These behaviours move firms to require to their suppliers the adoption of green measures and practices to reduce environmental impacts within the entire SC. This paper presents the results on an exploratory case-based research on the SC of fresh chestnuts aimed to integrate environmental concepts in the value chain approach, with a concurrent evaluation of sustainability improvements and their economic impact. Within the value chain configuration, environmental KPIs are defined for the specific case study and a logistic environmental model is developed. Within the model, an evaluation of carbon footprint for this SC is proposed, along with its possible improvements. Results include the analysis of different improvement scenar...

Building the Social Structure of a Market

Abstract: Motivated by the question of how to develop viable new markets and value chains in the resource-constrained settings of least developed countries, we adopted multi-year qualitative methods to examine the intervention of a nongovernmental organization (NGO) in developing the dairy value chain in Bangladesh. Consistent with the theoretical premise that markets and value chains are social orders, we found that the NGO’s success relied on building the social structure of a market wherein market participants could negotiate relationships and norms of production and exchange and embed them in practices and technologies. To establish social structure among participants as a means of market building, the NGO acquired relevant knowledge, then used contextual bridging (transferring new meanings, practices and structures into a given context in a way that is sensitive to the norms, practices, knowledge and relationships that exist in that context), brokering relationships along the value chain (facilitating introduc...

Developing a model for an agile supply chain in pharmaceutical industry

Abstract: Purpose – The purpose of this study is to develop a model for an agile supply chain in the pharmaceutical industry In a continuous changing global competitive environment, an organization’s supply chain agility directly impacts its ability to produce and deliver novel products to its customers in a timely and cost-effective manner While the beneficial effect of supply chain agility is generally appreciated, the literature addressing how a pharmaceutical company can achieve supply chain agility is limited Design/methodology/approach – This paper analyzes the three parts of pharmaceutical supply chain including supply of active pharmaceutical ingredient, manufacturing and distribution based on the supply chain operations reference model to assess agile supply chains by using three diverse questionnaires In addition, to prioritize critical factors, TOPSIS (technique for order preference by similarity to ideal solution) algorithm as a common technique of multiple attribute decision-making (MADM) model has

Scoping organizational LCA—challenges and solutions

Abstract: Although the largely used life cycle assessment (LCA) was initially targeted for products, it can also be adapted to the organizational level. The resulting methodology is the so-called organizational LCA (O-LCA), introduced by ISO/TS 14072 and being developed by several initiatives. O-LCA’s object of study is the organization and its value chain; it adopts a life cycle approach and assesses a multi-set of environmental impacts. This paper introduces the methodological framework of O-LCA to researchers and practitioners and focuses particularly on the scoping phase. Here, we discuss the solutions adopted for each identified challenge when accommodating product LCA to organizations. Those critical elements are analyzed and contrasted with main baseline initiatives: primarily product LCA standards and also Organisation Environmental Footprint and GHG Protocol. Additionally, small deviations from ISO/TS 14072 that are proposed by the authors are pointed out and explained. An example was made up to illustrate and support the explanations. O-LCA also follows a four-phase approach, including goal and scope definition, inventory, impact assessment, and interpretation. Although product and O-LCA are comparable, main differences are mostly at the scope level, which is very relevant for the subsequent phases of O-LCA. Function is the main basis for the definition of the unit of analysis in product LCA, while in O-LCA, are the organization and its portfolio, which is unique for each organization. The reporting organization should be described in terms of subject of study, sites that are to be partially or totally considered, and period when the organization is depicted. Finally, as in product LCA, the boundary of the studied system is defined that includes direct and indirect activities along the value chain of the organization. Most principles, requirements, and guidelines of product LCA apply for O-LCA, and the major identified differences are at the unit of analysis and boundary definition level. A cross-divergence that affects the perspective of the two methods is that O-LCA is not foreseen for comparative assertions intended to be disclosed to the public.

A mixed integer programming model to evaluate integrating strategies in the forest value chain — a case study in the Chilean forest industry

Abstract: When a company is integrated vertically, it can manage and plan its overall value chain in one direct and integrated approach. However in many cases, companies follow a decoupled approach where for...

Innovations in financing of agri-food value chains in China and India: Lessons and policies for inclusive financing

Abstract: Purpose – The purpose of this paper is to synthesize lessons from the agricultural value chain models and their associated financing mechanisms in China and India as to provide policy recommendations on how best to facilitate development of efficient and inclusive value chains. Design/methodology/approach – The paper builds on a review of the existing literature on agricultural value chains and their financing mechanisms, and draws lessons from it for strengthening interface between product and financial markets in order to enable smallholders capture benefits of the value addition. Findings – From the comparative review of value chain financing mechanisms and current policy contexts the authors find dominance of internal financing of value chains (in terms of provision of inputs, technology and services) in both the countries. Value chain finance from commercial banks and other financial institutions is limited and mainly through tripartite agreements among the financing institutions, lead firms and farm...

Fit and misfit of plural sourcing strategies and IT-enabled process integration capabilities: consequences of firm performance in the U.S. electric utility industry

Abstract: Recent work has shown that a firm's plural sourcing strategy, which determines how much it chooses to make versus how much it chooses to buy, requires consideration of the complementarities and constraints that affect the differential advantages of making and buying. Elaborating on this perspective, we theorize how (mis)fit between a firm's plural sourcing strategy of simultaneously making and buying and its development of information technology (IT) enabled interfirm and intrafirm process integration capabilities influences firm performance in deregulated markets. We position our theory development and empirical tests in the context of the power-generation segment of the U.S. electric utility industry (EUI), an asset-intensive industry that has been deregulated to promote the separation of key value chain activities (i.e., generation, transmission, and distribution) and the development of wholesale energy markets. We draw on the transaction cost economics, coordination costs, and IT capabilities perspectives to theorize that a firm achieves fit (realizing performance benefits) by increasing market sourcing intensity (MSI)--or, how much it buys relative to how much it makes-- and developing IT-enabled interfirm process integration capability for external coordination with the market, or misfit (realizing performance penalties) by increasing MSI and developing IT-enabled intrafirm process integration capability for coordinating internal production. We collated data from archival sources for 342 utility firms in the power-generation segment to construct a panel dataset for the period 1994--2004 on (1) firms' MSI from wholesale electricity markets, (2) firms' IT investment decisions to develop interfirm and intrafirm process integration capabilities, (3) measures of firm performance, and (4) several control variables related to exogenous shocks (i.e., regulatory change, oil crisis), region of operation, and firm-level factors. Our results suggest that fit between MSI and the development of IT-enabled interfirm process integration capability improves firm profitability, assessed by return on assets, and misfit between MSI and the development of IT-enabled intrafirm process integration capability extracts penalties in firm profitability. We also find evidence that fit between MSI and the development of IT-enabled interfirm process integration capability improves market valuation, assessed by Tobin's Q, and asset turnover, assessed by operating revenue/total assets. We discuss the implications of our findings for the development of IT capabilities to accompany a firm's plural sourcing strategy and the literature on IT business value.

Green Supply Chain Management: A Literature Review

Abstract: In light of the grim situation in both the environmental and energy sectors, manufacturing enterprises are faced with the challenge of pursuing economic benefits while at the same time coordinating the development between supply chain and environment. As a brand-new management model under the framework of sustainable development, green supply chain management has attracted the growing attention of the academic and business world. This study will review the literature on green supply chain management through several aspects including green supplier.

From innovation to co-innovation? An exploration of African agrifood chains

Abstract: Purpose – Building on recent advances in innovation research on developing country agriculture, this paper explores the concept of co-innovation, i.e. innovations that combine technological, organisational and institutional changes and that encompass different actors in and around the value chain. The purpose of this paper is to contribute to a further conceptualisation of co-innovation and show its usefulness for analysing innovation initiatives in agrifood chains. Design/methodology/approach – The paper combines two streams of literature (innovation systems and value chains) and is based on a review of the experiences with innovation in three different value chains in three African countries: potato in Ethiopia, pineapple in Benin and citrus in South Africa. Findings – Co-innovation is the combination of collaborative, complementary and coordinated innovation. “Collaborative” refers to the multi-actor character of the innovation process, where each actor brings in specific knowledge and resources. “Comp...