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Defining value chain architectures: Linking strategic value creation to operational supply chain design

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  • Holweg, Matthias
  • Helo, Petri

Abstract

Over the past three decades scholars have developed comprehensive insights into the operational and strategic aspect of designing and managing the supply chain. Reviewing this ample body of knowledge however one cannot help but notice a persistent disunion between the “value chain” view that considers aspects of value creation and appropriation, and the operational “supply chain” view that considers strategies and tools for designing and operating efficient inter-firm networks. Commonly these views do not interact: value creation has the aim of capturing the maximum value-added in financial terms, the supply chain view aims for designing operationally efficient supply chains. In contrast to their treatise within the academic literature, from a practical point of view these two aspects are both necessary (and thus in their own right insufficient) components to a firm's supply chain strategy. In this paper we thus turn to an exploratory case study to identify what such a combined view of the value and supply chain would entail. We refer to this purposeful creation as the “value chain architecture” and propose five fundamental decisions that define the latter: (1) the nature of value provision (driven by the core competence of the firm), (2) the operational footprint decisions for manufacturing, sourcing and distribution, (3) the approach to risk management, (4) the order fulfillment strategy (and implicit in that, the type of product customization), and (5) the buffering strategy. We conclude with an exploration of the application and utility of the “value chain architecture” concept in both academia and practice.

Suggested Citation

  • Holweg, Matthias & Helo, Petri, 2014. "Defining value chain architectures: Linking strategic value creation to operational supply chain design," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 230-238.
    • Handle: RePEc:eee:proeco:v:147:y:2014:i:pb:p:230-238
    DOI: 10.1016/j.ijpe.2013.06.015
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    1. Gow, Hamish R. & Oliver, Lance D. & Gow, Neil G., 2002. "Co-Operating To Compete In High Velocity Global Markets: The Strategic Role Of Flexible Supply Chain Architectures," 2002: WCC-72 Annual Meeting, June 23-25, 2002, Las Vegas, Nevada 16611, WERA-72 (formerly WCC-72): Western Education\Extension and Research Activities Committee on Agribusiness.
    2. Gow, Hamish R. & Oliver, Lance D. & Gow, Neil G., 2002. "Co-Operating To Compete In High Velocity Global Markets: The Strategic Role Of Flexible Supply Chain Architectures," 2002 Annual meeting, July 28-31, Long Beach, CA 19859, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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