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A Valuable Proposition

Are you adding value or just passing things down the line?

Value chain and supply chain, two classic business concepts, have traditionally been considered very similar. The assumption has been that everyone who touches a product or service adds some value to it. So farmers add value by growing and harvesting grain; truckers or railroads add value by hauling the grain to grain elevators, which add value by storing the grain and distributing it to the manufacturers, who add value by turning it into finished products. Along the way, a lot of other people join the value chain, from ad agencies to supermarkets.

Today, of course, we realize there's a difference between adding a "fingerprint"-just touching a product along its path-and adding tangible value. Imagine how many supersized orders of McDonald's french fries compare to a 100-pound bag of Idaho potatoes. Now compare the price. We've also had to modify the very definition of value to pertain to an economy based on generating and manipulating information.

Today, real value isn't found in tying your business to exclusive partnership arrangements. In fact, the whole notion that value is created linearly has come into question. More important is the adroit manipulation of what many today call "value webs"-ephemeral alliances that may only last for the duration of a single transaction. Learning how to dance across the value web is a critical skill for every company. And temporary alliances that create real value for all the participants in a supply chain will be the defining characteristic of third millennium logistics.


Watts Wacker-lecturer, bestselling author, political commentator, social critic and CEO of FirstMatter-is one of the world's most respected futurists.

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This article was originally published in the June 2001 print edition of Entrepreneur with the headline: A Valuable Proposition.

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