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

By Watts Wacker

Opinions expressed by Entrepreneur contributors are their own.

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

Today, of course, we realize there's a difference betweenadding a "fingerprint"-just touching a product along itspath-and adding tangible value. Imagine how many supersized ordersof McDonald's french fries compare to a 100-pound bag of Idahopotatoes. Now compare the price. We've also had to modify thevery definition of value to pertain to an economy based ongenerating and manipulating information.

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

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