We have had “push” model supply chains – and we have had “pull” models. And now we should abandon the idea of a chain altogether and think instead in terms of a network.
That’s the thesis of the new report from the Consumer Goods Forum (CGF) and Capgemini, “Rethinking the value chain”. As you might expect, the report focuses on the consumer goods market – but some of the conclusions could be applied to other markets.
Of course, the idea of a value network is not entirely new. In July, I looked at the value web concept put forward in “Business eco-systems come of age”, published by Deloitte University Press. Authors, Eamonn Kelly & Kelly Marchese argued that “many ‘supply chains’ appear to be evolving into ‘value webs’, which span and connect whole eco-systems of suppliers and collaborators”.
The CGF/Capgemini report argues that the value chains built over the years have become more efficient but the remain mostly linear. But more than ever networks are springing up that are organised around consumers and their communities. “Networks are non-linear, the offer many routes to consumer value…they help build mass collaboration with multiple partners.”
The report argues that this is not just desirable, but essential to the health of the industry. “If the industry does not change, the consequences will be stark,” it says pointing to the threat from new market entrants such as Amazon and eBay.
However, that change in perspective, from linear chain to non-linear network is not trivial. The development of omni-channel retail concepts is clearly relevant but the full implications will only become apparent as the value network concept matures.