Evolving from value chain to value grid

MIT Sloan Management Review

Volumn 47, Issue 4, 2006, Pages 72-80

  Pil, Frits K ^a,b,c   Holweg, Matthias ^c,d,e  

^a UNIVERSITY OF PITTSBURGH   (United States)

^b Learning Research Development Center   (United States)

^c UNIVERSITY OF PITTSBURGH   (United States)

^d UNIVERSITY OF CAMBRIDGE   (United Kingdom)

^e MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33746635569     PISSN: 15329194     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (8)

1. Jay W. Forrester provided one of the first systematic explorations of the complex dynamics underlying information and material flow in multiechelon systems; see J.W. Forrester, "Industrial Dynamics" (Cambridge, Massachusetts: MIT Press, 1961).
2. It set the stage for exploring the linkages across parts of the value chain from an operations stand-point. Among other things, it provided an early look at the root cause for dynamic distortions in value chains, which was later expanded and relabeled as the bullwhip effect; see, for example, H.L. Lee, V. Padmanabhan and S. Whang, "The Bullwhip Effect in Supply Chains," Sloan Management Review 38, no. 3 (spring 1997): 93-102.
3. Since then, value chain dynamics have become widely explored, as researchers try to understand value creation and the sources of value. The "value chain" concept gained prominence in the mid-1980s as researchers looked for cost optimization and new sources for competitive advantage; see J.B. Houlihan, "International Supply Chain Management," International Journal of Physical Distribution and Materials Management 15, no. 1 (1985): 22-38;
4. and M.E. Porter, "Competitive Advantage: Creating and Sustaining Superior Performance" (New York: The Free Press, 1985).
5. The efforts to understand value chains' dynamics as a source of core competence and competitive advantage continue to this day. A key concern in our previous research has been, from an operations standpoint, how holistic value chain strategies can be leveraged to enhance responsiveness to customer needs; see M. Holweg and F.K. Pil, "Successful Build-to-Order Strategies Start With the Customer," MIT Sloan Management Review 43, no. 1 (fall 2001): 74-83;
6. and M. Holweg and F.K. Pil, "The Second Century: Reconnecting Customer and Value Chain Through Build-to-Order" (Cambridge, Massachusetts: MIT Press, 2004).
7. Martin Christopher observed that competition increasingly occurs between entire value chains, not individual companies; see M. Christopher, "Logistics and Supply Chain Management" (London: Pitman Publishing, 1992).
8. An approach that was developed jointly with Audi AG and Daimler-Chrysler Corp., currently under pilot testing. For a more general discussion on the advantage of small-scale operations in the value chain, see F.K. Pil and M. Holweg, "Exploring Scale: The Advantages of Thinking Small," MIT Sloan Management Review 44, no. 2 (winter 2003): 33-39.