Value Chain Partnerships 101

A value chain can be described as a number of companies (or strategic players) working together in order to satisfy market demands related to a specific product or service.

Value chains help businesses capitalize on the useful in order to gain a competitive edge and eliminate the wasteful during each step of the product or service development process. This can include, for example, inbound logistics, operations, outbound logistics, marketing, sales, and a number of support-related activities (take a look here to see how this value chain concept was successfully implemented by Starbucks). The overall goal of a value chain is to provide added value to each step and, thus, overall value to the product or service (which results in higher profits).

Businesses are operating in a world, however, where customer reach is ever-expanding, new markets are emerging nearly overnight, and technology is advancing at a rapid pace. Combined with customer demand for greater innovation and quality of service, it can be difficult for companies to handle everything on their own while consistently meeting necessary requirements.

The good news is that thanks to value chain partnerships, companies don’t have to singlehandedly carry all of this weight on their shoulders. These partnerships allow businesses to work together across the entire value chain in order to maximize the quality of a specific product or service and deliver experiences that meet and exceed customer expectations. Value chain partnerships enable businesses to capitalize on their strengths and core competencies in order to achieve a common goal.

The bottom line is this: businesses must be able to effectively keep up with today’s rapid pace of innovation in order to meet ever-changing customer demands and needs. More times than not, this will be exceedingly difficult for a company to handle without external support or collaboration. Starbucks, a company that began with a single store in Seattle in the 1970’s, understood this. As a result, the company has risen to become one of the world’s most recognized, profitable and influential brands.

You may be able to manage a lot on your own; however, you can accomplish more and go farther when working with others. This is the promise of value chain partnerships.

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