What Are Value Networks?

Value network: A system of partners and alliances established by the company to create resources, expand and deliver goods. The value system includes the company's suppliers and suppliers' suppliers as well as its downstream customers and end customers. It also includes other valuable relationships, such as university researchers and government agencies.

Value network

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Value network: A system of partners and alliances established by the company to create resources, expand and deliver goods. The value system includes the company's suppliers and suppliers' suppliers as well as its downstream customers and end customers. It also includes other valuable relationships, such as university researchers and government agencies.

Chinese name

Value network

Foreign name

value network

Presentation time

1998

proposer

Adrian Slywotzky

Mercer Consulting's well-known consultant Adrian Slywotzky first introduced the concept of a value network in the Profit Zone in 1998. The book points out that with the development of the Internet and information technology, fierce market competition has led companies to transform the traditional supply chain into a value network to meet the growing needs of customers. According to the definition in the book: "The value network is a new business model that connects the increasingly demanding requirements of customers with flexible and efficient, low-cost manufacturing, uses digital information to quickly distribute products, and avoids high agency costs. Distribution layer that connects partnering providers to deliver customized solutions and raise freight rates to strategic levels to adapt to ongoing changes. "

In the traditional supply chain model, the starting point of producer production is the prediction of customer demand, that is, the producer determines the production volume of the product according to the historical sales of the same period, product substitutes, and customer purchasing power. At this time, the company will face two major problems: first, the prediction may be biased due to the selection of variables or improper standards when forecasting market conditions; second, because the market demand is changing at any time, and the forecast is based on the current Demand is generated, so when the product is produced, it is outdated. These shortcomings in the traditional supply chain have caused the continuous loss of value. The reason is that it failed to respond to market changes in a timely manner. In order to respond to market demands in a timely and effective manner, only the first-tier enterprises are unable to complete them, so some tasks that are more costly or incapable of completing the tasks for the enterprises must be handed over to other cooperative enterprises. Already. It is in this situation that the Internet and the evolving information technology support the concept of a value network.

It can be seen that customers, suppliers and their partners, information, and funds flow in the dynamic network of the value network. The driving force is exactly the actual needs of customers, and information technology is the bridge and guarantee to connect these network entities. Compared with traditional supply chains, value networks have the following characteristics:

1. Focus on customer needs. The company's production activities are based on the actual needs of customers and focus on how to maximize the value of customers;

2. Highly collaborative. The enterprises in the network are concerned about the improvement of the common efficiency of the entire network members. Therefore, the enterprise must make full use of the capabilities of partners. Among them, embedded and outsourced are the main means of enterprise operation in the value network.

3. Quick response. Information technology has strengthened the communication ability among network members, and can respond to market demands in a timely and effective manner.

4. Low cost. Although the cost of enterprise information technology has increased, the reduction in transaction costs brought by information technology to enterprises can offset the increased costs of infrastructure construction. In general, the cost of enterprises has decreased.

In the dynamic network of value networks, there are no fixed boundaries and no fixed patterns. Enterprises in the network organize their resources according to customer needs. Generally speaking, there are two kinds of relationships between enterprises: the first is that each enterprise is in an equal position; the second is that there is a "core enterprise" consisting of an enterprise or an enterprise alliance, and other enterprises are around the core enterprise Organization and coordination. The value network with core companies is relatively stable.