Introduction
No company creates value alone anymore
- Porter's value chain looks inside one organization; a Network Value System extends across every partner.
- Suppliers, manufacturers, logistics firms, retailers, banks, IT companies, government and platforms all contribute.
- The goal: maximize customer value while cutting cost and increasing responsiveness.
🕸️1 → manyvalue creation moved beyond the single firm
Learning objectives
Four outcomes — LO6 to LO9
- LO6 — Differentiate supply chain strategies and judge their fit for different industries.
- LO7 — Explain how IT improves coordination, visibility and decisions across the chain.
- LO8 & LO9 — Describe ERP, BI, CRM, WMS and TMS, and evaluate ERP / ASP / PaaS and cloud adoption risks.
🎯LO 6–9covered in this lecture
Network value systems
Complexity forced companies to collaborate
- Products are more complex, customers expect speed, and global sourcing cuts costs.
- Digital technology enables collaboration while firms specialize in core competencies.
- Benefits: lower cost, faster innovation, global expertise, risk sharing, faster launches.
🤝7 benefitsfrom cost to speed to shared risk
UAE example
Nine partners behind one boarding pass
- Boeing & Airbus supply aircraft; GE Aerospace the engines; Dubai Airports the hub.
- Emirates Flight Catering, dnata ground handling, Dubai Customs, travel agencies, hotels and payment providers complete the trip.
- Together these organizations — not Emirates alone — create the customer experience.
✈️9+partners in the Emirates ecosystem
Global example
The strength is the network, not the factory
- TSMC (Taiwan) makes the chips, Samsung Display (South Korea) the screens, Foxconn (China/India) assembles.
- DHL and UPS move it; Apple Stores, retailers and app developers deliver the experience.
- Apple's competitive advantage depends on network strength — it manufactures almost nothing itself.
📱3 continentsco-produce every iPhone
Four types of linkage
Relationships decide how fast value moves
- Supplier linkages (Toyota co-develops quality) and internal linkages (marketing → sales → production → logistics → service).
- Customer linkages: Amazon reads buying patterns to plan inventory.
- Strategic partnerships: Starbucks × PepsiCo distribute drinks globally; DP World links shipping lines to consumers.
🔗4 linkagessupplier · internal · customer · partnership
Where profit really sits
The highest profit is rarely where the highest sales are
- Smartphone industry: raw materials, manufacturing and assembly earn low margins.
- Branding, software, the App Store, accessories and after-sales earn high to very high margins.
- Apple's real profit engines: iCloud, App Store, AppleCare, accessories, premium brand.
💰Very highsoftware & services margin vs 'very low' for assembly
UAE example
Ticket sales are not the main profit source
- Business and First Class, cargo services and Skywards loyalty drive margin.
- Holiday packages and in-flight sales add further pools.
- Lesson for managers: invest in high-margin activities, not just sales volume.
✨6 poolsbeyond the economy ticket
Knowing your costs
Charge costs to the activities that consume them
- Cost pools group similar costs: procurement, production, warehousing, distribution, marketing, IT.
- Noon's pools: warehouse operations, delivery fleet, packaging, tech platform, support, marketing.
- ABC beats even-spread overhead: a product needing extra inspections carries that inspection cost — true product profitability appears.
🧮6 poolsof cost inside a typical e-commerce firm
Porter's core idea
Competitive advantage = superior activities
- Cost leadership (IKEA) · differentiation (Apple) · innovation (Tesla).
- Operational excellence (Amazon: fast, high quality, low defects).
- Customer intimacy (Emirates Skywards relationships).
🏆5 sourcesof activity-based advantage
Two routes to advantage
Do it better — or do it differently
- Efficiency: reduce cost, waste, and time — DP World's automated cranes cut container handling time.
- Innovation: create new value — Careem's ride-hailing transformed urban mobility in the region.
- Efficiency standardizes; innovation invents new business models. Winners pursue both.
⚡Bothsuccessful companies refuse to choose
LO6 · Strategy fit
Match the strategy to the market
- Lean = cost efficiency (IKEA) · Agile = rapid response (Zara) · Responsive = demand swings (Amazon).
- Resilient = recovers from disruption (Apple after COVID-19) · Green = sustainability (Unilever).
- Noon turns agile during shopping festivals; Emirates Flight Catering runs lean with resilient backup suppliers.
🧭5 strategieslean · agile · responsive · resilient · green
LO7 · Technology
Real-time visibility from supplier to customer
- IT delivers real-time information, better forecasting, inventory visibility and data-driven decisions.
- DP World runs IoT sensors and AI to monitor cargo and optimize ports.
- Amazon tracks every order with RFID, AI, cloud and predictive analytics — customers watch delivery live.
📡LO8 · Modern IT systems
ERP · BI · CRM · WMS · TMS
- ERP (SAP, Oracle, Dynamics 365) integrates finance, HR, procurement, inventory and sales into one source of truth.
- BI (Power BI, Tableau) turns data into dashboards; CRM (Salesforce) manages customer relationships.
- WMS controls receiving-to-picking accuracy; TMS optimizes routes, vehicles and freight costs.
🖥️5 systemsthat run the modern value chain
LO9 · Opportunities & risks
Rent the software, weigh the risk
- ASP: subscription software over the internet — low upfront cost, fast deployment; but internet dependence, security concerns, limited customization.
- PaaS (Azure, Google Cloud, AWS): build and deploy apps without managing infrastructure — fast and scalable.
- Risks to evaluate: vendor lock-in, compliance, integration, and organizational readiness.
☁️2 modelsASP for renting apps · PaaS for building them
Putting it all together
Every concept of this lecture, live in one company
- Amazon: network of suppliers + 3P sellers; profit pools in AWS, ads and Prime; cost pools in warehousing and transport; advantage via automation and AI forecasting.
- DP World: shipping lines, customs and free-zone partners; Port Community System, IoT tracking, AI berth planning, BI dashboards.
- Both win through digital integration, efficiency and network reach.
📦2 casesone global, one built in the UAE