Value Chains and Clock Speed

Bruce Hartman

Vish Hegde

PC industry value chain

PRODUCTPROCESS

VALUE CHAIN

Recipe, Unit Process

Details, Strategy

PerformanceSpecifications

Product Architecture, Make/Buy components Time, Space, Availability

Technology, &Process Planning

Manufacturing System, Make/Buy processes

Competing Olympic Rings: 3-D Concurrent Engineering

Product • Customer Needs

• Market Segments• Product Architecture

1. Sourcing: Make/Buy2. Partner Selection3. Relationship Design(spot, alliance, equity, etc.)4. Logistics System Design5. Inventory management Policies6. Relationship Management7. Value Chain Architecture

Proce

ss

Value Chain

• Mission Statement• Operating Objectives • Policies & Procedures -Structural: Bricks, Tech, Org -Infrastructural: HR, Business Processes

3-D Concurrency Model Example

Fine’s Clockspeed (1998) ApproachDouble Helix Theory of Industry/Product Evolution

MODULAR PRODUCTHORIZONTAL INDUSTRY

INTEGRAL PRODUCTVERTICAL INDUSTRY

Fine & Whitney, “Is the Make/Buy Decision Process a Core Competence?”

PRESSURE TO INTEGRATE

PRESSURE TO DIS-INTEGRATEORGANIZATIONAL

RIGIDITIES

HIGH-DIMENSIONALCOMPLEXITY

NICHE COMPETITORS

PROPRIETARY SYSTEM

PROFITABILITY

SUPPLIERMARKET POWER

TECHNICAL ADVANCES

Global Design Chain – Apparel industry

Global Design Chain – Apparel industry

Product Specifications

Samples

Factory

Factory

Factory

Asian Agent

Branded Wholesaler

Internet • Product Specs. Sent• Sample Requirements

• Specs. Received• Sample Status• Price Estimates

Video Conference

• Fit Sessions• Product Reviews