Introduction: The Value Chain

Abstract

Companies face significant challenges. The Covid-19 crisis, advancing globalization, the need for global digitization, and the urge for ever faster and new innovations are forcing companies to radically change their strategy and traditional models. The increasing global and above all digital networking of customers, manufacturing companies, suppliers and other interest groups, the almost unrestricted exchange of data and information and the associated maximum transparency over a large part of the value-adding activities within global supply chains raises the question of future generation of competitive advantages of manufacturing, trading and service companies. In this context, supplier management, i.e., the function that controls the entire value chain is of much more importance across the entire value chain than was the case in previous years. Because only the integrative approach from the customer order through the planning, procurement, production, logistics to the returns process gives companies the necessary basis for decision-making for their future actions. The tasks in supplier management have changed from a purely procurement function to a value-creating, leading, and value-adding function. By concentrating on core competencies and shifting services to supplier networks that are in competition with one another, new models, strategies, and processes emerge which lead supplier management into a central role in every company. For a long time now, the focus in the future has not only been on increasing company-internal cost advantages, but much more on the exchange of information and the exploitation of global cross-company potential. Scope of added value can no longer be dealt with by the manufacturer alone, but have to fall back on innovative, efficient, and flexible supplier structures. Increasing competition, global trends, the COVID-19 pandemic, sustainability elements, technological change, and shortened product life cycles place ever higher demands on companies and their suppliers in numerous industries. The increasing variety of products, shorter innovation cycles and cross-sector business models with digital business processes also increase the complexity of future management of value networks. However, the planning, control and monitoring of the upstream value creation networks, i.e., the supplier networks, becomes more difficult, so that these tasks have to be covered by holistic, standardized and innovative supplier management. But modern supplier structures are becoming increasingly volatile. The control of the external value-added networks must therefore also adapt to the new requirements. Risk prevention in the supply chain is therefore of central importance in every company, but only 17% of companies operate preventive supplier management with early and standardized integration of their suppliers, and more than two thirds only assess a selection of suppliers (Dust 2016). These alarming figures emerge from the study “Total Supplier Management—Strategic Competitive Advantages through Risk Prevention in Supplier Management.” The representative survey of 221 companies from different sectors from industry, trade, and services was created by the Technical University of Berlin in cooperation with the BME region Berlin-Brandenburg (Dust 2016). Figure 1.1 shows the proportion of peripheral skills being transferred to external suppliers to more than 80% (outsourcing). In contrast, own core competencies, i.e., processes and skills from which competitive advantages are developed for your own company are around 20%. As a consequence, it is important that enterprises are looking at their upstream activities (suppliers) and that these enterprises integrate them smoothly and digitally into their own operations (Helmold 2021). Only these companies that will be able to optimally drive their supply and integrate this supply into their operations will be able to gain a long-term competitive advantage. This is where Operations and Supply Management 4.0 come onto the spotlight as a new and integrated concept in the value chain.