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Paper info: Business Suppliers' Value Creation Potential: A Conceptual Analysis

Title


Business Suppliers' Value Creation Potential: A Conceptual Analysis

Authors


Kristian Möller
Helsinki School of Economics
Finland
Kristian Möller and
Pekka Törrönen
Helsinki School of Economics
Finland
Pekka Törrönen

Place of Publication


The paper was published at the 16th IMP-conference in Bath, U.K in 2000.

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Abstract


Joint value creation through partnering and networking is currently a hot topic. This paperproposes that the dimensions of supplier's value creation taking place in a supplier-customerrelationship can be classified through efficiency, effectiveness, and network functions. Thesefunctions are interrelated but conceptually separate. The value creation process can bedescribed through a spectrum ranging from core value, through added-value, to future value.The value producing potential of a supplier can be assessed reasonably well only in the caseof core value where there is sufficient benchmarking information in the form of existingalternative offerings and solutions. An apriori evaluation of the costs and benefits of addedvalue, and especially future value projects is wrought with problems as the realisation of thevalue is dependent on the development of multiple partners, technologies, and industries. Inthese cases we suggest that a customer can use supplier's capability profile as an indicator ofhow well a particular supplier is suitable for specific value creation projects. A frameworkconnecting specific capabilities to different types of value production is suggested.