A resource driven view of the Global Supply Chains (GSCs) and Strategic Value Chains (SVCs) that operate on the transportation corridors of the world.

The winning combinations of constructs that drive value.

By Allan Rodrigues of The Business Binnacle Ltd, New Zealand.

The downloadable series of presentation-cum explanatory documents are based on a number of consulting projects originally conducted by the author for the Sea Port and Global Supply Chain (GSC) industry in New Zealand over a period of four years.

Following from them the author was closely associated with training advisory courses for senior supply chain managers in New Zealand and in designing and conducting a number of high-end electives in Finance, Investment Decision Making and Decision Engineering, Operations Management, Supply Chain Management for several MBA programs and a Master of Engineering program in Technology Innovation at a number of Universities in New Zealand.

The author has also been a guest speaker at a number of universities in Australia and New Zealand.

The learnings from this combined experience of knowledge aggregation and leading practice from the major consulting projects and academic research and reflection conducted by the author are captured below.

They are available pro-bono for download (jump to Downloads ▾) by both market professionals and senior managers and students in strategy and operations.

Many of the models used have been originally designed by the doyens of their particular fields. A number of adaptations of these models have been undertaken, many for the first time by the author. They represent the intellectual capital of the author and the many referenced subject matter experts in their particular field.

They may be freely used provided they are properly referenced and, where required, their licensing requirements met.

New Zealand and Australia run the longest GSCs in the world. They do not have the big population dynamics and markets like the East-West pendulum GSCs. They have to work smarter particularly with their export supply chains, as both countries are amongst the world’s largest exporters in the Primary Industry (Australia for mining; and NZ for milk products, forestry, lamb, wool, meat, agri-industry and fruit.)

There have been a great many radical innovations on the Global Supply Chains, particularly on the East West pendulum (Walmart Express, the Blue Boomerang and the Purple Boot in Europe, along with the jockeying for power and influence on the Motorways of the Seas (MOS), as China attempts to find alternate routes to Europe and the US as the Arctic begins to open up.

New Zealand and Australia have always had an inward-looking view of the supply chain of a firm, making many of them (and particularly their SMEs and value-added resellers) price takers rather than price setters.

The export industries on the other hand have considerable experience in managing their end-to-end supply chains, but rarely (if at all), do academia or practitioners take a holistic look at the entire supply and industry value chains end-to-end from the birth of product to its death and disposal.

A soft drink can begin its journey in a bauxite mine perhaps in Africa and may end up in a recycling plant in Mexico. Along the way a great many players create and capture value and wealth. Who captures the most value should be of interest to any entity on the GSC or industry-wise SVC.

Despite commercial conflicts up and down across geographic and ownership boundaries, there are clear power conflicts between the GSC construct and the Strategic Value Chain (SVC) construct – often between the same partners that result in segment invasions and takeovers. There is an inherent conflict between cooperating and competing that must be managed.

The ‘presentation pack’ in the downloads below (jump to Downloads ▾) is a way of using presentations to disseminate dense information in pictures with notes easily visible. They are meant to attract the attention of busy C-suite senior manager who don’t have time to read reports but need the info encapsulated for ease of reference.

The packs are not presentations and should not be seen as such. They have all the information one needs to get a top-line idea of the subject matter. LOUD COLOURS are used to catch the attention of the reader. Many managers ask for an original formal report if they wish to act on the information.

There are 5 constructs that need to be addressed. The first four sections have been captured below. These are:

Part 1 of 4

The ‘Lean-Agile’ Global Supply Chains (GSCs) & The Port-Hinterland Transportation Corridors & Ecosystems

The Transportation Corridors that have, through several ‘port reform’ ideologies over the last few years, created Port Ecosystems to speed up the transportation processes end to end.
The transportation corridors begin at the Foreland Corridor where the product is born in its early production stages. The product then goes through several stages of production and assembly that may cross both international and even ownership boundaries to the Maritime Corridors. These products are shipped through several freight, satellite and dry port hubs, and gateway sea ports to the hinterland, where the end customer is serviced. Along the way value is added and wealth created by each entity.

Note: Part 1 is available for download at the bottom of this page.
(jump to Downloads ▾)

Part 2 of 4 (2A and 2B)

Part 2A: The Co-opetition Construct

The Global Supply Chains (GSCs) have harnessed information, technology and the convergence marketplace to re-invent themselves to be both ‘low-cost’ and yet be able to ramp up to provide high fulfilment and a high value or ‘quality of service’ by cooperating and competing at the same time. How this happens must be understood by all parties on the GSC.
These supply chains operate efficiently at each interface by using innovation, trust and strategic alliances designed around the co-opetition construct where the individual entities cooperate and compete, often in different markets or geographies.

Part 2B: Global Optimisation

A second construct based on the global optimisation of the GSC end to end is overlaid so that the value extracted is smoothed to ensure that all entities extract value and wealth that is commensurate with their risk and expected return.
The Global Optimisation construct must be designed to be equitable, not equal. It must ensure that the return on investment is commensurate with the risk faced by each entity on the GSC or the transportation corridors. Risk mitigation and risk pooling are critical. Where the construct is ineffective or inefficient it raises the spectre of a conflict between the Global Supply Chain (GSC) and the Strategic Value Chain (SVC) captured in part 3 of this series.

Note: Part 2A and 2B are available for download at the bottom of this page.
(jump to Downloads ▾)

Part 3 of 4

The Global Supply Chain (GSC) and Strategic Value Chain (SVC) Conflicts at the Value Boundaries. Using Strategic Alliances to Capture Competitive Advantage and Create Value (or Dominance).

There are two strategic networks that predominate in all business relationships worldwide:

The Global Supply Chain (GSC) that moves goods and services to form the building blocks of trade and commerce along the transportation corridors of the globe. GSCs work best when knowledge is shared, often through ‘Co-opetition’ (cooperating and competing at the same time, often in different segments or geographies);
The Strategic Value Chain (SVC) of an industry which is overlaid all along the GSC and encompasses all commercial activities and investment in resources including all fixed and mobile assets, human resources, core competencies and expertise of the many firms that operate on the GSC on their individual value chains.

The GSCs create and transport the product/service on the transportation corridors. The SVCs deal with resources. The SVCs seek to capture firms’ value-adds to a product or service from its birth to its death with each entity on the SVC investing in infrastructure, other assets, human resources expertise, core competencies, business and operational process engineering, marketing and customer support services separately. Individual firms operating on the SVC then tend to carve out their share of profit from the value they add to the GSC.

The SVC accordingly captures all the resources needed to create value and wealth. The chain of resources, along with their value activities, create both synergies and conflicts between the GSC and SVC. The ability to harness information all along the GSC and convert it into knowledge is often hijacked by a few Alpha Males on the GSC, who then embark on segment invasions to create dominance in their industry environment. They then raise the barriers to entry to shut out new entrants and build massive bargaining power to achieve absolute dominance across their industry sectors.

In addition, the ubiquitous nature of data points of information, and even knowledge being freely available across the internet, often results in unconnected industries invading the strategic value chains of other industries. This is a disruption that often comes from nowhere and can blindside even the most secure of industry players.

Managing the synergies and conflicts between the GSC and the SVC requires a high degree of conflict management so that value is optimised globally for all parties. Strategic Alliances accordingly create the alliance advantage that allow each of these value boundaries of the individual firms on the SVC to operate cohesively.

The alliance advantage is based on an understanding of the ‘competitive advantage’ that each individual firm brings to an alliance. It is the ability to create and sustain a competitive advantage that allows a firm to capture its value on an industry wide Strategic Value Chain.

There is however always an Alpha Male who operates somewhere at the GSC-SVC interface, often across several geographic or ownership boundaries many times removed. The aim of de-aggregating the SVC at the level of the industry from birth to death allows for equitable optimisation. The aim being to prevent an alpha male from unilaterally hijacking the value chain.

At the national or even regional level there are competitive advantages that a nation or region can bring to bear, making it a valuable partner to an alpha male with global ambitions. The theaterisation of commerce begins here and is then managed at these value boundaries between global players and regional experts.

It is critical that firms understand the interface and value boundaries between their Global Supply Chains and the Strategic Value Chains that capture the power of the firm and allow it to carve out a share of value. It is this skill that is transferable to other sectors and should be of interest to the non-commercial sector, including those militaries of the world that operate in theatres through alliances.

Note: Part 3 is available for download at the bottom of this page.
(jump to Downloads ▾)

Part 4 of 4

Determining the Rhythm and Cadence of the GSCs and SVCs. Managing the Tyranny of Time and Distance To Ramp Up Supply, Managing Congestion and Capacity Investment Upgrades.

As the GSC and SVC operate on their transportation corridors of choice, the tyranny of time and distance begins to impose its will. A typical GSC concentrates on moving products and services at a rhythm and cadence that provides its customers with the highest fulfilment at the lowest possible cost. Speed and velocity, however, impose limitations and costs along the entire length of the GSC-SVC interface.
The enforcement of higher supply velocity on the transportation corridors causes a mismatch between ‘throughput and congestion’ at each node and at each production facility, dry port, freight hub and gateway sea port all along the transportation corridor. These must be innovatively addressed in their design and management. A tendency to take a unilateral approach to ‘speeding up throughput’ at one node only creates a bottleneck downstream at another. The GSC is then impeded in its quest to be Lean-Agile. They will look for better hubs. A ‘hub’ is actually a commercial decision made by the GSCs, not a place or an area.
The use of flexible capacity investments, marginal supply analysis and dynamic pricing to drive efficiency then indicate how investments in infrastructure and assets can be made on the GSC-SVC silos, and at their selected hubs on the transportation corridors. These investments have to be made in optimised tranches of time so that they can mitigate their own risks from economic downturns, the shipping cycle, or the GSC optimisation wars to ensure and prevent the GSC-SVC conflicts from spilling over into the transportation industry.
Part 4A deals with constructing a Global Supply Chain by determining the rhythm and cadence along the supply chain. The trade-offs between Push, Pull, Lean and Agile operations management and the decisions to create low-cost lean supply chains upstream, and agile supply chains downstream with a high degree of fulfilment form part of the construct.
Part 4B focuses on the Global Supply Chains post-Pandemic (COVID-19), the closures of the Suez and Panama Canal, along with several other wars and breakdowns on the global supply chains of the world that have occurred in recent times. The GSCs in this post-Pandemic world need to be resilient, sustainable, and inclusive. There is a need to innovatively balance out ‘Supply Velocity’ with Congestion using innovative constructs and marginal pricing. Various models have been demonstrated including some by the author in his consulting work.
Part 4C deals with the strategic alliances on the major Global Supply Chains of the world, on how they are able to cooperate and compete in a process called CO-OPETITION. The construct offers lessons not just to the usual ‘for-profit’ companies but also for non-profits, government organisations and even the Armed Forces. Constructs to manage the dominance of the large behemoths who operate on the GSCs, as well as road-maps for theaterisation alliances in extended geographical regions have been provided. The theaterisation model used by the large global companies by leveraging their national competitive advantages have been re-purposed, so that they can be used by government organisations and even the Armed Forces operating in alliances or in theatres of military operations.

Note: Part 4 is available for download at the bottom of this page.
(jump to Downloads ▾)

Finally

There are commercial issues that can be exploited by smaller companies who can apply the learning from the innovation on these GSCs to their Local Supply Chains (LSCs). The concept of being Lean-Agile can just as well be done in a single geography.

A Possible Follow-on: Part 5

The Security of Global Supply Value Chains. The Resource-Driven Dominance of a Theatre of Operations

The fifth section refers to the major security issues that will begin to feature, especially after the US threats post-2016 towards defanging globalization, along with the lingering effect of the Pandemic, which have only just begun to appear. The SLOCs (Sea Lanes Of Communications) are not architectured in the same way they were in earlier years.
As a case in point, a major retail giant that might feed the engine of the US or European economy could consist of contract manufacturers in China for a product designed by an original brand manufacturer in the US, transported via land and sea by a western shipper, possibly using multiple flagged ships (perhaps even including Chinese-owned vessels through neutral shippers), through upstream and downstream container ports managed by private terminal operators along the way (Hutchinson et al), each with their own motivation to speed up or delay a shipment, and finally be handled for final assembly (or delay manufacturing) by several private operators before arriving at a VAR (value added reseller) in front of the customer.
The military lever of national power would perforce need to work in tandem with the economic, social and even information-knowledge levers of power to overlay security solutions on the SLOCs of a country in these complex scenarios. This complicates the threat perceptions and the entire security apparatus, as the GSC goes through several international boundaries (and even ownership boundaries) along its way.
The security presentation pack at Part 5 needs to delve into an understanding of the commercial risks and uncertainties that must be managed before a proper security solution might be a consideration.
Part 5 should be written in consultation with security professionals and then applied all along the GSC-SVC and their strategic alliances end to end. The author recommends that the security construct be melded into the GSC-SVC at the granular level and not overlaid independently.
The security of the GSC-SVC and the various entities on the transportation corridor should be seen as an integral part of the GSC-SVC. There are competitive advantages and limitations that are integral to the security apparatus of most countries. Any alliances should seek to plug the gaps in assets and skill base with each member of the alliance.
This is a work in progress.

Reading Instructions

For the reader, there is a ‘chicken and egg’ problem of understanding the constructs between each part in this series of presentation packs. Typically, the author recommends reading through all parts once. Often a point of confusion in Part 1 might be clarified in Part 2, etc.

The first three parts (Part 1, Part 2A & 2B, Part 3) have been published already and are available for download below. Section 4 will follow shortly.

The entire presentation packs are provided pro-bono in good faith. The author has tried to ensure that the models used by the many subject matter experts are referenced. In a number of cases models have been adapted for the occasion by the author.

Finally, it is vitally important to ensure that the presentation packs are properly peer reviewed and updated. It is not possible to guarantee the accuracy of information or knowledge, especially with the passage of time, and/or because companies constantly change strategies mid-course.

Workshops and Speaking Engagements

Allan Rodrigues presently conducts workshops on the Resource Driven View of the GSC-SVC Strategy and Value creation. He is also available as a speaker or guest lecture if required.

Download Files

📋 Download Part 1 here
(PDF 2.7 MB. Click to open; right click to download)

📋 Download Part 2A here
(PDF 3 MB. Click to open; right click to download)

📋 Download Part 2B here
(PDF 1.8 MB. Click to open; right click to download)

📋 Download Part 3 here
(PDF 3.2 MB. Click to open; right click to download)

📋 Download Part 4A here
(PDF 2.5 MB. Click to open; right click to download)

📋 Download Part 4B here
(PDF 2.3 MB. Click to open; right click to download)

📋 Download Part 4C here
(PDF 2.4 MB. Click to open; right click to download)

Downloads