The Impact of the Value Chain with David Closs
Last Updated December 21, 2022
At a gathering of thought leaders in supply chain management, David Closs stands out.
As the John H. McConnell Chair Emeritus of Business Administration in the Department of Supply Chain Management at Michigan State University, his academic research focuses on the topics of supply chain strategy, information systems, security, and planning techniques, with applications in computer modeling and information systems for location analysis, inventory management, forecasting and routing.
Being the only featured speaker hailing from academia at the SCOPE Supply Chain Summit, an invitation-only conference of top-level supply chain executives, is a testament to both his reputation in the industry as well as MSU’s as the leader in supply chain management education.
It is very valuable for a number of reasons,” Closs says of the SCOPE Summit experience. “It provides MSU with an opportunity to increase visibility for our research and expertise. It also develops interest in our research and often provides opportunities to extend it, collect more data, and provides insight to better interpret our findings. The combination of research and industry experience allows MSU to provide rigorous and relevant insight for industry professionals.”
As a speaker at the SCOPE Summit, Closs presented the research of a multidisciplinary team of MSU faculty collaborating through The Axia Institute, a value chain innovation center within MSU’s Broad College of Business that expands on the top-ranked Supply Chain Management program.
“Value chain extends supply chain by delivering value and solutions rather than just products,” says Closs in explaining the nuances between the two. “End-to-end integrated value chain management provides firms with the next transformational opportunity for value creation.”
The Value Chain Assessment
The presentation posed the overarching question, “How Do Value Chain Capabilities Impact a Firm’s Performance?” The research investigates the correlation of value chain competencies to performance. Closs explains that “historically, MSU has completed supply chain research that tried to identify the supply chain competencies that drove supply chain performance. This most recent work extends our previous efforts to determine the dimensions of value and the corresponding drivers.”
To answer this question, the team conducted an extensive survey of 258 executives to develop a value chain assessment for determining dimensions of value, which competencies most influence those values and why.
Their research found the top dimensions of value to be:
- Cost
- Customer responsiveness
- Quality
- Speed to market
In determining competency actions, the assessment found that value performance is primarily driven by:
- Internal integration
- Supplier integration
- Innovation
- Risk management
As Closs explains, the corresponding competencies driving value chain performance indicate that:
- Cost is most influenced by internal integration, innovation, supplier integration, and risk management.
- Customer responsiveness is most influenced by internal integration and innovation.
- Quality is most influenced by supplier integration and internal integration.
- Speed to market is most influenced by supplier integration and innovation.
Applying the Results
The assessment gives industry professionals a methodology to ensure the actions and competencies they’re emphasizing correlate with their top value chain goals. Cultivating the competencies through proven methods and activities that lead to high performance is one key takeaway from the value chain assessment results.
Organizations can start to develop a value chain mindset “by determining the value proposition desired by their key customers,” explains Closs. “This requires that executives and managers understand the concept of value and the realization that delivering requires collaboration between value chain partners. While this research begins to identify the drivers of value chain performance, further work is needed to identify other competencies and determine relationships.”
Part of that “further work” is using the insights of the value chain assessment approach and scaling it in a multi-industry value chain index.
“Our goal is to create an index that could be used to quantify how value chain performance is increasing for various industries,” says Closs. “We are using our current value chain research to generate interest in developing an industry-based value chain index.”
The value chain assessment project is just one example of how MSU’s Master of Science in Supply Chain Management program provides students with applicable industry knowledge through an experiential education. The assessment’s survey questions were developed and tested with current MS in Supply Chain Management students, as they are the working professionals and executives who will lead these innovative processes to meet future industry demands.
“The MSU SCM program continues to take a broad view of supply chain management, so our graduates come out with an end-to-end and integrated perspective,” explains Closs. “While this philosophy continues, we are extending it to include the concept of value chain so that students understand that delivery of product is not the only requirement—consumers are increasingly looking for solutions or value as well.”
