Value Chain Mapping

Instructions:

• Use the diagramming tool to create a value chain map of either the personal computer laptop industry or the commercial aircraft manufacturing industry with the structure presented in class, keep it simple, and limit the map to 20 to 35 nodes.
• You’ll want to start with the material suppliers on the left and move through the external value chain to the customers on the far right side of the value chain map. Consider what the top two or three vendors do to make, sell, and support their products and what companies are in their supply chain (to the left) or their distribution chain (to the right)?Determine the leading firms in each node and using Google searches find the Revenue for each firm and sum those to get the Total Revenue value of each node (you can mix recent years).See if you can determine the Total Economic Value Add of your industry from the data on your map (hint: it is not the sum of the Revenues).Find the Total Unit Shipments from Google searches, or other sources, and determine the Average Selling Price for the final product.Is your industry growing or shrinking, is it consolidated or fragmented?
• Note your findings on your value chain map and submit via Canvas as a PDF file.

Module 4.2
Value chain mapping
High-risk + low-data decisions
Uncertainty
Use a decision framework
• Collect data & ask questions
• Test & validate
Ego
Learning & listening
• Collect or buy experience
• Be honest, fail often but early
Bias
Increase diversity
• Multiple points of view
• Deep global networks
Networks & Maps
What is this?
Internet maps
•
Dr. Priya Mahadevan’s 2007 UCSD work: https://
jacobsschool.ucsd.edu/news/release/685
•
Wired article: https://www.wired.com/story/opte-internet-mapvisualization/
•
OPTE Project: https://www.opte.org/the-internet
•
Webverse (2016) interactive map: http://webverse.org
•
The Internet Map: https://internet-map.net
•
FCC broadband services map: https://broadbandmap.fcc.gov/#/
Networks have changed the world
NETWORKS
● Networks have changed the
world – Trade routes, Trains,
Electricity, Telegraph, Roads,
Pipelines, Communications,
Internet & Social networks
● Metcalfe’s Law: the value of a
network grows as the square of
connections
● Leveraging networks is a
powerful tool for disruption
● Value chain networks help to
better understand industries
Networks, social-graphs & topologies
Board member networks
https://www.interviewqs.com/blog/board-members
Visualizations
• Visualizations make data easier for the human brain to
comprehend and its easier to detect patterns, trends and
relationships
• A map is a synthetic representation of a place, or a network,
helping us to better visualize a construct
• The process of mapmaking can enhance our understanding of
the world – models shape meaning
• Value chain networks can be used to better understand
industries
Visualizing networks with maps
Synthetic representation of the real-world
Visualization examples
Value chains
Porter’s Internal Value Chain
Porter’s Internal Value Chain
Value chain map structure
Time
Raw Materials
& resources
Supply chains & vendors
Channels
Customers
Each node (square) is one or
more companies
CUSTOMER
Parallel steps
Serial steps
Raw materials
Value adding steps
Finished products
A simple value chain
Raw Materials
& resources
Supply chains & vendors
Channels
Customers
CUSTOMER
Added value over time
Sample Value Chain – entertianment & broadband circa 1994
Value chain network
Time
Adjoining
Industries
Governance
Suppliers
Raw Materials
Raw materials
Labor
Intellectual property
Subassemblies
Components
Cash
Raw Materials
IN
Value adding firms
Customer
OUT
Customer
Reverse cash flows (if any)
Products
Services
Intellectual property
Business models
Securities
Cash
Sample Value Chain network NA Oil & Gas Industry
US Oil & Gas Industry
Source: US Energy Information Association
TEV = $3.411T
Employment = 9.712M
Labor = $0.658T
O&G
Corporate
IT, SAP, etc.
Comms
O&G
Corporate
Purchasing
EAM
APM
SAP Ariba
Private NDT
Education &
Testing
RFQ, Bids &
Awards
NDT
Equipment
Vendors
Silicon
Federal
Education
Funds
Temporary
Workers
LABOR
Labor Pool
EQUIPMENT
Sensors
Pipeline
NDT
RoS NDT
Tank NDT
DOJ, Courts
Work permit
Work permit
Permitting driven by
IT software vendor
Work permit
Turnover
NDT
Event NDT
Work permit
NDT Vendors
Work permit
NDT OJT
Compliance
NDT
Work permit
Trade
Associations
City, County,
State
Public NDT
Education &
Testing
Mistras is some cases is an
Equipment Vendor
Embedded
SW
NDT Subcontractors to Plant
Services Vendor
API
Federal DOT
DOE BLM …..
Private Property
Owners
ASNT
O&G
Operations
IT, SAP, etc.
Activists
Lobbying
NDT
Reports
Plant
Automation
& Control
NPMA
Contracting, Leases,
Permitting & Licenses
PCMS,
Meridium,
BHGE, …
AEC
Mothball Well
NFS/BLM
Restart Well
Engineering Analysis
Plant
Operations
Predictive
Models
Safety,
Inspection &
compliance
operations
Aircraft
USGS
Turnover
Operations
Aerospace
Example Fluor
GIS Vendor
Satellite
DoD
Exploration
& Modeling
Spot, private
suppliers, …
Plant Services
Drill Test
Well
Sample
Analysis
Construct
Well
Operate
Well
Local
Pipeline
Storage
Tank
Gathering
Pipeline
Storage
Tank
Plant AEC
Product
Storage
Tanks
137 US Refineries
Refining
Plant
Upstream
Downstream
Midstream
1,133 Wells & Rigs
Retail
AAPG
Petrochemical
Wild-catters
Decomissioners
Decommission
Well
Decommission
Pipeline
Decommission
Refinery
Tanker
Truck
Storage
Maintenance &
Repair Services
Trade Labor
Industrial
User
This represents another complete
NDT customer
Distribution
Pipeline
Aviation Fuel
OEM Certified
Labor
Tanker
Truck
Storage
FBO
Local Storage
Distributor
Local Storage
Airfield Tanker
Truck
Aircraft
Rail Tank
Car
Abandonment
Environmental
Restoration
OEM Training
OEM Parts
Heating Oil
Tanker
Truck
Storage
Rail Tank
Car
OEM Supplier
Diesil Fuel
Storage
Direct Industrial
Users
Distribution
Pipeline
Diesil Fuel
Storage
Distribution
Pipeline
Distribution
Pipelline
Rail Tank
Car
Shipping
Terminal
Tanker
Truck
Ships
Marinas
Truck Stop
Distribution
Pipeline
Boating
153,000 Retail Distribution Points
Only 2% Majors Owned
Tanker
Truck
Storage
Terminal
Auto Fuel
Storage
Delivery Tanker
Truck
Tanker
Truck
Trucks
Rail Tank
Car
Storage
Terminal
Tanker
Truck
Gas Station
Big Box
Station
Car, RV, ATV, …
Residential
Commercial
Sample Value Chain network NA Oil & Gas Industry
Consumer
savings
Bond market
Finance
Sewer
Land
Banks
Consumer down payments
Government
Insurance
Trade schools
Water
Electrical
connection
Semi-skilled labor
Handheld tools
Hardware
tech
Late buyer
Augmented reality
Equipment
Manufacturers
Augmentation/
robotics for bricks
and masonry
LIDAR
Equipment Rental
Drone tech
Advertising
Developer
Customer
discovery apps
Realtor (leasing)
Pre-Marketing
Build
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Subcontractor
Survey
Excavation
Foundation
Framing
Envelope
Mechanical
Electrical
Plumbing
Finishes
Inspection
General Contractor
Feasibility study
Procurement
Architect
Engineering
Permitting
Contracting
Finished apartments
Moving
Frunishings
Personal
shopping
Asset tracking
Commissioning
Project
management
Estimating and
take-off
Bid management
Software
Equipment
management
Compliance
Reale
Interior Design
Demo
Remodel
Worker tracking
Maintenance
Operations
Automated image
analysis
Progress tracking
Accounting
Investment
management
BEMS
CAD
Building
performance
model
Pre-construction
Materials
Recycked
aggregate
Construction site
Factory construction
Real estate
Post occupancy
Marine dredging
Deconstruction
Remodel
Ready Mix
Poured concrete
ICF
Quarries
Cement
Mortar
Pre-cast
Marble
SIP
Mansonry
Power
Fly ash
Glass
Mines
Paints and
pigments
Bricks
Concrete
Tile
Carpet
Modular kitchen
units
Materials
Steel
Hardwood
fllooring
Beams
Aluminum
Copper
Hardware
Sheet rock
Rolled steel
Plaster
CLT
Forest
Prefinished CLT
Open wall units
Plywood and
primary
processing
Closed wall units
Modular
bathrooms
Trusses
Petrol
Insulation
Package
receiving hubs
Resins
Finished plastic
components
Mobility access
hubs
Adhesives
Roofing
Baths
Sinks
Smart plumbing
Internet
connectivity
Smart meters
EV chargers
Tolients
Plumbing
components
Finland construction industry
Source: Confederation of Finnish Construction
Windows and
doors
https://www.rakennusteollisuus.fi/globalassets/suhdanteet-ja-tilastot/suhdannekatsaukset/2018/kevat/
sami2/suhdannekuviot-englanniksi.pdf
Building construction = €27 B
50% new construction, 50% remodel
Finand construction employment = 198 K
Labor cost = €15-20 B
Assembli
es
Paper
Metal
Gypsum
Asphalt
Masonry
Wood
Windows/doors
Rebar
Electrical
subassemblies
Lighting
Sector profits = €1.3B (2017)
Industry enterprise value €10-15 B
Elevator
Near-term = stable
Mid-term = uncertain
Solar panels
Electrical
components
Batteries
Appliances
Home assistants
Glass
Roofing
Plastics
Vegetation
Landfill
We want to know…
Where are the:
• Surpluses?
• Rents?
• Tolls?
Who are the Gatekeepers?
CUSTOMER
Value chain relationships:
• Regional
• Global
• Financial
• Regulatory
What’s in a map?
Value chain map structure
Time
Raw Materials
& resources
Supply chains & vendors
Channels
Customers
Each node (square) is one or
more companies
CUSTOMER
Parallel steps
Serial steps
Raw materials
Value adding steps
Finished products
Value adding node (a firm)
Money
What value is being
Added by the entity?
Materials
$in
∆
Customers
Money
$out
Value adding node (a commercial firm)
Regulations
Investment $
Debt $
Material vendors
Contract labor
Cash$
COG$
Taxes, fees, div.
NPBT
EPS, Val, Mul
R&D G&A
OPS MKT
Rev$
Customers#
Units#
Added Value = Rev$ − Cash$ − COG$ materials
ARPU = Rev$ / Customer# ASP = Rev$ / Units#
Productivity = Rev$ / Employees#
Diagramming software
Discussion
Example
Media & broadband
Media & broadband
Media & broadband
Value chain insights
Internet services displace traditional advertising & media buying
Advertising
disrupted on a grand
scale
Digital audio and video displace film & tape
Digital becomes a
better creation medium
Internet displaces cable, satellite & broadcasting equipment
Internet becomes
a better distribution pipe
Internet displaces NOCs, retail and fulfillment
Internet becomes
a viable commerce platform
Personal computers & CE displace set-top boxes
Smart TV
Smart phones
Tablets
Laptops
Desktops
IoT
Home networks
Chromecast
Ruku
AppleTV
Personal computer
platforms create
better home delivery
systsems
Youtube creates a “new” channel replacing channels
Youtube
delivers unlimited
Outlets (channels)
Streaming displaces traditional theater, networks and cable
Over-the-top
promises unlimited
Outlets (channels)