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external value chain or value network

. As companies outsource more and more activities, 

management of the links between the company and its partners becomes more important. 

Deise et al. (2000) describe value network management as:

the process of effectively deciding what to outsource in a  constraint-  based,  real-  time 

environment based on fluctuation.

Electronic communications have enabled the transfer of information necessary to create, 

manage and monitor outsourcing partnerships. These links are also mediated through inter‑

mediaries known as ‘value chain integrators’ or directly between partners. As a result the 

concept of managing a value network of partners has become commonplace.

Figure 6.9, which is adapted from the model of Deise et al. (2000), shows some of the part‑

ners of a value network that characterises partners as:

  1 

 Supply‑  side partners (upstream supply chain) such as suppliers, business‑to‑business 

exchanges, wholesalers and distributors.

  2 

Partners that fulfil primary or core value chain activities. In some companies the man‑

agement of inbound logistics may be outsourced, in others different aspects of the man‑

ufacturing process. In the virtual organisation all core activities may be outsourced.

  3 

 Sell‑  side partners (downstream supply chain) such as business‑to‑business exchanges, 

wholesalers, distributors and customers (not shown, since conceived as distinct from 

other partners).

  4 

Value chain integrators or partners who supply services that mediate the internal and 

external value chain. These companies typically provide the electronic infrastructure for 

a company.