Business suppliers' value creation potential : A capability-based analysis

Joint value creation through partnering and networking is a topic of current interest. This paper proposes that the dimensions of the supplier's value creation in a supplier-customer relationship could be classified according to efficiency, effectiveness and network functions. These functions are interrelated, but they are conceptually distinct. The value creation process could be described as a spectrum ranging from core value, to added value, to future value. The value-producing potential of a supplier can be assessed reasonably well only in the case of the core value, where there is sufficient benchmarking information in the form of existing alternative offerings and solutions. A priori evaluation of the costs and benefits of added value and, especially, future value projects is problematic, because the realisation of the value is dependent on the development of multiple partners, technologies and industries. In these cases, we suggest that a customer could use a supplier's capability profile as an indicator of how suitable that particular supplier is for specific value creation projects. A framework connecting specific capabilities to different types of value production is suggested, and its managerial implications are discussed.