Value Chain Leadership for the Supply Chain Executive

The difference between a value chain and a supply chain is that the first includes more of a feedback loop from the end consumer, according to Elsy Ocejo, vice president of supply chain at Illes Foods. “That way, you start adding value to the product, not adding cost,” she says.

It’s the supply chain that enhances the value proposition of the company’s products, and that’s why the supply chain role needs to encompass everything from sourcing to project management to customer experience, Ocejo says. It also highlights the need to value partnerships – not only external ones, but also the internal partnerships that allow for the sort of cross-functional collaboration that leads to real innovation.

Efficiency is one thing, Ocejo says, but it has to be balanced with creativity. With the right mix, that means operational excellence is enhanced by inventive thinking to arrive at a better value proposition overall. Often, that means combining the efforts of departments in ways that weren’t done before – such as figuring out how the strategies of research and development and supply chain management can dovetail.

In the case of food production, that can get complicated. Whenever Illes starts developing a new product, it needs to tap into a wide variety of existing and new sources – whether commodities, flavors or packaging – that need to be tested in order to come up with a product that will delight the customer, explains Ocejo. That’s where the supply chain, married to R&D, becomes a value chain.

It can also involve getting proactive about watching for new legislation over, for example, the use of ethylene oxide (EtO) to reduce microbial contamination, which has been banned in the European Union. “It’s a question of how we can collaborate together to really get to the sources and change that, and propose that to the customers as well,” Ocejo says.

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