A framework for designing efficient value chain networks

Published Date
20 May 1999, Vol.62(1):133–144, doi:10.1016/S0925-5273(98)00225-4

Author 

Srinivas Talluri ^a,

R.C Baker ^b

Joseph Sarkis ^c

aDepartment of Information Systems and Sciences, Samuel J. Silberman College of Business Administration, Fairleigh Dickinson University, 1000 River Road, Teaneck, NJ 07666, USA

bDepartment of Information Systems and Management Sciences, Box # 19437, The University of Texas at Arlington, Arlington, TX 76019, USA

cGraduate School of Management, Clark University, 950 Main Street, Worcester, MA 01610, USA

Available online 14 May 1999. 

Abstract

Strategic interorganizational networks aid organizations in gaining competitive advantages and improving production efficiencies. Network organizations, virtual corporations, and value-adding partnerships are envisioned by many experts as the epitome of interorganizational networks for the 21st century. These multi-organizational structures are viewed as a solution for rapid introduction of products while maintaining high quality and minimal costs. One common key issue in designing these new forms of organizations is the partner selection process. The business processes, owned by organizational partners, must be efficient both individually and as a collective group. This paper proposes a two-phase quantitative framework to aid the decision making process in effectively selecting an efficient and a compatible set of partners. Phase 1 identifies efficient candidates for each type of business process (e.g. design, manufacturing, distribution, etc.) utilizing data envelopment analysis. Phase 2 involves the execution of an integer goal programming model to determine the best portfolio of efficient partners based on a number of compatibility objectives. Model application and insights are evident through an illustrative example.

Keywords

Value chain networks

Data envelopment analysis

Goal programming

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  Corresponding author. Tel.: +1 201-692-7285; fax: +1 201-692-7219; e-mail: talluri@alpha.fdu.edu.

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