Transformative Megatrends Driving Value Chain Compression

Transformative Megatrends Driving Value Chain Compression

  • July 2021 •
  • 67 pages •
  • Report ID: 6130369 •
  • Format: PDF
Transformative business solutions and customer-centric business models are compressing the value chain.Vertical integration is causing value chain dynamics to change, with new entrants offering end-to-end solutions across the upstream and the downstream stages.

The value chain will move from the current product-centric model to consumer-centric data, systems, and services in the new compact ecosystem.New technologies such as AR/VR, AI, and Blockchain will not only enable value-added customized solutions but will also reduce value chain inefficiencies.

Disparate generational preferences toward purchases impact the overall customer journey.Millennials prefer automated customer service and Gen Zs place high value on personalization, which is pushing retailers to redesign the value chain with a focus on direct customer communication.

The growing trend of digitalization in the retail space is also encouraging businesses to explore new delivery and fulfilment models that will reduce the gestation gap between product order and delivery. Advanced technologies, digital platforms, and direct-to-consumer models will result in value chain compression, reduced friction, and a decrease in the total number of steps in future customer journeys. Evolving consumer purchase trends such as the demand for more personalized products, same-day delivery, and innovative and informative purchase experiences enable the delivery of high-volume products (direct from the supplier/manufacturing hub to the customer). Companies are looking to set up digital ecosystem business models and provide several interconnected services through a single platform. This will offer multiple touch points and also shorten customer journeys. The digitalization of customer services and the adoption of technologies such as cloud computing, predictive analytics, and Blockchain are opening up several opportunities for companies to shorten the value chain, mainly in the media and entertainment, insurance, automotive, and payment industries. Value chain compression offers numerous economic benefits such as decreased capital and infrastructure costs; for example, Blockchain reduces several steps around validation, tracking, clearing, and risk mitigation, which allows the companies (financial institutions) that use this technology to reduce infrastructure costs by 30%. This study offers a comprehensive view of the new trends in the value chain. It focuses on the various models that are leading to the shortening of various value chain stages. The study includes an in-depth representation of various emerging business models that support value chain compression. It also offers a comparative mapping of customer journey across various industries’ value chains. In addition, the study provides insight on the key impact of value chain compression across businesses and examines the new opportunities arising due to the shortening of the stages of value delivery.