In battling supply chain complexity, author John Mariotti (The Complexity Crisis) says one handy tool to use is a "Shape of Value" plot.

According to Mariotti and others, perceived value is the main driver of purchase decisions, and there are in turn five primary drivers of those value perceptions:

• Quality
• Speed
• Innovation
• Cost
• Service

As shown in the figure below, it then becomes possible to plot the value map for any particular product or customer segment along those dimensions, using watch makers Rolex and Times as an example.

Adapted from The Complexity Crisis, John Mariotti

According to Mariotti, excess complexity in an organization can distract companies from the fundamental focus on customer value creation. In addition, a tool such as this can help companies understand which decisions and supply chain processes actually add to perceived customer value and those which only add to complexity without having a strong impact on the core value elements important to a company's customers.

Supply Chain Digest adds that using this tool often requires several layers of analysis. For example, for any given product, a company may have "channel" customers (e.g., retailers, wholesalers) and "end" customers (actual users), each of which have their own value plots. A good recent example is Dell adding mass merchandisers - with their specific value drivers - to its traditional customer base of businesses and individual consumers. In addition, different market segments and geographic regions may also have different value equations for the same product, all of which adds... to complexity.

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