Value chains and regional competitiveness programs World Bank Washington, DC 26th October 2006
Value chains and regionalcompetitiveness programs
World BankWashington, DC26th October 2006
30 October 20062
Introduction
Personally 15 years working only in cluster basedcompetitiveness developmentConsulting company COMPETITIVENESS hasperformed 105 cluster initiatives in 12 countriesWe work at value chain level but only for regionalgovernments or donors, never for a single companyWorking in the more advanced regions in the UK,France, Spain, Italy, Denmark, Sweden,… as well asin developing countries (Brazil, Argentina,Thailand,…)
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Agenda
New value chains for competitiveadvantageExamples of value chain change inclusters– Seafood cluster– Bakeries cluster
From cluster initiatives to horizontalpolicies
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Agenda
New value chains for competitiveadvantageExamples of value chain change inclusters– Seafood cluster– Bakeries cluster
From cluster initiatives to horizontalpolicies
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In the past companies in a cluster reacted to increasedglobal competition with collaborative initiatives:–sharing parts of their value chains (research,logistics,…)–developing common support services (training,…)
Competitiveness before
Jointservice
Company A
Company B
Company C
Company D
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Developed economies have to respond redefiningtheir businesses where they compete:–Incorporating leading technological innovation–Adding advanced services that require localdelivery
Competitiveness now
Leadingtechnology
Advancedservices
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Competitiveness now
Leadingtechnology
Advancedservices
A different value chain will be neededA cluster collaborative effort maybe needed todevelop some parts of the new value chain
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Agenda
New value chains for competitiveadvantageExamples of value chain change inclusters– Seafood cluster– Bakeries cluster
From cluster initiatives to horizontalpolicies
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Market attractiveness: Frozen
Margins squeezed by:Asian new entrantsEuropean industryovercapacityLow cost substituteprotein
Weak postioning:Price sensitivityPowerful retailersconcentrating furtherLimited suppliers
High volume/low margin business
Margins Positioning
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Market attractiveness: Fresh
Higher margins:Logistics act asbarrier to entry“Local” competitionFew substitutes forhealthy protein
Stronger positioning:Consumer demandfor freshnessTraceabilityincreases supplierpartnering
Higher margin large niche business
Margins Positioning
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Seafood service innovation fromHouston (Texas)
Market attractiveness: Fresh
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Become the « Value added hub »for fresh fish in Northern/Central Europe
Opportunities for the Humber cluster
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Opportunities for the Humber cluster
Build up a “Sea/Airhighway” for freshfish from Iceland ,Faroes and Norway•Humberside airport•Immingham port
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Opportunities for the Humber cluster
Develop the topready meals
development clusterin Europe
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Opportunities for the Humber cluster
Establish a “chilledfood shuttle” tolink to:
• Schiphol (air)• IJmuiden (fast-
ferry)
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Opportunities for the Humber cluster
Piggy-back on Dutchpan-Europeanchilled distributionnetwork:•Presently trucking•Future TGV
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Opportunities for the Humber cluster
HUMBER: READY MEALDEVELOPMENT
ICELAND: FISHING ANDPRIMARY PROCESSING
HOLLAND: PERISHABLEDISTRIBUTION
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The Vitoria Airport case (I)
(*) not regular routes
Second perishable products gate toEurope after Frankfurt (30,000tonnes / year)
Charter flights with supplyingregions in South Africa, Chile*,Argentina *
Three 747 flights a week fromNamibia with an average of 50tonnes of fish each
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the Vitoria Airport case (II)
Fish not landed directly inVitoria, gets picked up throughtruck services with majorEuropean airports,
…consolidated in Vitoria,
…and distributed to mostSpanish fish markets
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The Vitoria Airport case (III)
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The Dutch Flower Cluster
8000 producers
1500 wholesalers/exporters
3 Auctions
Originally:
quick paymentsfinancial guaranteeorganise logistic
facilitiesconnecting logistics
Now:– International logistic
services facilitiesprovider
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8000 producers
1500 wholesalers/exporters
AuctionsGrimsby Fishgate
Co
ntr
act
sale
s
Co
ntr
act
sale
s
Catching
Processing
Dutch cluster Current situation
Humber Seafood Exchange
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8000 producers
1500 wholesalers/exporters
AuctionsGrimsby Fishgate
Co
ntr
act
sale
s
Co
ntr
act
sale
s
Catching
Processing
Dutch cluster Current situation
Humber Seafood Exchange
Humber Seafood Exchange
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Agenda
New value chains for competitiveadvantageExamples of value chain change inclusters– Seafood cluster– Bakeries cluster
From cluster initiatives to horizontalpolicies
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Mapping of Bakery Related Activity in Yorkshire
Plant Bakers
Self retailing bakers
Sandwich/on the go chains
Independent craft
Specialist suppliers
> 100M
15.000.000– 25.000.000
10.000.000-15.000.000
5.000.000-10.000.000
1.000.000-5.000.000
< 1.000.000.
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Selling bread in the US
Morning stainsMorning stains
Afternoon stainsAfternoon stains
DETXAN
Sell breadthrough
supermarkets
“Sell 22 types ofhealthy bread to
suburban motherson the way home”
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And…the margin?
Morning stainsMorning stains
Afternoon stainsAfternoon stains
DETXAN
$$$?
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On Sept. 22, Tony Alvarez was appointed CEOof Interstate Bakeries (IBCIQ ), the KansasCity-based maker of Wonder Bread andTwinkies, which filed for Chapter 11bankruptcy protection on the same day.
And…the margin?
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And…the margin?
Per store data:Average: $ 1,9 M50% ROI in units
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Industry structure: strategic segments
Fresh-on-the-GoFresh-on-the-GoBread=FMCGFast moving
consumer goods
Bread=FMCGFast moving
consumer goods
Stagnant
Few buyers
Consolidation
Competing for marketshare
Growing
Still fragmented buyers
Formats innovation
Opportunities forgrowth
Low profitability « Better » profitability
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Main offering observations in US
In storefreshnessIn store
freshness
Good quality par bakedmass artisan production
OccasionsOccasionsImpulsebuying
Impulsebuying
Starbucks: 300.000record copiesAu Bon Pain: 200cards/store /week
SpeedSpeed
Self serviceInternet ordering
VarietyChoiceVarietyChoice
Re-organisation of the supply chain
Manufacturing« categories »Manufacturing« categories »
Purchase wellManufactureLaunch productsProduct/brand marketingDeliver to hubsStock in shelvesChannel dispatches
Sell theproduction
through retail
Sell theproduction
through retail
Re-organisation of the supply chain
Manufacturing« categories »Manufacturing« categories » ServiceService
Purchase wellManufactureLaunch productsProduct/brand marketingDeliver to hubsStock in shelvesChannel dispatches
Sell theproduction
through retail
Sell theproduction
through retail
Customise solutionsAggregate offers
Fresh/ Artisan/ QualityMenu/ Packaging/ Oven
Innovate in solutionsPoint of sale innovationExtreme logistics
RotationRespond to customer needs
Look for the finalconsumer and
serve them
Look for the finalconsumer and
serve them
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Reorganising the supply chain
ManufacturingManufacturing ServiceService
Manufacturing
Brand/Product launching
Others
Manufacturing
Others
ServiceProcessingAggregationCustomisationLogistics…
A category An added value service
Manufacturingcentre
Food servicecentre
ManufacturingLong LifeProduct pushClient
ProcessingPerishableLogisticsCustomer
Reorganising the supply chain
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Agenda
New value chains for competitiveadvantageExamples of value chain change inclusters– Seafood cluster– Bakeries cluster
From cluster initiatives to horizontalpolicies
30 October 200637
Action implementationStrategyAction implementationStrategy
Action implementationAction implementation
Action implementation
Action implementation
Action implementationAction implementation
Action implementation
---Year 1---I---Year 2---I---Year 3---I---Year 4---I
CL
US
TE
RL
EV
EL
Strategy
From cluster initiatives to horizontal policies
Mapping
StrategyStrategy
Strategy
StrategyStrategy
Strategy
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Action implementationStrategyAction implementationStrategy
Action implementationAction implementation
Action implementation
Action implementation
Action implementationAction implementation
Action implementation
---Year 1---I---Year 2---I---Year 3---I---Year 4---I
CL
US
TE
RL
EV
EL
Strategy
Horizontal policies
Regional institutions
From cluster initiatives to horizontal policies
Mapping
StrategyStrategy
Strategy
StrategyStrategy
Strategy
HO
RIZ
ON
TA
LL
EV
EL
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Action implementationStrategyAction implementationStrategy
Action implementationAction implementation
Action implementation
Action implementation
Action implementationAction implementation
Action implementation
---Year 1---I---Year 2---I---Year 3---I---Year 4---I
CL
US
TE
RL
EV
EL
Strategy
Definition (re-definition) of horizontal policies
Strengthening of regional institutions
From cluster initiatives to horizontal policies
Mapping
StrategyStrategy
Strategy
StrategyStrategy
Strategy
HO
RIZ
ON
TA
LL
EV
EL
Policy reviewsInstitutionalreviews
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Horizontal policies in Catalonia
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Thank you!
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