Five Cases in Creating and Destroying Value

Case studies are most useful when they recover the decisions and uncertainties behind an outcome. In supply chains the outcome often arrives years after the decision and in a different part of the cycle: a network built in a boom is tested in a recession, a debt load sized for a good Christmas meets a bad one, and a premium service designed in a calm year is valued only when a strait closes. The task is to separate what decision-makers could have known from what happened later.

The five cases below were chosen to test all four factors of the flow equation, to balance value created against value captured or destroyed, and to span the chain from a ship to a shop. Amazon Logistics shows density bought ahead of demand and the cost of buying too much of it at once. Old Dominion Freight Line shows a service promise turned into a pricing policy and then into a network. Toys "R" Us shows a retailer financed for a better year than the ones it lived through. A.P. Moller-Maersk shows the largest attempt in the industry to leave the freight cycle, and how far it got. Inditex shows a company that pays more to make and move each garment so that it can sell more of them at full price. Figures come from the research companion, which records their sources and confidence. Interpretations are analytical judgments, not claims that one decision caused an outcome.