THE LINEAR VALUE CHAIN

This page goes deeper into describing the dominant linear production and organisational systems existing today in developed/western countries; with short historical perspectives in the Blog entries at the bottom of the page.

The video above, is one of two videos that provides an overview of the Linear Value Chain. This first video, explains the key elements in the value chain and the micro-economy.

To the right, are tabs that contain more information on each of the main elements, explained in the video.

Lead Production Firm

Lead Production Firm: This refers to those production firms that manage and have the greatest influence in the upstream and, often but not exclusively, in the downstream supply chain. A value chain can also be highly controlled by Lead Retail firms (see the main text for more information), or Lead Transformation Firms (as in the coffee industry – roasting…), or in some cases, Lead Specialised Labour (i.e., where specialised labour is highly sort-after, but hard to find). In more coarse grained terms – one can ask the question: who extracts the most profits out of the total profits generated in the value chain? The answer then highlights the lead firm(s) in the value chain, and then speaks a lot about the context of that market and or industry, and it’s relationship to geographic and socioeconomic issues.

There are generally two main types of lead firm:

Integrated Firms: Are those firms that manage and do a large majority of the production activities in the value chain, from product strategy to assembly, and manufacturing of components. Retail is generally not included in an Integrated Firm’s activities, but it can be. Although, non-integration is the predominant trend, integration has re-become a bit of a ‘hot topic,’ with the likes of Tesla Motors, and their new battery manufacturing facility; and Solar City for example.

Non-Integrated Firms: like Integrated Firms, Non-Integrated Firms also initiate the flow of resources and information through the value chain, however, they focus more on ‘core activities,’ such as specific ‘high-value’ activities, such as R&D, design, and marketing for example; whilst outsourcing/contracting the other activities to external suppliers. This trend towards non-integration, has been increasing with specialisation.

Factors of Production

Factors of Production: Factors of Production are a taxonomy concept (a way to name and frame) developed in Classical Political Economy (the predecessor to modern economics). The concept still provides a useful way to discuss and think about some of the main essential elements that need to be brought together and organised to produce goods and services. Factors of Production are not consumed or physically embedded in the final goods.

Land Space:  New land can not be created – except for some reclaimed land from the sea – however, as the sea is really land covered in water, it is really a change in land use. Through the combination of the other factors of production, a farmer can attain a surplus of food and fibre from nature (which nature provides for free). All economic activities, beyond agriculture, and fishing (and forestry, foraging, and mining) need land, however, for manufacturing, infrastructure and housing, the concept of ‘land’ shifts towards ‘Space,’ and this is its’ usage in this model. When seen as Space or Area, new spaces can be created (underground, or up in the air) through buildings to cruise-liners for instance. Land in the terms of Space, is a clear distinction between a place to produce (at least) the basic elements to survive (i.e., food and clean water) – with its’ value linked to the fertility of the soil – and a place to produce goods and services and to live (and in most cases, without the access to soil). Land Space for production can be valued both as a place where an activity takes place, and as a commodity – a good that can be produced and sold for a profit. As a commodity it can be bought and held as an appreciating value asset, which can be rented, sold or used as collateral for a loan for instance. It’s economic value, is therefore determined both by its’ current value for use, and its speculated commodity value in the future – which in both cases is also linked to its’ geographic location (its’ relation to these factors in the rest of the economy).

Entrepreneurs or Management: Entrepreneurs are those willing to bear risk, innovate and develop strategies, manage and lead a business venture. Management, is what usually takes over from entrepreneurs when a company reaches a certain size – when the business is too complex, or the original owner has retired or sold the business for example. In general terms, small business managers can be seen as entrepreneurs, even if the business has been running a long time (so entrepreneurship is not always a link with the ‘new’), as they often need to be multi-skilled, and very active to maintain their businesses cash-flow (particularly as they are far from a monopoly, and usually truly live in a real market of constant competition).

Specialised Labour: Firms hire people either as a salary or wage worker, in exchange for their labour. Specialised labour is a slightly more defined description of ‘labour’, as today, there are virtually no jobs that do not require some form of basic training (which can also be referred to as ‘human capital’). An increasing division of labour developed throughout the industrial revolution to the modern-day, has lead to this ever increasing specialisation.

Capital Good & Technology Industries & Goods (The Means of Production): Refers to the firms that design and build those goods that support labour in the production of final goods in the future, such as machines (i.e. Trump GmbH + Co.KG), factories, offices (Real Estate example is Harwood International), computers (i.e. Lenovo Group Ltd), and software (i.e. Dassault Systèmes S.A.) for example; and the Capital Goods themselves. Capital goods, when purchased, are investments that are usually useful for more than one tax year, and so can not be deducted as a business expense – entirely: Rather, the tax is deducted over the number of useful years the capital good has in service, and this is called depreciation. It is also important to note that according to (Rosenberg, 1982) most of the technological advancement of the past two centuries has occurred within the capital goods industry – not in consumer goods.

…it constitutes certain kinds of knowledge that make it possible to produce (1) a greater volume of output or (2) a qualitatively superior output from a given amount of resources. (Rosenberg, 1982).

Technological innovations can be in products, processes (like a recipe), work organisation, finance and markets for example; and can be radical or incremental. Innovations can cross industrial sectors (like capital goods technologies), and can both create new industries and destroy others.

Raw Materials

Raw Materials: are those materials that have had virtually no transformation, but have been produced/gathered/extracted by a combination of the factors of production.

According to Giljum et al., (2009) there are five main categories of raw material input: biotic materials, abiotic materials, air, water and land area. However, in this map, there are four, as land area is not embedded in the final good; and for this reason it is a Factor of Production.

1) Biotic Materials: are the materials from Agriculture, Fishery, Forestry and Foraging (AFFF) activities, such as wood, linoleum, straw, humus, manure, bark, cotton, spider silk, chitin, fibrin, and bone.

2) Abiotic Materials: are the materials extracted through Mining activities, including “…minerals (metal ores, industrial and construction minerals) and fossil energy carriers (coal, oil, gas, peat).” (Giljum et al., 2009)

3) Air“…is a key resource input to combustion and other processes and serves as a balancing item to establish material balances e.g. for the use of fossil fuels, producing CO2 from O2 in the air and carbon in the fuels.” (Giljum et al., 2009)

 

4) Water: is a major resource in all biotic and abiotic material production and extraction.

If an LCA (Life Cycle Analysis) was being made on a product and or process, then Land Area is included, because: “Taking a resource use perspective, land area is one of the most restrictive categories of resources since humanity only has one planet on which we have to arrange sustainable ways of meeting our demands on land…” (Giljum et al., 2009) 

These man-made flows of raw material production/extraction/gathering can affect, directly or indirectly, some natural material flows in the natural world (see biogeochemical flows above), such as adding additional green-house gases into the atmosphere, or deforestation that can change rain patterns and biological food webs for example.

About Commodities: When talking about raw materials, the term ‘commodity’ is often used, and so it is important to clarify what it means, as it has three main uses:

A) A commodity, can be defined (as by Marx for instance), as a product that has been produced purely for sale, it is not a surplus of production. For example, it is not the extra carrots grown on a farm, after those are taken for self-consumption by the farmer; instead it can be the cereals that have been grown by the farmer to sell, and not consumed at all on the farm itself – or a factory, building a motor-car for example – the manufacturer is not building the car for its’ own use, but instead for the exchange of money from customers.

B) Another use of the term, commodity, is the large volume production (usually by more than one producer) of raw materials. In this case, these raw materials can be seen, from a market perspective (usually a global market perspective), as all the same (standard), and often, only compete on price; these materials usually compete in large markets, with high competition, and correspondingly low profits. The way in which the raw materials have been produced, may be different (i.e., more or less negative or positive externalities), and of different quality (i.e., more or less vitamins in the carrots). But as a commodity, it maybe, and often is the case that it is, difficult to transmit these differences in the market, to adjust the price to that which is given by the market (low price elasticity).

C) Within a global system, from coffee to cell phones (and so also products), all raw materials and products eventually mature towards (some faster than others) a form of commoditisation (they become a ‘commodity’). And so, unless companies can differentiate – i.e., though innovation and/or marketing, or market protection mechanisms, such as monopolisation, patents or state interventions, then all will eventually face the profit struggles of becoming a ‘commodity producer.’

Primary Industries

Primary Industries: Those industries that produce the raw materials – and often commodity [the term commodities is explained above in Raw Materials].

In the majority of global value chains, agriculture is clearly a primary producer for the rest of the global value chain. An increasing number of intermediate companies have positioned themselves between the farmer and the final consumer.

Agriculture, Forestry, Fishing & Foraging (AFFF): As agriculture has grown in scale, and output has reduced in diversity through a trend towards specialisation, and exportation, agriculture has increasingly become a primary producer – moving toward commoditisation.

However, beyond agriculture, there are still many different types of foods, or natural products that are foraged or hunted or gathered (including legal or illegal hunting) from the land and sea. Examples include natural pearls, seaweed, different types of wild flowers, berries, mushrooms, and wild deer. Fishing is still a form of hunting – although now with sophisticated search technology, the term ‘hunt’ is a little less clear, and fish ‘farms’ are increasingly part of the mix.

Mining: This is all the companies that extract minerals, or organic materials (long-chain carbon based materials) from the earth, or from an orebody, lode, vein, seam, or reef.

Intermediate Suppliers & Goods

These are also known as secondary factors of production, as they are created through the combination of the primary factors of production. Intermediate Suppliers also make up part of the Upstream Supply Chain.

Energy: Here, we refer to energy that is being used an Intermediate Good (see below) which can come from non-renewable or renewable sources.

Intermediate Goods: Those goods used as inputs for the production of final goods, manufactured by Integrated and Lead Firms, Subsidiaries, or Turnkey Suppliers for example. As with the rest of the value chain, there is some form of hierarchal order in this sector of activity. Many of the firms are vertically layered, with those above, contracting or sub-contracting inputs from those layers below. In most cases, the lower-end of the hierarchical chain is predominately, low-skilled, and low value (low profits), and is often based in developing countries.

Heavy & Light Transformation Industries & Goods: These suppliers transform raw materials, through refining and chemical processes, into all the modern materials we use today – glass, steel, cement, carbon fibre, paper and cotton thread for instance. Company examples include The Dow Chemical Co., BASF SE, or E. I. du Pont de Nemours and Company for chemicals; Pilkington Group Limited for Glass, and Lafarge S.A. for cement and concrete for example. These industries have been seen by many economists as key sectors in the development of a modern state.

Component Industries & Goods: These firms produce ‘discrete elements’, such as components, or sub-components, that become inputs for other component and sub-component manufacturers, or inputs for Turnkey Suppliers, or Lead or Integrated Firms and/or their Subsidiaries. Component Suppliers are also referred to as ‘lower-tier suppliers’, ‘specialised suppliers’, ‘sub-contractors’ or ‘commodity producers’; a large-scale example is Intel Corporation (micro-chips).

Outsourcing, Offshoring & Service Industries

Turn-key Suppliers: (Also called: System Suppliers, OEM suppliers, First-tier suppliers, Contract Manufacturers…). Examples include Dana, Delphi, Celestica, and Foxconn. 

Over the last 10 years or so, many lead firms have consolidated their base of suppliers, from sometimes a thousand to a few hundred. In this situation, the old suppliers are often still in the value chain, but now they are contracted via the turn-key supplier instead of the lead company. And so, Turn-Key Suppliers have positioned themselves in the supply chain, as a ‘single-source’ service, for both managing supply chains, and in some cases also assembling supply-chain parts from various sources, into more finished intermediate goods, or even final goods, for their upstream clients.

Subsidiaries: These are companies that are fully owned, or partly owned (more than 50% of the stock), by a parent company (in this case the Integrated Firm or Lead Firm). In the situation of full ownership, this can be brought about through the Acquisition of, or Merger with, another company; or the construction of a new office/plant in the same country or abroad (offshoring). And in the case of part ownership over 50% (known as ‘Controlling Interest’), this can be a purchase of stocks from an existing company, or as a partnership in the construction of a new office/plant (again, onshore or offshore).

Inter-firm Trade: Although this flow is not highlighted in the map, this is worth mentioning here. Inter-firm trade is when different production plants that are owned by the same company (within the same country or in different countries), are sending components or sub-components to be assembled in another plant within the same firm. It is estimated that between 30-50% of all international trade in manufactured goods is inter-firm trade (R. Lanz et al 2011). Basically the outputs from one production plant becomes the inputs of another. Although this may not seem so important to mention, when it is highlighted that these very high number of ‘trades’ are not in the market, and so prices are not dictated by the market, and they do not involve VAT.

Service Industries & Goods: Many, companies of all sizes are outsourcing parts of their business to service providers. Two main forms of service industry is described below:

Business Services: Includes ‘financial services‘ (global examples include Deloitte Touche Tohmatsu Limited, PwC, Ernst & Young, and KPMG for example), ‘communication services‘ (Cisco Systems, Inc. for example), ‘computer and information services’ (Infosys Limited for example), and ‘legal services’ (global examples include Dentons, and DLA Piper) for example. Particularly enabled by the internet, these specialised services can now also be outsourced to external 3rd party companies (based locally or worldwide) like Manufacturing activities can.

Logistics & Packaging: Logistics Providers are a key component in the modern-day globalised value chain. From boats, to planes, to lorries, to trains, to vans, these companies move everything (that is not able to be transported by pipes, wires and electromagnetic waves (radio for example)…) through the value chain. Examples of third party logistic providers (3PL), such as DHL Supply Chain & Global Forwarding, Kuehne + Nagel, DB Schenker Logistics, Nippon Express, and UPS Supply Chain Solutions. Closely linked to logistics is packaging, which is also a key part of the logistics network. Packaging has to protect the goods, whilst often being designed to be as light and compact as possible, and labelled to support tracking. One of the biggest innovations in logistics has been the ‘pallet’ and the ‘shipping container.’ Companies include Chep, Arrowhead Systems, Inc. for instance.

Ownership & Organisational Form

Ownership & Organisational Form: The ownership of the means of production, is not the same as the organisational form of the enterprise. Both a ‘traditional’ company and a cooperative company often organise themselves in similar ways (i.e., integrated, and vertically scaled, with management groups), but the form of ownership and distribution of income can be very different.

Different forms of ownership includes Sole Proprietorship, Limited Liability Companies (LLCs), Corporations, different forms of Partnerships, and Cooperatives for example.

In terms of organisational form, this includes such options as whether the company is integrated or non-integrated, uses conventional hierarchy, flattened hierarchy, matrix, divisionalised, or networked management forms, for example.

Goods and Services

There are many different definitions of goods and services, which can also overlap depending on the context – for example, one product can be classed as more than one type of good – a car can be a durable good, or a luxury good, or a private good.., and can also be a service, if it is rented for instance. Although not discussed in this section, as there is the concept of a ‘Good’ – those materials that are said to satisfy human wants and provide utility; there is also the concept of a ‘Bad,’ in economics too, which is anything with a negative value to the consumer, or a negative price in the marketplace, i.e., waste.

Tangible Goods:

Fast-Moving Consumer Goods (FMCG): Also known as ‘consumer packaged goods’ (CPG), are nondurable products that are consumed very quickly, and have a short shelf-life. Examples include soft-drinks, toiletries, some toys, and processed foods for example. Generally produced in large volumes.

Nondurables Goods: Also known as consumables goods or soft goods, these goods are ‘used up’ during use, like ink in printers, and paper and pens for example.

Durable Goods: Also known as hard goods, these goods are longer lasting, and can be used and reused many times over. Examples include washing-machines, fridges, cars, furniture, computers and mobile phones.

Intangible Goods: A good that can not be touched. For example, mobile apps, and virtual goods (digital books, music, movies and online games for example). Intangible goods can be included as services, but here they are defined separately. A service is often designed and made with a customer (a haircut for example), but an intangible good can be made without any direct contact with or actual consideration in some cases, for the customer. Another way to look at is, is that intangible goods can be owned, and reused (perhaps indefinitely).

Services: Are a form of contract between the supplier and the user. The user does not (generally) own the item(s) being paid for, instead they can hire/lease/rent the access to it’s use via a service provider or ‘Rentier’.  The Five I’s of Services include: Intangible, no Inventory (no stock)Inseparability (the service provider is a key part of service delivery), Inconsistency (Each service is unique), and Involvement (The customer is involved in the service delivery process).

Downstream Supply Chain

Marketing Firms: This includes all marketing companies that are responsible for the communication of a product, service or brand to customers (e.g. Wolff Olins) for clients such as Final Manufacturers or Sales Firms. These companies can also be involved in the Research and Development of new (or rebranded) products and services (e.g., ?Whatif!), and the collection of consumer trends (Mintel Group Ltd for example).

Wholesalers and Retailers: Also known as, Sales, Retailers, Distributors, Resellers, and Value-Added Resellers (VAR). In all value chains, nearly in all cases, the sales companies have the power to vary sales prices, promote one product over another, and have direct (physical or virtual – via the internet) contact with the final customer – a powerful part of the value chain. Examples include Darty plc and Groupe Fnac.

After-Sales-Services: This group includes all companies that are either independent, working outside the product warranty or product insurance (domestic appliance companies, independent car garages, bicycle repair companies, or general mobile home repair services for example), or all those companies that are contracted by firms responsible for the warranty/product insurance (e.g., final manufacturer or sales firm), during, or in some cases outside, the period stipulated. This can include the same independent firms listed above, or international companies that integrate the service within other specialised tasks such as UPS, Inc. for example.

Customers

Consumers:  Describes the more traditional method of people consuming goods: A consumer pays for a good, uses it and either sells it or disposes of it once the good is no longer required, is broken, or is technologically obsolete for example.

Waste and Waste Management

“…anything for which the generator or holder has no further use and which is discarded or is released to the environment.” (ISO 14021:1999(en))

There are many ways to classify different types of waste, and many of the classifications overlap. However, in this map, the main waste types are separated into three main types:

Pre-consumer Waste (Primary Sector Waste & Secondary Sector Waste)

Post-consumer Waste (shown as the brown arrows)

Gaseous, Liquid & Solid Pollution

Pre-consumer Waste: Pre-consumer Waste is the ‘scrap’ from resource inputs (Biotic Materials, Abiotic Materials, Air, Water, and Land Area), during the extraction, production and transportation of Energy, extraction, cleaning (if required) and transportation of Water, and during Mining, Agriculture (AFFF), and Industrial activities.

Post-consumer Waste: All waste, both hazardous and non-hazardous, coming from residential properties and commerce at the ‘end-of-pipe.’ Includes organic matter such as sewage (blackwater), waste water from different types of washing (greywater), food waste, and garden waste for example, and non-organic (packaging, and end-of-life products for example).

Gaseous, Liquid & Solid Pollution: All the waste that is not captured, and leaks into the environment; which becomes pollution.

Waste-to-Energy: This refers to domestic and industrial waste systems that incinerate, gasify, pyrolyse, or use plasma technology, to create electricity from wasted resource.

Landfill: The disposal of solid waste into the ground. This can be with or without pre-treatment, and the site can be ‘sealed’ or unsealed.

The video above, is the second of two videos giving an overview of the Linear Value Chain. This video shows the macro-economy. The macro-economy includes the institutions, infrastructures and policies that influence, and in most cases, make possible, the industrial value chain (the micro-economy). Although not discussed in detail here, the macro-economy also includes a state or regions relations - such as trade, finance, and politics - with other states or regions; and the impact and influence that these relationships have both on the rest of the macro-economy and the micro-economy.

To the right, are the tabs that contain more information on each of the main elements, explained in the video; and in the text below, there is further explanation in a more essay form.

Hard Infrastructure

Hard infrastructure: is the technology and structures that make the man-made stocks and flows physically possible. Hard infrastructure can be seen as the socialisation of the productivity of industry: the more efficient the hard infrastructure, the more efficient industry can be. And as a second benefit, much of the infrastructure can be used (and subsided) by the public for recreation and tourism for example. The, often large firms, that build large infrastructure, such as roads, and telephone lines, have often matured into large ‘natural’ monopolies, where large scale, centralised control, has been the predominant model.

Solid Waste Infrastructure: This includes the hard infrastructure for managing solid waste in landfills, waste-to-energy, industrial hazardous and non-hazardous waste, municipal domestic waste collection, and materials recovery for example. These are the companies and infrastructures that manage the waste system also discussed in the tab “Waste” in the section on micro-economics.

Fresh Water and Waste Water Infrastructure:  Fresh drinking water is usually sourced from rivers, lakes, reservoirs, aquifers (including fossil aquifers), or from the sea using different forms of desalination plants. The water is then pumped through a range of coagulation, sedimentation, disinfection and filtration processes, before it is transported to local storage tanks or reservoirs ready for domestic, industrial or agricultural use. This infrastructure also includes the management of waste water from industry, farms and homes for example.

Energy Infrastructure: Here, we refer to the generation of Electricity, and the refining of the Gas and Petroleum Products. In the case of electricity production, raw materials such as Coal, Biomass, Limestone (with Coal burning), Oil (which has a refining stage), Uranium, Biofuels and Gas, are transported to Traditional Energy Generation Plants. Here, these fuels produce heat, which boils water to make steam, turns a turbine, which then drives a generator to produce electricity. The electricity is then connected, firstly to a Transmission Network (High voltage, long distance network), and then the Distribution Network (Low voltage short distance network), where it is connected to homes, offices and factories. Non-traditional Energy Generation Plants also make up the energy generation mix, such as Wind-farms, various forms of Solar Capture and Hydro-electricity for example. The fossil fuels (and wood products) can also be transported to be burnt in domestic and professional locations to produce heat for different applications.

Earth Monitoring infrastructure: This group of hard infrastructure is not so visible, but it is an important part of our modern lives, including, Earth observation satellites, GPS, and Meteorological, Seismometer and tidal networks for example. This is often included in ‘communications’ (shown below), but it is not the same thing: this is uni-directional data collection and transmittance – an increasingly important part of environmental monitoring, and the ‘internet-of-things’ for instance.

Communications & Data Storage Infrastructure: This includes the infrastructure that has transformed how information and data is spread across the world at incredible speeds (near the speed of light in many cases). Examples include, one of the oldest: the Postal Service, which is still innovating with concepts around drones…; Telephone Networks and Exchanges; Cable Television and Distribution Networks; The Internet, including the Core Routers, Data-Server Farms (stocks), Wireless data transfer, such as Wi-fi (and more recently Li-Fi), and software for example; and Communication Satellites and Cables (including undersea).

Transport Infrastructure: This includes much of the large visible infrastructure that we see all around us in the built environment. Such as roads and the road structures (tunnels and bridges…), airports, seaports, railways, mass transit systems, canals, and ferries. Many of this structures require huge investments, and in some cases are funded by sovereign wealth funds: states that have a budget surplus such as many oil-producing nations in the Persian Gulf, China, Singapore and Norway for example.

Buildings

Buildings: All the structures we build, to live-in, work-in, play-in…

Construction: This is not a primary industry, however it is very closely linked. Construction is the process of preparing for and forming buildings and groups of building and the necessary connected infrastructure. Construction starts with planning, design, and financing and continues until the structure is ready for occupancy. Construction companies build the physical soft-infrastructure and the hard-infrastructure, as well as residential structures.

Real Estate Developers: They often manage construction development projects, can be involved in buying land, raising finance for projects, and design the vision for the project for example.

Soft Infrastructure

Soft Infrastructure: Includes policies and institutions, which are the mechanisms (rules for example) and structures (physical places with specific designs and technologies) that have been developed to govern and support a group of individuals within a community. The term soft infrastructure is being used here, as the definition between ‘policies’ and ‘institutions’ is not always clear, and the term ‘institution’ is also commonly used to describe both (often long-term) customs and behaviours, and formal organisations of government for example. Soft Infrastructure does not include the service sector of the economy.

There is a tier of soft-infrastructure further to the imaginary left in this diagram, called Global-National Organisations, which includes Global Economic Organisations, Informal Summits, Military Alliances, Non-intergovernmental Organisations, Regional Organisations (E.U. for example), and Cultural, Linguistic, Ethnic, Religious and Historical Organisations. They are not shown for clarity reasons, though clearly this tier is an influential part of the system.

Tier 0: The E.U. is a Regional Organisation (RO), a form of Global-National Organisation, which could equally be exchanged for another, like OAS, SAARC, CARICOM, UNSAR, ASEAN or ALBA for example. The E.U. is basically a collective of states, that has come together to create a new larger collective geopolitical boundary, with the focus on fostering (and maintaining) economic and political integration and cooperation.

Tier 1A: This includes the main elements of the Nation State; The Governance Infrastructure, The Social Infrastructure, The Economic Infrastructure, and Cultural, Sports & Recreation Infrastructure.

Tier 1B: This is a more detailed breakdown of the main elements of the Nation state. Governance Infrastructure includes the Executive System, the Judiciary System, the Legislation System, the Tax System, the Emergency Services, and the Military Infrastructure. Social Infrastructure includes the National Health System, the Welfare State, and the Education system. The Economic Infrastructure includes, the Financial System, the Manufacturing Infrastructure, and the Agricultural, Forestry and Fisheries Infrastructure (this last one is not shown). The Cultural, Sports & Recreation Infrastructure includes, Tourism Infrastructure, Cultural Infrastructure (libraries, museums, theatres…), and Sports and Recreation Infrastructure (sports facilities, parks etc).  This last element has no Tier 1B definition on the map, as they are not a priority in reference to the story of remanufacturing (as yet!).

Tier 1C: As in Tier 1B, only those elements relating directly to the remanufacturing story have been included:

Principles/Standards/Guidelines: Go to this link for a detailed overview of what these are: Principles, Standards and Guidelines

Development Policy: In this example we are focusing on industrial development policy. And this refers to policies that can be specifically refined or defined, with the objective to encourage economic development.

Parks & Zones: This includes two, sometimes linked, industrial development strategies. The first are industrial parks (IE) (also known as industrial estates or trading estates), which are zones that have been planned for the development of industry. The second are special economic zones (SEZ), which also includes (FTZ), EPZ (Export Processing Zones), FZ/FEZ or BLP for example.

R&D Labs: This includes de-centralised labs that can be both private and public (or a mix of the two), that are outside of the linear value chain itself, but are key in the development of long-term science and technology, that directly, and indirectly, help manufacturing R&D labs develop new innovations in the market. M. Mazzucato (2013) highlights that most of the innovations for the iPhone for example – such as the touch screen interface, the internet, GPS, and Siri were all developed in government funded labs.

Financial Institutions: This includes different types of institutions that deal with Deposits (Banks, Building societies, Trusts…), Contracts (Insurance and pensions), and Investments (Investment banks, Underwriters…).

Higher Education: Also known as tertiary education, this is the optional stage of education after secondary education.  It includes universities, colleges and vocational schools, trade schools, and institutes of technology for example.

Knowledge Networks: In this case, relates to formal knowledge networks that are supported by a group, company and/or technological service; to help the spread of specific knowledge to a specific group of actors (the ‘connect‘ network in the UK for example), or general knowledge to humanity in general (wikipedia for example). The knowledge networks can be paid or free, and can be fully open, or open to members only.

Action Groups

Action Groups: This includes individuals, groups or a network of groups and individuals, involved and tasked in the activity of change on some part of the system as whole.

One well known form of Action Group are Clusters.

Flows

Financial Capital & Trade Flows: These are in fact two different flows, but have been grouped for simplicity. Trade flows, refers to the national and international trade routes (historic and geographic in many cases). Financial Capital refers to flows of investments and payments that invariably flow down the linear value chain.

Technology Flow: Technology as a flow, is the flow of Technological knowledge and progress between people, which “…constitutes certain kinds of knowledge that make it possible to produce (1) a greater volume of output or (2) a qualitatively superior output from a given amount of resources.” (Rosenberg, 1982).

Information & Expertise Flows: This links strongly to a definition of culture “[the] transmission of learning via language and symbols” given by Göran Therborn (Therborn, 2011). The Flow of information through the system, as different forms of media, entertainment and art, and models and values for example. Expertise, refers to those people that have experience in a field and share that knowledge with others, or apply knowledge and experience to a particular task. Information and Expertise can flow up or down the value chain – although it is often controlled and managed; particularly by those leading the value chain.

Workforce Flows: This includes those people already in employment or searching employment. And here it refers to the flow of people though the system, both as an employee (filling new positions or leaving old ones, commuting to and from work, and work related travel for example), and as a person emigrating, immigrating, or migrating from their homes to another state or country, or from the countryside to the city, for work, for example.

Social-Ecological Systems

Society: This is a rather large topic for one icon! This refers to the waves of globalisation during human history, our different modes of livelihoods, population ecologies, and ethnic and religious dynamics and cultures for example.

Households: Refers to the work, leisure activities, and social dynamics of the household; and those actors involved in those activities. The household actors include those not directly part of the market economy: such as those involved in domestic production and/or consumption work within the household, domestic workers, the retired, those in education, and those with disabilities. And the household also includes those that are also directly part of the market economy: the market economy workforce itself (including the self-employed), the unemployed, and volunteers for example.

The Environment: This describes the biogeochemical cycling through both plants and animals (the biosphere), and through rocks, soils, (the lithosphere), through water and ice (the hydrosphere), and through the air (the atmosphere).  All elements go through cycle pathways, as stocks or flows. It also describes, geography, and ecology: The Earth and the energy coming into the Earth from Gravity and the Sun.

Below are blog posts related to aspects of Linear Value Chains.

Bibliography (Text Above)

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Soft-Infrastructure Strategies

Linear Value Chain Blog
Governments and Regions have access to many tools that they can use to influence (i.e., provoke, support or restrict) certain developments in the economy. This section focuses on a few of the key ones. This is a slightly more technical section, aimed more

Private and State-owned Enterprises

Linear Value Chain Blog
After the Second World War, many European governments transformed particular enterprises into state-owned enterprises (SOEs) or created new ones (with complete or partial ownership), making them, by far, the largest single employer in the domestic economy. These state-owned enterprises make up a large part of the modern-day hard and soft

Production: A Vertical Splintering of Industry

Linear Value Chain Blog
Capital goods suppliers, such as the machining-tool industry, produce industrial equipment such as milling machines, grinders and lathes, that are bought by mass-manufacturing firms. It is the capital goods, combined with particular production technologies, such as interchangeable parts

Raw Materials – where do they come from?

Linear Value Chain Blog
The material outputs from mining activities are not only inputs for the manufacturing value chain, but are also inputs for hard infrastructure and modern agriculture. And like modern Agriculture, both are also enabled by hard infrastructure, making them very much inter-dependent actors within the economy’s technical foundation. Raw materials

Production Inputs: Two main groups

Linear Value Chain Blog
Lead Manufacturing Firms have two forms of inputs: A) Factors of Production B) Supply Chain. In the photo above, can you identify the different elements described below, that are required for producing the meal (a product

Value Chains

Linear Value Chain Blog
The value chain concept was first described and popularised by Michael Porter (1985). A value chain is "the sequence of productive (i.e., value-added) activities leading to and supporting end use" (Sturgeon 2001); in other words, each actor in the sequence adds value, often in it's