Orchestrating a network of activities in the value chain

Abstract

The orchestrator is a management literature metaphor to describe the role of a player who organizes and manages a set of activities in a network, by ensuring value creation opportunities in the system and value appropriation mechanisms for each player. In this paper, we consider orchestrators who do not own capacities but have access to a large pool of globally dispersed service providers in the various stages of the supply chain. For a given customer order, the orchestrator identifies the right set of service providers and coordinates the entire execution such that order is delivered as per the requirements. We propose a mixed integer program to optimally choose the service providers taking into account the capacities, production and distribution costs, international taxation, tariffs, and coordination costs.