Source: adapted from W. Delfmann (2007) “The Changing Role of Gateways in the Context of Global Value Chain Dynamics”, Canada’s Gateway and Corridors Initiative Conference, Vancouver, British Columbia.

Level of Embeddedness of Production and Distribution

There are different levels of embeddedbess of production and distribution systems, ranging from pure standardization where the market is serviced from expectations about what the demand may be, to pure customization where the whole commodity chain is responsive from the market's demands. The trend in most sectors has been towards a higher level of embeddedness, since this is associated with a higher level of synchronization with market demand and lower levels of inventory. Sectors related to energy and raw materials tend to have low levels of embeddedness as they have stable outputs and a fairly well known demand that can be predicted in advance (e.g. oil consumption for the American market). The apparel sector is probably the one closest to pure customization as fashion is constantly changing and thus commodity chains must adapt very quickly to market fluctuations in terms of preferences and seasonality. Computer manufacturers with a strong online selling strategy, such as Dell, fall within the customized standardization paradigm as they offer customers the possibility to provide specific specifications built from a set of existing parts. The product (computer) is often not assembled until an order has been placed.