Joint Supply
Candlefocus EditorThe most archetypal example of joint supply is cattle. A cow can provide multiple outputs in the form of milk, beef, and hide, all of which are beneficial for consumer and business use. This concept is often applied to agricultural sectors as it can allow producers to diversify their portfolios and ensure access to a wider range of products and services.
Joint supply also applies to energy production. By introducing multiple energy sources in a single facility, a portfolio of different energy outputs can be achieved simultaneously. Such systems are often referred to as Combined Heat and Power (CHP) systems and have become increasingly prominent in the field of renewable energy. CHP systems often use gas, wind and/or solar sources to generate multiple types of energy including electricity, heat, and steam.
Joint supply models are used in a range of industries, from industrial production to retail. For example, supermarkets often offer joint supply models through their loyalty cards. Customers receive discounts when they purchase certain combinations of products from the same store—purchase a box of wine and a bottle of beer to receive a discount on a bottle of spirits, for example. By introducing joint supply models, businesses often find an increase in customers and greater market share.
It is important to note that joint supply is not the same as joint demand. Joint demand occurs when the demand for two products relies on the market demand of the other. An example of this includes razors and blade—the demand for blades relies on the sale of razor since the blades do not make sense without the razor. Joint supply, on the other hand, is the simultaneous access to multiple outputs from a single source.
Overall, joint supply is a tool which can be used by businesses and producers to increase their market share and create more value add-ons. Not only can it provide multiple reciprocal outputs, it can often save on costs and introduce a more diverse portfolio of outputs. The substantial impacts that joint supply can make to businesses and consumers alike, make it a popular model to many industries.