What Is the Difference Between a Supply Chain and a Value Chain, in the Space Economy?

Beyond Orbit

The global space economy is in an era of unprecedented expansion, moving far beyond its origins in government-led exploration to become a dynamic commercial frontier. This rapidly expanding ecosystem, which reached a record $613 billion in 2024, is often discussed in terms of its most visible components: the rockets, the satellites, and the complex logistics of launching hardware into orbit. These elements form the industry’s supply chain, a term that has become common in public discourse.

But to understand what’s truly driving this $600 billion-plus market and its projected growth to over $1 trillion by 2032, one must look past the physical supply chain. The real story, the one that explains how companies are building sustainable, profitable businesses against a backdrop of immense technical risk and capital expenditure, is found in the value chain.

While the terms are often used interchangeably, they are not the same. A supply chain explains how a rocket is built and delivered to the launch pad. A value chain explains how a company like SpaceX uses that rocket to create a competitive advantage that earns a profit, or how a company like Planet Labs uses satellites to build a data subscription business that has nothing to do with selling hardware. The supply chain is the operational flow of things; the value chain is the strategic framework for creating profit.

This article defines these two concepts. It will then apply this framework to the modern space economy – its upstream (manufacturing), midstream (in-orbit), and downstream (data and services) segments. Through detailed case studies of launch providers, satellite manufacturers, data analytics firms, and emerging in-orbit services, this analysis will demonstrate the critical difference between simply supplying the final frontier and creating value within it.

The Framework: Distinguishing a Chain of Supply from a Chain of Value

To analyze the business models of the space economy, it’s essential to first establish a clear, foundational understanding of our two core concepts. The distinction between a supply chain and a value chain isn’t just academic; it’s the primary tool for understanding the difference between an operational cost and a strategic asset. One describes the flow of goods, while the other describes the creation of competitive advantage.

Defining the Supply Chain: The Operational Flow

A supply chain is the network of suppliers, manufacturers, warehouses, distribution centers, and retailers that work together to get a product or service from its origin to the customer. It encompasses all the organizations, people, activities, information, and resources involved in the physical movement of a product, from the sourcing of raw materials to the final delivery.

The supply chain is best understood as an operational management process. Its primary focus is on the physical journey of goods. The chief concerns of supply chain management are efficiency, cost minimization, and speed. A company with good supply chain management aims to reduce waste, minimize inventory costs, speed up delivery, and ensure the product arrives at the right place at the right time.

A typical supply chain is often described as having five critical phases:

1. Planning: Forecasting customer and manufacturing demand to match supply.
2. Sourcing: Identifying suppliers, negotiating contracts, and acquiring the necessary raw materials and components.
3. Manufacturing: The operational process of converting raw materials into a finished product.
4. Delivery: The logistics of transporting and distributing the product to the customer.
5. Returns: The (often-overlooked) logistical process of handling product returns, repairs, and support.

The Core Components: Procurement and Logistics

Within the broader topic of supply chain management, two terms are often confused but have distinct roles: procurement and logistics.

Procurement is the starting point of the supply chain. It is the specific function of acquiring the goods and services a business needs. This includes identifying suppliers, sourcing raw materials, negotiating contracts, and purchasing replacement parts, operating supplies, or other items needed for the manufacturing process. It is the functional act of buying.

Logistics is the function responsible for the movement and storage of those goods. Logistics management involves planning, implementing, and controlling the physical flow of products, materials, and information. This includes transportation management, warehousing, inventory management, packaging, material handling, and security. Logistics is the bridge that ensures the materials acquired through procurement reach the factory on time and that the finished products reach the customer efficiently.

It’s helpful to see these in a hierarchy. Procurement is a part of the supply chain, as is logistics. The overall supply chain management is the end-to-end system that integrates procurement, manufacturing, logistics, and distribution into one seamless flow.

Defining the Value Chain: The Strategic Framework

The value chain is a much broader and more strategic concept. Introduced by business theorist Michael E. Porter in 1985, a value chain is the full series of activities that a company performs to create and deliver a valuable product or service to its customers. The term “value chain” reflects the fact that at each step in the process, the product becomes more valuable than it was at the previous step.

While the supply chain is an operational process focused on cost and efficiency, the value chain is an analytical business management process. Its goal is to identify where and how a company can create a competitive advantage and, as a result, a profit margin. It seeks to increase customer value while decreasing the cost of delivering that value.

A value chain analysis evaluates all of a company’s activities, not just the physical ones. This is its key distinction. It includes activities like product design, marketing, brand management, and, importantly, after-sales support. It’s about gathering information to discover what customers truly value and then figuring out how to embed those qualities into the product and its surrounding services.

Porter’s Model: Primary and Support Activities

Porter’s value chain model is the industry standard for this analysis. It divides a company’s activities into two categories: “primary” activities that directly create the product, and “support” activities that enable the primary activities to happen more efficiently.

Primary Activities are the sequential functions involved in the physical creation and delivery of the product to the customer, and its support after the sale:

1. Inbound Logistics: All activities related to receiving, warehousing, and managing the inventory of raw materials.
2. Operations: All activities that transform those raw materials and components into the final product.
3. Outbound Logistics: All activities required to collect, store, and distribute the finished product to the customer.
4. Marketing and Sales: The activities that make customers aware of the product and enable them to purchase it. This includes advertising, promotion, pricing, and sales force management.
5. Service: All activities that enhance or maintain the product’s value after the purchase, such as customer service, repairs, maintenance, refunds, and training.

Support Activities are the underlying functions that enable the primary activities to be performed. They don’t make the product themselves, but they provide the foundation for its creation:

1. Procurement: The function of sourcing and purchasing inputs. Porter classifies this as a support activity because it serves all primary activities (e.g., buying raw materials for Operations, buying ad space for Marketing, buying computers for Service).
2. Technology Development: This is a broad category that includes research and development (R&D), product design, process development, and market research.
3. Human Resource Management: All activities related to the recruitment, hiring, training, development, retention, and compensation of all employees.
4. Firm Infrastructure: The company’s overhead and management systems, such as general management, finance, accounting, legal, and quality control.

With these two frameworks defined, the relationship between them becomes clear. The supply chain is a subset of the value chain.

Specifically, the core functions of the supply chain – sourcing, manufacturing, and distribution – align directly with Porter’s Primary Activities of Inbound Logistics, Operations, and Outbound Logistics. The supply chain represents the physical, operational backbone of the company’s value-creation process.

The value chain is much broader. It includes this physical supply chain but also integrates the intangible and post-sale activities that create a competitive advantage. A company’s value chain includes its innovative R&D (Technology Development), its powerful brand identity (Marketing & Sales), and its excellent customer support (Service).

This leads to the fundamental difference in purpose:

• A supply chain perspective focuses on cost and efficiency. The driving question is: “Are we delivering this product quickly and cheaply?”
• A value chain perspective focuses on competitive advantage and profit. The driving question is: “Are we delivering what the customer values, and are they willing to pay more for that value than it cost us to produce?”

These two chains are complementary and interdependent. A resilient supply chain is necessary for the value chain to function; you can’t have a great brand (value) if your products are never on the shelf (supply). Conversely, an efficient supply chain is useless if it delivers a product that fails to meet customer needs (an inefficient value chain). A company needs both to succeed.

This distinction is what allows us to understand how businesses in the same industry compete. Two companies can have nearly identical supply chains – they may even buy components from the same few suppliers – but they can have vastly different value chains. One might compete on brand (a powerful “Marketing & Sales” activity), one on radical innovation (a strong “Technology Development” activity), and one on customer support (a “Service” activity). This is the key insight that unlocks the business models of the modern space economy.

An Analogy: The Coffee Shop

Before applying this framework to the complexities of space, a simple, Earth-bound analogy can solidify the concepts.

The Coffee Bean Supply Chain:

This is the physical, operational journey of the coffee bean. It’s a complex global supply chain that starts with 25 million farmers in developing countries who cultivate and pick the coffee cherries. The beans are then moved to a processor (mill), then to an exporter, then shipped across the ocean to a roaster. The roaster (like Counter Culture Coffee) processes the beans and packages them. Finally, a distributor delivers the bags of roasted beans to a local cafe. This supply chain is long, complex, and vulnerable to disruptions like droughts, which can threaten the global supply, or logistics backups, which can delay shipments.

The Coffee Shop Value Chain:

This is how the cafe competes and makes a profit from those beans. The cafe’s value chain includes the bean supply chain (this is its “Inbound Logistics” and “Operations”). But the value – the reason it can charge $5 for a product that costs pennies in raw materials – is created elsewhere in the value chain:

• Service (Primary Activity): The friendly, skilled barista who knows your order.
• Marketing & Sales (Primary Activity): The brand, the “ethical sourcing” story, and the “transparent” relationship with farmers that makes a customer feel good about their purchase.
• Firm Infrastructure (Support Activity): The clean, inviting atmosphere of the cafe, the comfortable chairs, the fast Wi-Fi, and the music.
• Technology Development (Support Activity): A unique, easy-to-use mobile app for pre-ordering.

The supply chain delivers a commodity (roasted beans). The value chain delivers an experience and a brand that allows the shop to capture a significant profit margin. The customer is not just paying for the bean; they are paying for the value added at every step. This exact same logic applies to rockets and satellites.

The Context: Segmenting the Modern Space Economy

Having established our theoretical lens, we now turn to the “playing field” where we will apply it: the modern space economy. This is no longer just the domain of a few national space agencies; it’s a rapidly commercializing, multi-faceted industry.

The global space economy hit a record $613 billion in 2024, showing strong 7.8% year-over-year growth. This expansion is not just a government-led initiative. The commercial sector is the primary engine, accounting for 78% of the total economy, or $471 billion. Government space spending, while robust at $132 billion, makes up the remaining 22%. This commercial dominance is the central reason a value chain analysis is so essential. In the “Old Space” model, government agencies paid for hardware on a cost-plus basis, meaning profit was often guaranteed. In the “NewSpace” model, commercial companies must compete, find a customer, and generate a profit margin, which is the entire purpose of a value chain.

This commercial growth is being driven by the monetization of communications and Earth observation satellites. The entire market is projected to cross the $1 trillion mark as soon as 2032. To analyze this complex economy, the industry typically segments the space value chain into three main areas: Upstream, Midstream, and Downstream.

Upstream: Building the Infrastructure to Leave Earth

The upstream segment encompasses all activities related to designing, manufacturing, and getting to space. This is the foundational hardware and infrastructure layer.

This segment includes the research, manufacturing, and ground systems. It covers fundamental and applied research, the supply of materials and components, the manufacturing of space systems like satellites and rockets, and the ground infrastructure needed to support them, such as telemetry, tracking, and command stations.

Midstream: Operating in the Space Environment

The midstream segment focuses on the services and activities that happen in space or serve as the “link” between the assets in orbit and the users on Earth.

This segment includes the act of launching (the launch service itself, as distinct from building the rocket), in-orbit logistics, satellite maintenance and refueling, Earth-to-LEO communications, and responsible decommissioning of satellites. It is the operational layer that manages the assets in space.

Downstream: Bringing Space Data and Services Back to Earth

The downstream segment consists of the Earth-based consumer and commercial applications that are enabled by the assets in the upstream and midstream. This is where space “touches” the end-user.

This segment includes space-based data services, satellite broadcasting, location-based services (like any GNSS-enabled device), and, most importantly, the “value-added services” that process raw space data and signals, converting them into usable information and analytics for customers.

The most visible, capital-intensive, and iconic part of the space economy is the upstream launch vehicle market. This is where we find the clearest examples of how different value chain strategies can create wildly different outcomes, even for companies producing the same product: a ride to orbit.

By analyzing the traditional incumbent, United Launch Alliance (ULA), and the NewSpace disruptors, SpaceX and Rocket Lab, we can see the supply chain vs. value chain distinction in sharp relief.

The Traditional Aerospace Supply Chain: A ULA Example

The Supply Chain (Operational):

ULA’s business model is that of a prime contractor and integrator. Its supply chain is a vast, complex, and dispersed network of external suppliers. ULA does not manufacture most of its core components; it manages the complex process of sourcing them and integrating them into a final, reliable launch vehicle.

For its workhorse Atlas V rocket, this supply chain includes:

• A diverse network of suppliers providing fabricated and machined parts. For example, ULA works with 16 suppliers in Kansas alone, including companies like Milling Precision, to source these components.
• The booster’s structurally rigid isogrid aluminum barrels and spun-formed aluminum domes.
• The Centaur second stage, constructed of stainless steel and powered by an RL10C-1 engine.
• Various payload adapters and fairings, such as the 5-meter composite shell, which are sourced to meet specific mission requirements.

This is a traditional aerospace supply chain, characterized by long-term supplier relationships, rigorous quality control, and a “cost-plus” pricing model passed on to the government customer.

The Value Chain (Strategic):

ULA’s value chain was designed to perfectly serve its government clientele. Its competitive advantage was never cost; it was reliability.

• Mapping to Porter: The “value” ULA created was not in its “Operations” (it was an assembler) or its “Technology Development” (which was often funded by its parent companies or the government). The value was located in two other activities:
  1. Firm Infrastructure (Support Activity): This includes ULA’s unparalleled quality control systems, program management, and the deep institutional relationships with its DoD and NASA customers.
  2. Service (Primary Activity): In this context, “Service” is the act of delivering 100% mission success. ULA has successfully delivered more than 145 missions, a track record that provides immense value to a customer launching a one-of-a-kind, multi-billion-dollar spy satellite.

ULA’s dispersed supply chain was a key feature of this value chain. It allowed the company to execute a strategic model that competed on perfect reliability, where cost was a secondary concern.

The Vertically Integrated Value Chain: The SpaceX Model

SpaceX, in contrast, was founded on a complete rejection of the traditional aerospace model. It did not want to manage a supply chain; it wanted to be the supply chain.

The Supply Chain (Operational):

SpaceX is famously and aggressively vertically integrated, manufacturing around 80-85% of its launch vehicle components internally. This includes its own rocket engines, avionics, and even rocket structures. This was a deliberate strategic choice. By producing in-house, SpaceX eliminated the “cost-plus” profit margins of the vast supplier network that ULA had to pay. This internal supply chain is a primary driver behind its ability to cut launch prices by a factor of ten, offering a launch for $90 million while a competitor’s cost was $460 million.

The Value Chain (Strategic):

This is the critical distinction: SpaceX’s vertical integration (its supply chain) is a tool for its value chain.

• Mapping to Porter: SpaceX’s competitive advantage is built on cost and innovation speed, and its value chain reflects this.
  1. Technology Development (Support Activity): This is SpaceX’s primary weapon. By controlling its own manufacturing, SpaceX can innovate at a speed its competitors can’t match. It can test an engine, see it fail, redesign the part, and test it again in days or weeks, not the years it would take to coordinate with an external supplier.
  2. Operations (Primary Activity): This relentless innovation in “Technology Development” enabled the single greatest disruption in the launch market: reusability. Reusability is a value chain innovation in the “Operations” phase. By recovering and reusing its Falcon rocket boosters, SpaceX fundamentally altered the economics of launch, slashing its own costs and creating an almost unassailable profit margin.

SpaceX didn’t just build a different supply chain; it built a different value chain. While ULA’s value chain managed an external supply chain to guarantee reliability, SpaceX’s value chain is its internal supply chain, which it leverages as a “Technology Development” tool to compete and win on cost and innovation.

The Niche Value Chain: Rocket Lab’s Additive Manufacturing

Not all NewSpace companies follow the exact SpaceX model. Rocket Lab, another successful upstream company, built its value chain to dominate a specific niche: the small satellite market. In the past, smallsats had to “rideshare,” or piggyback on a larger rocket, making them subject to the primary payload’s schedule. Rocket Lab offered them a dedicated ride.

The Supply Chain (Operational):

To serve this market cost-effectively, Rocket Lab’s innovation is in its manufacturing process. Its Rutherford engine is the world’s first 3D-printed, electric pump-fed orbital rocket engine.

• Instead of sourcing, machining, and painstakingly assembling thousands of complex engine parts, Rocket Lab’s inbound logistics consist of metal powders.
• Its “Operations” (manufacturing) activity is 3D printing. It can print the Rutherford’s primary components – the combustion chamber, injectors, pumps, and main propellant valves – in as little as 24 hours.
• This additive manufacturing approach extends to the rocket’s body. The company uses automated fiber placement (AFP), a form of 3D printing, to create the lightweight carbon composite structures of its rockets.

The Value Chain (Strategic):

This unique supply chain directly creates Rocket Lab’s unique value proposition.

• Mapping to Porter:
  1. Technology Development (Support Activity): This was the initial, heavy investment in mastering additive manufacturing and electric pump-fed engines.
  2. Operations (Primary Activity): This investment pays off in “Operations” by drastically reducing production timelines and complexity compared to traditional methods.
  3. Marketing & Sales (Primary Activity): This “Operations” advantage allows Rocket Lab to market a specific value to its customers: “rapid and reliable” launch. A small satellite operator, who values speed to market, can buy a dedicated, fast launch without waiting for a rideshare.

This upstream analysis shows three companies in the same market, all with “launch” as their output, but with three completely different value chains. ULA competes on reliability, SpaceX competes on cost and reusability, and Rocket Lab competes on speed and niche access. Their supply chains are the tools they built to execute those unique value strategies.

The other major component of the upstream segment is the manufacturing of satellites. Like rockets, satellites are highly complex, high-value assets. However, their supply chain reveals a different kind of challenge, one not of competition, but of vulnerability. This sector provides a powerful example of how a weakness in the supply chain can create a significant risk to a company’s entire value chain.

The Global Web of Satellite Components

A modern satellite is not a single product. It is a complex system of systems, an integration of thousands of specialized components, each of which must be “space-qualified” – that is, able to withstand the vacuum, radiation, and extreme temperatures of orbit.

The Supply Chain (Operational):

The supply chain for a satellite manufacturer is a complex, global web of highly specialized, low-volume, and high-value component providers. Unlike the mass production of cars, the satellite supply chain is often a “job shop” environment, with long lead times and intense quality control.

A typical satellite’s supply chain includes:

• Electronics: Radiation-hardened components, high-reliability parts, and On-Board Computers (OBCs).
• Power: Space-grade solar panels, batteries, and power control units.
• Guidance & Control (Avionics): Reaction wheels, magnetorquers, sun sensors, and star trackers, which allow the satellite to orient itself.
• Propulsion: On-board propulsion systems for maneuvering.
• Materials: Specialized materials like optical and thermal coatings, radiation shields, and propellants.
• Software: Flight software, payload management software, and mission control software.

For many NewSpace companies, it is now more economically viable to buy these components “off-the-shelf” from trusted suppliers rather than develop them in-house. This creates a robust, interconnected, but also interdependent global supply chain.

Geopolitical Choke Points: The Rare Earth Mineral Supply Chain

This is where the supply chain/value chain distinction becomes a matter of national security. Many of these critical satellite and defense components depend on a class of materials known as rare earth elements (REMs). For example, the rare earth element neodymium is used to create magnets that are extremely strong, retain magnetic strength at high temperatures, and are essential for high-performance military systems and satellite components.

The Supply Chain (Operational):

The operational supply chain for rare earth elements is dominated, almost entirely, by one country: China.

• Mining: China mines nearly 70% of the global supply of rare earths.
• Processing: More importantly, mining is only the first step. China refines and processes an estimated 85-90% of the world’s rare earth metals.
• Dependency: The United States, by contrast, is over 95% reliant on imports for its rare earth consumption, with much of that coming directly or indirectly from China. This is because domestic mining capacity waned due to lower costs overseas and more stringent environmental regulations at home.

The Value Chain (Strategic Risk):

This operational supply chain dependency creates a massive strategic value chain risk for any U.S. or European satellite manufacturer, especially those whose primary value proposition is serving their own governments.

• Mapping to Porter:
  1. Procurement (Support Activity): This activity, which in the coffee shop analogy was just “buying beans,” now becomes a high-risk, high-cost, geopolitical choke point. A satellite manufacturer’s “Procurement” department is now subject to the whims of a strategic competitor.
  2. Firm Infrastructure (Support Activity): This supply chain risk is so severe that it forces the entire company – and the U.S. government – to react. The Department of Defense’s efforts to stockpile these critical materials or the U.S. government’s investments to help on-shore rare earth processing are value chain responses. They are investments in “Firm Nnfrastructure” (national security) to mitigate a critical “Procurement” risk.

This is a perfect illustration of the difference between the two concepts.

• A supply chain perspective asks: “Where can we get neodymium cheaply and efficiently?” The answer is China.
• A value chain perspective asks: “What is the strategic risk to our competitive advantage (e.g., being a trusted and reliable supplier to the U.S. Department of Defense) if our ‘Procurement’ activity is dependent on a rival nation?” The answer is that the risk is unacceptable. The firm must add cost (a supply chain negative) by investing in “Technology Development” (finding substitutes) or “Procurement” (funding a more expensive, secure domestic supplier) to protect its overall value (a value chain positive).

Midstream Case Study: The Rise of In-Orbit Services

The midstream segment is where the space economy transitions from selling hardware (Upstream) to selling services (Midstream and Downstream). This segment, which includes operations in space, is where some of the most innovative new business models are emerging. The “product” is often intangible – a service, a capability, or a data stream. This makes the value chain concept even more important than the supply chain.

The Ground Segment: A Supply Chain for Data

The most established part of the midstream is the ground segment. This is the critical link that connects the satellites in orbit to their operators on Earth.

The Supply Chain (Operational):

The supply chain for the ground segment is the hardware required to build a ground station. This includes acquiring and installing antennas, high-power amplifiers (HPAs), antenna positioners (to track satellites), and receivers. It’s a physical, logistical network of hardware distributed across the globe.

The Value Chain (Strategic):

In the NewSpace economy, few satellite operators want to build their own expensive, global network of ground stations. This has created a new value chain: “Ground-Station-as-a-Service” (GSaaS). Companies like ATLAS Space Operations don’t sell antennas; they sell access to their network of antennas.

• Mapping to Porter:
  1. Operations (Primary Activity): The company’s core operation is managing a distributed network of ground stations to provide low-latency, high-reliability data transport for its customers.
  2. Marketing & Sales (Primary Activity): The value proposition sold to satellite operators is simple: “You don’t need to build your own ground segment. Use ours and pay as you go.” This allows the satellite operator to focus on their value chain (e.g., analyzing data) instead of worrying about the supply chain of ground hardware.

A New Business Model: Orbit Fab’s “Gas Stations in Space”

A more revolutionary example of a midstream value chain is the emerging market for in-orbit refueling. Orbit Fab’s entire business model is to build an in-space propellant supply chain, a service they’ve branded as “Gas Stations in Space™.”

This is a new but rapidly growing market. Orbital spacecraft refueling was valued at $625 million in 2024 and is projected to grow to over $1.9 billion by 2032.

The Supply Chain (Operational):

Orbit Fab’s own supply chain is an upstream activity. It’s the process of building its physical hardware. This includes designing, sourcing components for, manufacturing, and launching its two main products:

1. Fuel Depots: “Big, simple satellites full of propellant,” like the Tanker-001 Tenzing, which is the first operational propellant depot in low Earth orbit (LEO).
2. Fuel Shuttles: More complex satellites that will “act as servicers to pick up fuel from the depot and deliver it to the customer’s spacecraft.”

The Value Chain (Strategic):

Orbit Fab’s business is not selling tankers or shuttles; it is a midstream service. They are selling propellant, delivered in orbit.

• Mapping to Porter:
  1. Service (Primary Activity): This is the entire business. The service is in-orbit refueling.
  2. Marketing & Sales (Primary Activity): The value proposition is simple and powerful: “extend the operational lifespan” of a customer’s satellite.

This is a significant value chain disruption. Historically, a satellite’s lifespan was a fixed “Operations” variable. When its on-board fuel ran out, it was decommissioned and became space junk, even if its sensors were perfectly functional. Orbit Fab’s “Service” completely changes the customer’s value chain.

A satellite operator’s “Procurement” (a support activity) can now buy fuel in orbit (an operational expense) instead of buying a brand new satellite (a massive capital expense). This can save the customer hundreds of millions of dollars and creates a more sustainable space economy. Orbit Fab created a new market by creating a new value chain activity.

The Future Midstream: In-Space Servicing, Assembly, and Manufacturing (ISAM)

The next evolution of the midstream value chain is ISAM: In-Space Servicing, Assembly, and Manufacturing. This is the concept of repairing, upgrading, assembling, or even manufacturing assets in orbit.

The Challenge:

The market currently faces a “chicken-and-egg” problem: no one builds serviceable satellites because there are no in-orbit servicers, and no one builds servicers because there are no customers with serviceable satellites.

The Supply Chain (Operational):

The supply chain for a future ISAM business would be the launch of robotic arms, repair tools, or raw materials (like feedstock for an in-orbit 3D printer) to a “factory” in space.

The Value Chain (Strategic):

The value chain is the service of building or repairing in space. The value proposition here is not just “repair.” It’s “new capability.” ISAM could allow for the in-orbit assembly of structures, like massive telescopes, space-based solar power platforms, or deep-space habitats, that are too large to fit in a rocket’s payload fairing.

The entire midstream segment – from GSaaS to refueling to ISAM – is about shifting the “Operations” and “Service” activities of the value chain from the ground to orbit. They don’t sell a physical product; they sell capability that enhances their customers’ assets.

Downstream Case Study: The Earth Observation Data Market

The downstream segment is where the physical product all but disappears, and the value is created almost entirely through data, analytics, and applications. This is where the supply chain/value chain distinction is the sharpest and most important. The downstream market is where most of the space economy’s value is generated and where it has the most direct impact on non-space industries on Earth.

The Earth Observation (EO) Value Chain

The Earth Observation (EO) industry, which uses satellites to image the globe, has its own clear internal value chain, which is helpful to define:

1. EO Upstream (Data Capture): This involves the manufacturing, launch, and operation of the satellites themselves.
2. EO Midstream (Data Handling): This is the ground infrastructure, data storage, pre-processing, cataloging, and archiving of the raw satellite imagery.
3. EO Downstream (Data Exploitation): This is where value is added. This is the analysis of the data, often using machine learning and AI, to convert raw pixels into products, applications, and services for end-users.

In this context, the supply chain is the hardware and data pipes (the EO Upstream and Midstream). The value chain – where the profit margin is created – is the analysis (the EO Downstream).

Planet Labs: A Value Chain of Daily Data

Planet Labs (Planet) provides a clear example of a downstream-focused company. Planet has launched the largest constellation of Earth-imaging satellites in history. Its core mission is to image the entire Earth’s landmass every single day.

The Supply Chain (Operational):

Planet’s supply chain is its “EO Upstream” and “EO Midstream.”

• Upstream: Designing, manufacturing, and launching its fleet of low-cost “Dove” nanosatellites.
• Midstream: Managing the immense, continuous flow of data – between 7 and 10 terabytes per day – from its hundreds of satellites to its ground stations and processing it on the cloud. This is a massive data logistics challenge.

The Value Chain (Strategic):

Planet’s business is not selling satellites or raw images. It’s a “Downstream” data analytics company that just happens to own its own sensors.

• The Value Proposition: The value is not the picture; it’s the insight derived from the daily change.
• Mapping to Porter:
  1. Service (Primary Activity): Planet’s core product is a data subscription that provides business intelligence. Its customers are not space agencies; they are non-space companies.
  2. Marketing & Sales (Primary Activity): The company’s sales force targets specific industries with custom-built analytic products:
     • Agriculture: Monitoring crop health, predicting yields, and optimizing irrigation and fertilization.
     • Finance & Commodities: Providing “alternative data” to traders by, for example, assessing activity at ports, monitoring factory output, and even estimating oil production by measuring the shadows cast by oil tankers.
     • Defense & Government: Monitoring assets, providing situational awareness, and responding to natural disasters.
  3. Technology Development (Support Activity): Planet’s R&D is focused as much on software (machine learning, AI, data platforms) as it is on satellite hardware. The AI is what scans the terabytes of daily data to find the signal a customer cares about (e.g., “how many ships are in this port today vs. yesterday?”).

Planet is a data analytics company. Its massive satellite supply chain is simply an input – a cost of goods sold – for its value chain, which is the data subscription service.

Starlink: A Hybrid Infrastructure-as-a-Service Model

Starlink, a division of SpaceX, is a fascinating and complex case that blends all segments. It provides a global, high-speed, low-latency satellite internet service via a “megaconstellation” of thousands of LEO satellites.

The Supply Chain (Operational):

Starlink has two massive, distinct, and strategically different supply chains:

1. The Satellite Supply Chain (Upstream): This is the mass production of its thousands of LEO satellites. This supply chain leverages SpaceX’s core value chain – its vertical integration, in-house manufacturing, and low-cost launch – to produce and launch satellites cheaper and faster than anyone else.
2. The Ground Terminal Supply Chain (Downstream): This is the mass production of the consumer-facing dishes and modems that customers buy. This supply chain is not fully vertically integrated. It has a critical dependency on Chinese suppliers for components like printed circuit boards and RF modules.

The Value Chain (Strategic):

Starlink’s value chain is not selling hardware; it’s selling a service: “connectivity.”

• The Value Proposition: It provides fast, reliable internet to previously inaccessible areas, serving consumers, businesses (in agriculture, mining, and oil and gas), and mobile clients.
• Mapping to Porter:
  1. Service (Primary Activity): The core product is the monthly subscription for internet connectivity.
  2. Operations (Primary Activity): This involves managing the complex, distributed mesh network of satellites, which dynamically route data to provide continuous coverage.
  3. Strategic Importance: This “Service” has become a vital tool for national security. In Ukraine, for example, Starlink’s service has been described as “oxygen” for the military, enabling resilient battlefield communications.

The Starlink Paradox:

Starlink presents a significant paradox and the single best example of the tension between a supply chain and a value chain.

• Its Value Chain (strategic) is revolutionary: a globally dominant, resilient “Service” (connectivity) built on the hyper-independent, vertically integrated power of SpaceX’s “Operations” (launch).
• Its Supply Chain (operational) is conventional and high-risk: The ground terminal’s dependency on Chinese components creates a direct strategic vulnerability.

This is the most advanced insight of our analysis: a strategic competitor (China) has direct leverage over the supply chain (components for the dish) of a product that is being used as a strategic value chain asset (battlefield internet) against its allies (Russia). This demonstrates that a single “Procurement” (support activity) problem can threaten an entire, multi-billion dollar “Service” (primary activity). It proves that a company must analyze both chains together, as a strength in one cannot always overcome a weakness in the other.

The Next Frontier: Chains for the Cislunar Economy

This final analytical section projects these concepts onto the next major economic expansion in space: the Moon. The cislunar economy (the space between Earth and the Moon) is currently in its infancy, but it shows this entire process – the shift from building a supply chain to enabling a value chain – in real-time.

Building the Lunar Supply Chain

We are currently in the supply chain-building phase of the lunar economy. The primary actor is NASA, which is deliberately acting as an “anchor customer” to kickstart a commercial supply chain for deep space.

NASA is not building its own delivery vehicles. It is buying services from commercial partners to create a “shipping route” to the Moon.

• Deep Space Logistics (DSL): NASA is procuring commercial services to transport cargo, equipment, and consumables to the Gateway, a planned lunar-orbiting station. This is the equivalent of an ocean freight contract.
• Commercial Lunar Payload Services (CLPS): Through this initiative, NASA is paying a pool of American companies to handle the complete logistics of delivering NASA’s scientific payloads to the lunar surface. This includes payload integration, launch, and landing.

This is the pure definition of a logistics supply chain: the transportation and delivery of goods from Earth to the Moon. NASA’s role is to create the demand that allows a commercial supply chain to exist.

The Emerging Lunar Value Chain

This supply chain (the “how”) is just the first step. It is the necessary-but-not-sufficient foundation to enable the future value chain (the “why”). A true, sustainable lunar economy will emerge from this, one that is projected to surpass €142 billion by 2040.

We can apply the same Upstream/Midstream/Downstream framework to this future lunar economy:

• Lunar Upstream (on Earth): Manufacturing the landers, rovers, and habitats.
• Lunar Midstream (Earth-to-Moon & on-Moon): This includes the transportation services (the CLPS supply chain) but will grow to include on-Moon operations like resource extraction.
• Lunar Downstream (on Earth): The products of the lunar economy. This could be data, but more importantly, it’s resources like helium-3 or water ice.

The tipping point for a true lunar economy will be In-Situ Resource Utilization (ISRU). This is the moment the lunar value chain is born.

The most-discussed example is mining lunar water ice, which is believed to be abundant in shadowed craters at the poles. This water ice can be processed into its constituent parts: liquid hydrogen and liquid oxygen, the two primary components of rocket propellant.

This creates the first true lunar value chain:

1. A company’s “Operations” (primary activity) will be mining water ice on the Moon.
2. Its “Operations” will also include processing that ice into propellant.
3. This propellant is the final product.
4. This product (propellant) becomes the supply chain (“Inbound Logistics”) for the next value chain: a company (or NASA) planning a mission to Mars, which can now launch “dry” from Earth and refuel at a lunar-orbiting propellant depot.

This is the moment the Moon shifts from being a destination (the end of a supply chain) to a hub (a critical link in a new, interplanetary value chain).

Summary

The distinction between a supply chain and a value chain is the most important analytical tool for understanding the business of space. This article began by establishing a clear distinction: a “supply chain” is the operational network for the flow of goods, while a “value chain” is the strategic framework a company uses to build a competitive advantage and profit. The supply chain (Inbound Logistics, Operations, Outbound Logistics) is a part of the value chain, which also includes R&D, marketing, and service.

The evolution of the $600 billion space economy is a story of a shift from a supply-chain-focused industry (government, cost-plus hardware) to a value-chain-focused one (commercial, service-based).

In the Upstream (manufacturing), we saw how NewSpace companies like SpaceX and Rocket Lab weaponized their manufacturing processes (vertical integration and 3D printing) as a value chain strategy(“Technology Development”) to compete on cost and speed. This was contrasted with the traditional, dispersed supply chain model of ULA, which was focused on reliability. We also saw how a single supply chain vulnerability (the dependency on Chinese rare earth minerals) creates a significant value chain risk for the entire upstream satellite industry.

In the Midstream (in-orbit), we analyzed the emergence of pure-service value chains. Companies like Orbit Fab are not selling hardware; they are selling a capability (in-orbit refueling) that fundamentally disrupts the value chains of their customers by extending asset life and creating a new market.

In the Downstream (data), we saw the clearest distinction. Companies like Planet Labs have a supply chain of satellites but a value chain of data analytics. The hardware (supply) is just an input to the service (value). The Starlink case provided a powerful paradox: a revolutionary value chain (global connectivity) built, in part, on a high-risk supply chain (component dependencies), proving that both must be analyzed in concert.

Finally, the emerging Lunar Economy shows this process in real-time. NASA is currently acting as an anchor customer to build the supply chain (the “shipping route”). The future value chain will be born when in-situ resource utilization (e.g., mining water ice for propellant) turns the Moon from a destination into a vital economic hub.

A supply chain gets you to space. A value chain defines what you do there – or what you bring back – to create a sustainable, profitable business.