Bit of a thought experiment to hopefully challenge our perspectives and encourage reflection; so we can all get a little better together (and undoubtedly identify foolish assumptions / knowledge gaps in my own thinking).

How would you compare the price and value of supply and distribution, in a general sense?
Do you value supply higher than distribution? Or perhaps the other way round?

Definition of Terms:
Valuing - Estimating the value of an asset
I'm thinking of a 2 by 2 matrix, Integrated / isolated along the top, and improved / unimproved along the side.
Integrated Value - The value of an asset when integrated with a existing portfolio which has existing supply and distribution (as defined below)
Isolated Value - The value of an asset when isolated, as in there is no compliment in the portfolio or it is not part of a portfolio. In other words, when existing supply and distribution is not added.
Improved / Unimproved value - When the business can be improved (or not) with internal competencies, such as strategy, marketing, management, HR, etc.

Highest value would be improved integrated, as one could improve the business as well as integrate supply/distribution. The lowest would be unimproved isolated for the opposite, hopefully intuitive reason (if not let me know and I'll try to improve my explanation!).

Pricing - Estimating the price worth paying for an asset.

Using a comparable 2 by 2 matrix as the one outlined above in the valuing defintion.

Supply - Getting anything which can be sold.
May be providing a service, manufacturing product, sharing IP, etc, or it could be having negotiated rights to these things.
A type of asset.

Distribution - Existing routes where supply can be sold.
May be an existing client base, advertising space, access to marketplaces, retail distribution networks etc.
A type of asset.

Black and white propositions to challenge:
Note - Inherently these are wrong as they are absolute, but perhaps a useful way to find the suitable mean is to identify the two poles.
1. 'Supply is more valuable than distribution; if you don't have a good supply then even if you sell it you'll get low referrals and dissatisfy customers. Plus, if you've got a good supply you can easily compliment other people's existing distribution; adding value to their existing distribution without having to build that yourself - generating both of you a profit.'
2. 'Distribution is more valuable than supply; if you don't have access to customers, it doesn't matter how good your supply is since they don't know about it. Plus if you have strong distribution, you can source additional supply and put it through your existing distribution and capitalise on the time-consuming innovations that others have created, all while helping your customers achieve their ultimate goals.'

Perhaps a mean?
3. 'Neither is valuable without the other, and is entirely dependent on the competencies of the purchaser and the presence/absence of a complimentary portfolio. To an inventor (or someone with supply), distribution is more valuable as it is an opposing compliment to the supply they already have. To a marketer (or someone with distribution), supply is more valuable as it is an opposing compliment to the distribution they already have'

Now comes the challenge of placing a price on a business with supply, distribution, or both.

I'd lean towards pricing the business in an unimproved, isolated state (as it currently is) then valuing it at an improved, integrated state (as it could be).

The improved integrated state would be evaluated based on conservative estimates of what the existing business could do with their supply / distribution. This could be done by:

A. Find comparative volumes for similar products put down similar distribution channels; inputting the average revenue and margin of the business now, and the potential revenue and margin which the business could be brought to

B. Doing small scale tests, using a host-beneficiary relationship between the buyer and seller (holding the respective side depending on which assets [either supply or distribution] are held) which would be factored into the valuation of the business. Possible concern with this is that the seller may then demand more if they see the potential profitability of the purchase, but if initial terms were agreed formulaically prior to the test this could be a positive for both parties, as it would derisk the purchase for the buyer, and possibly increase the value of the sale.

C. Do small scale tests with a comparable product (not from the seller) or pre-orders if the purchaser has distribution. Do small scale tests with a comparable distribution channel (not owned by the seller) or if the purchaser has supply.

D. Preemptively begin barter negotiations and partnerships with possible clients using the asset to identify possible sales volumes and market pricing.

Then once an estimate has been made of the potential value of the asset has been estimated, we'd come to the meat of this problem:

If hypothetically the estimated value for an asset of each type (supply and distribution) was equal, then would you price & value them as the same? As in, would the price of supply which would produce x be valued the same as the price of distribution which would produce x - assuming the x which would be produced was on the same time horizon and the assets would be purchased by an organisation which was equally capable of gaining the maximum utilisation out of the asset whichever it was.

Would there be any discounting of either type based on potential changes or innovations in the respective asset (either supply or distribution)? Would this discount be the same? Asked another way, how frequently would supply need to change, compared to distribution? Or, how stable is what needs to be supplied, and the method of distribution?

Of course this would be industry dependent, but these questions are to spark discussion, so if you know of a specific example in one industry, please share! If you've got a more archetypal approach which transcends industries, please also share!

What about the equivalent of 'rebuild cost' from the real estate space - how costly it would be to recreate the asset? If so, how would the value of trust and relationships be estimated? Or the value of new ideas?

My take: Both are required, but distribution and relationships are an asset which could outlive supply, and would be less likely to change provided the supply is of a high quality and the relationship is maintained.

Would love to hear your thoughts, and please pick apart every aspect of what I've shared above - it'll be fun for us all if you do!