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Managing Your Value Chain Receiving Raw Materials As Input, Adding Value, And Selling Finished Products to Customers |
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By Vadim Kotelnikov, Founder, Ten3 BUSINESS e-COACH – Innovation Unlimited, 1000ventures.com
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"If you are not managing your value chain, you are not managing your business." |
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What is Value Chain? Value chain is a high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers. Today's Challenges Old-fashioned command-and-control companies were merely trying to manage the "white space" in their organizational charts. Today's companies must manage the white space in entire value chains. A critical pre-requisite for success in digital economy is the implementation of an integrated value chain that extends across - and beyond - the enterprise. 8 Best Practices of Successful Companies Case in Point Dell Inc. "We learned to identify our core strengths," says Michael Dell, Founder of Dell Inc. “We wanted to earn a reputation for providing great customer service, as well as great products. Engaging the entire company – from manufacturing to engineering to sales to support staff – in the process of understanding customer requirements became a constant focus of management, energy, training, and employee education.“ ... More Employee Empowerment Transition to knowledge-based economies made establishment of effective employee empowerment mechanisms within companies crucial to their competitiveness. Peter Drucker in his Management by Objectives (MBO) concept calls for achieving the balance between management and employee empowerment. A manager should view members of his or her team much as a conductor regards the players in the orchestra, as individuals whose particular skills contribute to the success of the enterprise. While people are still subordinates, the superior is increasingly dependent on the subordinates for getting results in their area of responsibility, where they have the requisite knowledge. In turn, these subordinates depend on their superior for direction and "above all, to define what the 'score' if for the entire organization, that is, what are standards and values, performance and results."
Lean Enterprise The 'Lean Enterprise' encompasses the entire production system, beginning with the customer, and includes the product sales outlet, the final assembler, product design, and all tiers of the supply chain (to include raw material mining and processing). Any truly 'lean' system is highly dependent on the demands of its customers and the reliability of its suppliers. No implementation of lean manufacturing can reach its full potential without including the entire 'enterprise' in its planning... More Case in Point Canon: Eliminating 9 Wastes The objectives of Canon Production System (CPS) are to manufacture better quality products at lower cost and deliver them faster. Canon invited all their employees to suggest ideas for improvement and developed 6 Guidelines for the Suggestion System to make it most effective. The company developed also a list of 9 wastes to help their employees become problem-conscious, move from operational improvement to systems improvement, and recognize the need for self-development... More Today's Solution: Process-managed Enterprise
A process-managed enterprise supports,
empowers
"Because multiple value chain participants must collaborate to deliver value, they must all participate in process analysis and design - and achieve team learning. Only with the visibility provided by process management can end-to-end processes be understood, anomalies spotted, redundancy eradicated and inefficiencies eliminated. Process management integrates everyone and everything once; thereafter, process design, transformation and experience take place freely and continuously, not as a series of infrequent, long-winded, piecemeal and distracting "integration projects" for each new process design. In this way, participants truly learn about the process and the side effects of change on the business."4... More 4 Phases of IT/Business Alignment 1. Plan: Translating business objectives into measurable IT services. The plan phase helps close the gap between what business managers need and expect and what IT delivers... More Leveraging Your Service-Profit Chain
The service-profit
chain is a powerful phenomenon that stresses the importance of
Extended Enterprise The term "extended enterprise" represents a new concept that a company is made up not just of its employees, its board members, and executives, but also its business partners, its suppliers, and its customers. The notion of extended enterprise includes many different arrangements such as virtual integration, outsourcing, distribution agreements, collaborative marketing, R&D program partnerships, alliances, joint ventures, preferred suppliers, and customer partnership. The Growing Role of the Business Architect In today's knowledge- and innovation-driven complex economy, business architects are in growing demand. They are cross-functionally excellent people who can tie several silos of business development expertise together, create synergies, design winning business model and a balanced business system and then lead people who will put their plans into action... More The Tao of Business Success The Tao helps you achieve much more with much less effort. The Tao teaches you the art of living and doing business. It gives you advice that imparts perspective and balance. It applies equally well to the managing of a large corporation or the running of a small business, to the governing of a nation or the leading a small team, to your personal development or to the coaching of others... More
Primary Value Chain Activities... Support Activities Facilitating the Primary Value Chain Activities... Enterprise-wide Business Process Management (EBPM)... Business Process Management Software (BPMS).. Process Thinking... Value Innovation... Teaming Up with Suppliers... Vertical Integration... Virtual Integration... Customer Partnership... Waste Reduction... Case in Point General Electric (GE)... Case in Point Procter & Gamble... Case in Point Motorola... Case in Point Toyota... Case in Point Canon...
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