VALUE CHAIN MANAGEMENT

Value Chain Management

Receiving Raw Materials As Input, Adding Value, And Selling Finished Products to Customers

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach – Inspiration and Innovation Unlimited!

"If you are not managing your value chain, you are not managing your business."

Value Chain Management: Lean Value Chain and Production System

State-of-the-art Value Chain for Product Development

Collaboration on product design and development among all value-chain participants
Enabled by Web-based collaborative modeling that allows manipulation
Measured by product-development cycle time

State-of-the-art Value Chain for Manufacturing

Collaboration with other chain members and application of lean techniques to supplier's operations allows the chain to respond rapidly in a continuously changing market.
Enabled by software that allows visibility to all chain members
Measured by cycle-time reductions, on-time deliveries, and productivity

State-of-the-art Supply Chain

The entire chain is a single, integrated equity
Suppliers contracts based on mutual benefits rather than straight cost. Supply chains are not about buying something a bit cheaper, these are strategic decisions
The cost, quality, and delivery requirements of the manufacturing customer are objectives shared by every company in the chain
Inventory is the last resort for resolving supply-and-demand imbalances between the tiers
Sharing of benefits achieved through collaboration
Enabled by electronic data interchange (EDI)
Measured by lead-time on class-A purchased materials

Enterprise-wide Business Process Management (EBPM)

8 Principles

Look at your business from the outside-in, from the customer's perspective, as well as from the inside-out... More

Customer Success 360

13 Tips for Transitioning Your Company To a Lean Enterprise

Start with value stream pilots to demonstrate lean as a system and provide a "go see model"... More

4 Phases of IT/Business Alignment

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

TPS-Lean Six Sigma

Critical Success Factors

Active commitment and involvement from Senior Executives
Incentives, recognition, reward and celebration
Supplier involvement... More

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.

Yin-Yang of Customer Value Creation

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

Treat suppliers and customers as partners... More

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

Customer-driven Innovation: 7 Practice Tips

Customer-Driven Innovation is not a one-time event. It's a philosophy, a mindset, and a habit. You should live this principle daily if you wish to keep creating an innovative customer value, developing attractive product designs, and ultimately win the value innovation competitive game... More

Employee Empowerment

Transition to knowledge-driven economies made establishment of effective employee empowerment mechanisms within companies crucial to their competitiveness... More

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.

Leadership-Management Synergy

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."

In Japan, following the Kaizen strategy, companies practice employee empowerment through such mechanisms as the suggestions system and quality control (QC) circles... More

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).

Toyota Production System

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 and energizes employees, encourages their initiative, enables and allows its people to perform process work. Value chain leadership requires cultivation of a shared vision in all participants. The shared vision provides common direction and focus, motivates personal, team, and organizational learning, and thus enables all participants in the value chain to work toward common goals.

"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

The Growing Role of the Business Architect

Today's companies need business architects who can take a systems view of a business and build synergies.

Business architect is a person who initiates new business ventures or leads business innovation, designs a winning business model, and builds a sustainable balanced business system for a lasting success... More

Leveraging Your Service-Profit Chain

The service-profit chain is a powerful phenomenon that stresses the importance of people - both employees and customers - and how linking them can leverage corporate performance. The service-profit chain is a powerful phenomenon that stresses the importance of people - both employees and customers - and how linking them can leverage corporate performance.

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.