Mgmt

People

Technology

Capital

Equipment

Materials

Information

Inputs

Transformation Process

Output

Goods, services

Fundamental principles of Value Chain Management

Optimize the whole, not the pieces Broader than “cradle to grave” (“lust to dust”) Delight our customers in a way that improves the financial returns of all value chain participants.

Benefit of value chain management:

improved customer service - the major benefit

* cost saving

* accelerated delivery times

* improved quality

Obstacles to Value Chain Management (cont.)

* Organizational Barriers - among the most difficult

* include refusal or reluctance to share information, shake up the status quo, and deal with security issues

* Cultural Attitudes

* lack of trust - reluctance to share information, capabilities, and processes

* too much trust - leads to theft of intellectual property

* intellectual property - proprietary company information that is critical to competitiveness

* collaboration results in a loss of control

* Required Capabilities - essential to capturing and exploiting the value chain

* coordination and collaboration

* ability to configure products to satisfy customers

* ability to educate internal and external partners

* People - must be committed to value chain management

* must be flexible

* must be willing to expend incredible amounts of time and energy

* experienced managers a critical resource

processes

Organizational Processes - the way that organizational work is done

* must examine core competencies to determine where value is being added

* non-value-adding activities should be eliminated

* processes must change in the following ways:

* better demand forecasting is necessary

* selected functions may need to be done collaboratively...