A Framework of Scor

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A framework for operations management: the value chain

Mark Rainbird

Sydney Graduate School of Management, Sydney, Australia

Keywords Operations management, Value chain, Distribution channels, Markets Abstract Proposes that a broad perspective needs to be taken of operations management, so that it is no longer seen as the domain of mechanistic functionalism, but rather as the architect and engineer of the business model driving in turn the firm’s creation of value. Suggests that a value chain approach provides an appropriate framework for such business model architecture. Draws a distinction between industry level value chains and value chain analysis at the level of the firm where the focus is on business processes. Suggests that mapping one against the other is critical to business model effectiveness and the creation of value. Finally, notes that a firm’s value chain should not be seen as necessarily a series of smooth synchronous links, but as dynamic that creates its own interaction costs. This should not be seen as dysfunctional, but as a source of dynamism replicating the market environment the firm is operating in. While it does not sit well with the notions of scientific management so commonly associated with classical operations management, suggests that this process fusion is a fundamental aspect of the firm’s operations that needs to be purposefully managed.

A framework for operations management 337

Introduction – a focus on business models The distinction between a firm’s business model and its strategy is an important but often misunderstood one. As Magretta (2002) points out, the business model is the “system, how the pieces of a business fit together” , while a firm’s strategy is the choices made about how to deploy that model in the...