Present business strategies, attuned to the implementation of Blue Ocean approaches, continue to compete for fine products, unbeatable prices, customer loyalty, and ultimately successful marketing tactics. In all these, one of the most valuable tools of business remains the value chain analysis and the resultant management of it within operations. Harrison (2017) notes that value chain management remains the most significant tool that allows businesses to gain a competitive advantage over others. Smartsheet.com, a website accustomed to business operations and the need to implement value chain analysis, supports the aforementioned hypothesis. The site states that a value chain analysis aids in the recognition of the various ways a business can reduce cost, eliminate waste, increase profitability, and optimize effort, thereby, resulting in ample production ("Everything You Need to Know About Value Chain Analysis", 2018). The foundation of business operations is in the production process, which identifies each component, resultantly eliminating waste. Moreover, through proper analysis of the production process areas of improvement become apparent. In doing so, enterprises commensurately determine their best value in concordance to customer demand. By having this intimate understanding of value, businesses therefore improve and expand, resulting in proper cost savings, and the enhancement of production.
By definition, value chain refers to a range of activities that encompass the design, production, marketing, and distribution processes of businesses conducted to bring about a service or product from its conception to its delivery to customers (Taylor, 2005). In companies, which focus on the production of goods, the value chain as they perceive commences from raw materials used in their products and continually consists of everything incorporated within the product before its sale to the final consumer. As such, value chain management refers to the process of organizing such activities for their immediate analysis, the goal being, ample communication between the managers of each stage to ascertain proper product placement within the hands of customers. According to Porter, a Harvard Business School graduate who first introduced the concept of the value chain, there are five forces modelling where businesses are in terms of competition within a specified marketplace. Thus, one cannot comprehend competitive advantage, which is central in value chains, through looking at a business as a whole. On the contrary, Porter defines this as discrete activities within a firm such as design, production, marketing, delivery, and product support. Such activities contribute to the relative cost within a firm, eventually establishing a basis for proper differentiation.
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In due course, value chains aid companies through the creation of strategies within various company dockets such as inbound logistics, operations, outbound logistics, marketing and sales, and services. Through ample focus on company activities such as procurement, technological development, human resource management, and the infrastructural structure of firms, the value chain streamlines company objectives and acclimatizes them to its needs. Moreover, through cost advantage, the value chain identifies primary and support activities, carefully delineating their contribution to the company as per customer wants. Differentiation advantage further classifies the most conversant activities, which bring more value to customers. This kid of differentiation consequently results in a robust and profitable operation to the company and value to customers. The video ultimately shows the importance of value chain in the design of products and services within a company, which is the core of operations management. A value based perspective on operations management results in quality products thereby altering profitability through its positive influence. It is apparently clear that for a company to realize success, value has to be at the core of its processes. This value, more often, has its definition in the incorporation of suppliers, distributors, and retailers to company objectives as mandated by consumer feedback and metrics. As such, the video reaffirms the need for value chain management in business and its benefits on return of investments and customer loyalty.
References
Everything You Need to Know About Value Chain Analysis. (2018). Retrieved from https://www.smartsheet.com/everything-you-need-to-know-about-value-chain-analysis
Harrison, K. (2017). What is a Value Chain Analysis?. Retrieved from https://www.businessnewsdaily.com/5678-value-chain-analysis.html
Taylor, D. (2005). Value chain analysis: an approach to supply chain improvement in agri‐food chains. International Journal Of Physical Distribution & Logistics Management , 35 (10), 744-761. doi: 10.1108/09600030510634599
