Value Chain Its importance and scope

"The best structure will not guarantee results or performance. But the wrong structure is a guarantee of failure." Peter Drucker

Introduction

All management, fully identified with its responsibility to ensure the successful company under his charge, market share gain has been proposed, can not ignore what is the value chain

No doubt that Value Chain Management will help: to identify sources of competitive advantage

General considerations, scope

It is known as Wikipedia puts it, that the business value chain or value chain, is a theoretical model for describing the development of business activities of an organization generates value to the end customer described and popularized by Michael Porter in his Competitive Advantage: Creating and Sustaining Superior Performance '

Take into account that the value chain quickly got in front of company management thought as a powerful analysis tool for strategic planning. Its ultimate goal is to maximize value creation while minimizing costs. It is a question of creating customer value, which translates into a gap between what is accepted and pay the costs incurred for purchasing the tender. However, experience has shown that reducing monetary costs also has a technological limit, because sometimes has affected the quality of supply and the value it generates. So systems thinking in this area has evolved to develop value propositions, in which the offer is fully designed optimally to meet demand

The purpose of analyzing the value chain to identify those activities of the company that could provide a potential competitive advantage. Taking advantage of these opportunities will depend on the company's ability to develop along the value chain better than its competitors, those crucial competitive activities.

Take into account that Porter highlights three different types of activity:

* The direct, which are those directly involved in the creation of value for the buyer. Are varied, depending on the type of business and operations are for example the sales force, product design, advertising, assembly of parts, etc..

* The indirect, which are those that allow you to operate continuously to direct activities, as might be the maintenance and accounting.

* The Quality Assurance in the performance of all activities of the company.

Since then, Porter went beyond the concept of the value chain, extending the value system, which considers that the company is immersed in a complex set of activities carried out by a large number of different actors. This view leads us to consider at least three additional value chains that describe how to build:

* The value chains of suppliers, which create and provide essential supplies to the own value chain of the company.

* Providers incur costs to produce and ship the supplies required in the value chain of the company.

* The cost and quality of these supplies influence the costs of the company and / or differentiation capabilities.

* The value chains of channels, which are the delivery mechanisms of the company products to the end user or customer.

* Costs and margins of dealers are part of the price paid by the end user.

* The activities of distributors of products or services of the company affect end user satisfaction.

* Value Chains Buyers, who are the ultimate source of differentiation, since in them the function of the product determines the client's needs.

Indeed, every manager can not ignore that:

* It must create a value chain of your business activities.

* Examine the connections between internal activities developed by the company and the value chains of customers, channels and suppliers.

* Identify those activities and key skills to bring satisfaction to customers and be successful in the market.

* Use a benchmarketing for internal and external comparisons that allow you to:

* Evaluate how well the company is developing its activities.

* Compare the cost structure of the company with its rivals.

* Assess how fit the value chain of the company within the value system of their industry.

* Adjust and improve their value chain to react to strategic and tactical moves of its competitors in their value chains.

Should then be clear to the manager that the value chains of other companies in your industry will depend on the trajectory of these, their strategies, their skills and competitive advantage comes not only from within your company but also outside it.

It is also important to consider what determines the cost of activities in a value chain

The cost of developing each of the activities of a value chain can flow from the back or forward in the chain, depending on two types of factors:

* Structural cost drivers

* The economies of scale.

* The effects of the experience curve.

* The technological demands.

* The capital intensity.

* The complexity of the production line.

* Achievable Cost Drivers

* A commitment to the sales force to continuous improvement.

* The attitudes and skills with regard to quality.

* The cycle time for launching new products to market.

* The efficiency to design and implement internal business processes.

* The efficiency of the company to work with suppliers, distributors

and / or clients in reducing costs.

One should also be clear in terms of which involves the collection of information for strategic analysis of costs

Obtaining information for this purpose is a wonderful task, requiring information to decompose the cost accounting department at the cost of implementing:

* Specific Activities.

* Adopt the system of Activity Based Costing (ABC).

(The intention to adopt ABC costing is to "track" and not assigned as a traditional accounting system, the costs of specific tasks and activities of the value chain.)

** Graduate Teaching? Rea Faces Graduate, University of Carabobo

Topics Exatec annotations management .- Modern Specialty Program Quality Management and Productivity, virtual classroom, 2009