Value chain analysis and management is a powerful tool to identify and improve the activities that create value for your customers and stakeholders. It helps you to optimize your resources, enhance your competitive advantage, and align your strategy with your goals. But how can you coach others on this topic effectively? Here are some tips to help you.
Start by explaining the concept of value chain analysis and management in simple terms. You can use an example of a familiar industry or product to illustrate how different activities contribute to the value creation process. For example, you can show how a coffee shop adds value by sourcing, roasting, brewing, and serving coffee, as well as by providing customer service, ambiance, and loyalty programs. You can also explain the difference between primary and support activities, and how they relate to the core competencies and capabilities of the business.
Since I come from immense experience in Fitness industry, to explain the concept of value chain analysis and management in simple terms, I will take a real life scenario of a Gym or a Fitness Studio. If you want to start a Gym, you need to source several equipment from different manufacturers. Cardio machines from top notch manufacturer, Weight lifting machines and free weights from other place. If you are planning to add some supplements then you got to strike a deal with various healthy food products. This is how a gym adds value for stakeholders. Through this process customers will get to use a full fledge gym to keep themselves healthy. There are few aggregators who act as gym discovery platform.
Next, introduce the framework of value chain analysis and management, which is based on the work of Michael Porter. You can use a diagram or a table to show the five primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) and the four support activities (infrastructure, human resource management, technology development, and procurement) that make up the value chain. You can also explain how each activity can be a source of competitive advantage or disadvantage, depending on how well it is performed and how it interacts with other activities.
In simple words, value chain analysis is nothing but various processes that is involved in creating a certain product or service. If I have to take an example of setting up a Gym, these are the things that it will involve. 1. Inbound Logistics: Sourcing cardio machines, weight lifting machines and free weights from various manufacturers. 2. Operations: You need trainers, front office executives, janitors to operate the gym. 3. Outbound logistics: You need to place sign boards, posters, bill boards etc 4. Marketing and Sales: You need to do offline and online marketing activities to showcase your offerings. Well structured CRM to keep track of sales. 5. Service: Providing quality service by giving results to your clients on time.
Then, apply the method of value chain analysis and management to a specific case or scenario. You can use a real or hypothetical example of a business or organization that you or your coachees are familiar with or interested in. You can guide your coachees through the steps of identifying, analyzing, evaluating, and improving the value chain activities of the example. You can ask them to use tools such as SWOT analysis, benchmarking, cost-benefit analysis, and value stream mapping to assess the strengths, weaknesses, opportunities, and threats of each activity, and to suggest ways to enhance the value proposition, reduce the costs, increase the efficiency, and differentiate the offering.
Finally, discuss the implications of value chain analysis and management for the strategy and performance of the business or organization. You can help your coachees to understand how value chain analysis and management can help them to align their activities with their vision, mission, and objectives, and to create value for their customers and stakeholders. You can also help them to recognize the potential challenges and risks of value chain analysis and management, such as complexity, trade-offs, interdependencies, and external factors. You can encourage them to use value chain analysis and management as a continuous process of learning and improvement, and to monitor and measure the results and impacts of their actions.