How can you use value chain analysis to collaborate with your business partners?

1 What is a value chain?

A value chain is a representation of the sequence of activities that a firm or an industry performs to produce and deliver a product or service to the market. A value chain consists of two types of activities: primary and support. Primary activities are directly involved in creating and delivering the product or service, such as inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are indirectly involved in creating and delivering the product or service, such as procurement, human resource management, technology development, and infrastructure. A value chain can be used to analyze the sources of competitive advantage, cost efficiency, and differentiation for a firm or an industry.

2 How to conduct a value chain analysis?

Conducting a value chain analysis requires following certain steps. It starts with identifying the main activities that your organization and its business partners perform to create and deliver value to their customers. Then, each activity should be broken down into smaller sub-activities and assigned to the primary or support category. Assessing the cost and value of each activity and sub-activity, as well as how they contribute to profitability and customer satisfaction, is also important. Furthermore, it's necessary to identify the linkages and interdependencies between activities and sub-activities, and how they affect the performance and efficiency of the value chain. Evaluating the strengths and weaknesses of your organization and its business partners in each activity is also important for comparison with industry best practices and benchmarks. Finally, you should identify opportunities and threats for improvement, innovation, and differentiation in your value chain, prioritizing them based on their potential impact and feasibility.

3 How to collaborate with your business partners using value chain analysis?

Value chain analysis can help you collaborate with business partners to align strategic objectives and value propositions, co-create and co-deliver value to customers, innovate and experiment with new ideas, share and learn from best practices, and communicate and coordinate with business partners. It allows you to leverage the core competencies and resources of your organization and its business partners, optimize synergies and efficiencies in the value chain, enhance your product or service's value proposition and competitive advantage, test ideas with customers and business partners, adopt best practices to improve performance and quality in the value chain, and resolve any issues or conflicts that may arise.

4 What are the benefits of using value chain analysis for collaboration?

Value chain analysis for collaboration can bring several advantages to your organization and its business partners. It can improve the customer experience and satisfaction by providing a higher value product or service that meets or exceeds their needs. Additionally, it can increase profitability and growth by reducing costs and increasing revenues, while capturing a larger market share. Furthermore, it can enhance innovation and differentiation by creating a unique product or service that stands out from the competition, as well as strengthening the relationship and trust by establishing a mutual understanding of the value creation process and the roles of each partner. Ultimately, this will foster a culture of collaboration and partnership.

5 What are the challenges of using value chain analysis for collaboration?

Using value chain analysis for collaboration can also pose some challenges for your organization and its business partners. Managing the complexity and diversity of the value chain, while balancing the trade-offs and conflicts between cost and value, is essential. Adapting to changing customer needs and market conditions is also necessary in order to keep the value chain relevant and competitive. Last but not least, overcoming barriers and resistance to change and collaboration is key for motivating and engaging stakeholders in the value chain.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?