How can you use value chain analysis to reduce lead times?

1 What is value chain analysis?

Value chain analysis is a method of breaking down your business process into primary and support activities, and evaluating how each one contributes to the value of your product or service. Primary activities are the ones that directly create and deliver value to the customer, such as design, production, marketing, and distribution. Support activities are the ones that enable and enhance the primary activities, such as procurement, human resources, technology, and infrastructure. By analyzing your value chain, you can identify the sources of competitive advantage, differentiation, and cost reduction in your process.

3 How to reduce lead times with value chain analysis?

To reduce lead times with value chain analysis, you need to focus on the activities that cause the most delay and waste in your process, and apply the principles of lean management. Lean management is a philosophy and a set of tools that aim to eliminate or minimize anything that does not add value to the customer. To do this, you can use value stream mapping, which is a visual tool that shows the flow of materials and information from start to finish. Kanban is another tool which is a pull-based system that regulates the flow of work by using visual signals, such as cards or bins, to indicate status and demand. Kaizen is also an approach you can use, which is a continuous improvement process that involves everyone in the process and encourages them to identify and solve problems, implement changes, and monitor results. All these tools can help you reduce lead times with value chain analysis.

4 How to measure and monitor lead times with value chain analysis?

Measuring and monitoring lead times with value chain analysis requires you to use key performance indicators (KPIs) that reflect the efficiency and effectiveness of your process. KPIs are metrics that help track and evaluate the progress and outcomes of your process, and compare them with your goals and benchmarks. Lead time, cycle time, throughput, inventory turnover, and customer satisfaction are some of the KPIs that can help measure and monitor lead times with value chain analysis. Lead time is the total time it takes to complete a process from customer order to product or service delivery. Cycle time is the time it takes to complete an activity or stage in the process from input receipt to output delivery. Throughput measures the rate at which the process produces outputs in units per time period. Inventory turnover is a ratio of cost of goods sold to average inventory level, indicating how quickly the process converts inventory into sales. Finally, customer satisfaction gauges how pleased customers are with the product or service, and the delivery process through surveys, ratings, reviews, or feedback.

5 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?