How can you use Value Chain Analysis to identify your program's value-creating activities?

Value Chain Analysis is a powerful tool for identifying the value-creating activities within your program. It involves dissecting the program's processes to understand where value is added at each step, from inception to delivery. By examining each activity in your program's chain - such as development, production, marketing, and distribution - you can pinpoint areas of strength and weakness. This analysis helps in understanding how each activity contributes to the overall value of the program and highlights opportunities for optimization and innovation. By focusing on these key areas, you can streamline operations, enhance product quality, improve customer satisfaction, and ultimately, increase the overall value of your program.

To apply Value Chain Analysis to your program, list its activities, distinguish primary and support functions, and evaluate each activity's contribution and cost-effectiveness. Identify points of competitive advantage and optimize activities for efficiency. Integrate SWOT analysis for a holistic view. Continuously monitor and adapt the value chain to align with dynamic business environments. This process helps identify strengths, weaknesses, and opportunities, allowing strategic resource allocation for enhanced value creation.

Value Chain analysis first needs a strong and fundamental understanding of not only your key processes, but what makes you stand out from your competitors in your industry. To know that you clearly have to understand your core values which include your mission, your culture and your people.

Using the tool, identify a process of ins and outs ie Inbound Logistics: The company receives components like processors, screens, and batteries from suppliers. Operations: These components are assembled to create the smartphone, involving manufacturing processes and quality control. Outbound Logistics: The finished smartphones are distributed to retail stores or directly shipped to customers. Marketing and Sales: Activities involve advertising, promoting the product's features, and selling the smartphones through various channels. Service: After-sales support, warranties, and repairs contribute to the overall customer experience.

In SaaS context value creation of programs can be gauged by how the org leverages user data to customise onboarding processes, core operational activities like scaling the software to acquire more customers and improve the use case coverage, minimising downtime, hiring and retention of skilled workforce right from development to support teams, technology partnerships so on and so forth.

dentify Activities: List all involved activities—primary (like production) and support (such as HR). Assess Importance: Evaluate how each activity contributes to the program's value, competitive advantage, and efficiency. Cost Analysis: Review costs associated with each activity to spot areas for improvement. Conducting Value Chain Analysis involves listing activities, assessing their impact, and analyzing costs for potential enhancements.

Current State VCA pragmatic not to forget all main drivers of the main KPIs: Order leadtime in days, Inventories in days of customer demand from supplier to customer, No of direct personnel, Plant Throughput time door-to-door 1. Display Material Flow end-to-end starting from customer demand in time unit up to supplier delivery scheme, incl processing (cycle) times, waiting times, inventories in plant, warehouses, transports 2. Information Flow end-to-end incl order type, sender / receiver Following the VCA of current state, define future state and the focus transformation/improvement points

Steve Jobs once said, 'That's been one of my mantras — focus and simplicity.' In the realm of Value Chain Analysis, this mantra becomes pivotal. As a seasoned management consultant, I help businesses dissect their operations, assess the value and cost of each segment, and sharpen their focus on what truly adds to their bottom line. By simplifying and concentrating on these key areas, I assist in crafting strategies that not only enhance efficiency but also elevate the brand in the competitive market. Let's collaborate to refine your value chain and propel your business to new heights. #ValueChainAnalysis #BusinessEfficiency #StrategicFocus

Depending on the scope of the program, value chain analysis may differ tactically. At strategy level, it involves comparing the existing results or metric to the new result that is expected from the program. Scope may be Cost reduction, Improve market share, Profitability or Revenue improvement. M/Any of these area need to be analyzed & review how the new program has helped to achieve the defined program scope. Identify the contribution of the departments in the organization or Project teams that have influenced in achieving the scope , Identify the different activities $ & difference in actions performed earler and during the program that influenced in reaching the defined scope.

Procurement: Evaluate how your program acquires resources, whether it's software licenses, hardware components, or other necessary materials. This includes negotiation and relationship management with suppliers. Technology Development: Consider the activities related to research and development, technology infrastructure, and innovation that contribute to program improvement and competitiveness.

Value chain analysis is pivotal in program management for identifying areas of improvement. Apply this by dissecting the program into primary (directly related to production) and support activities. Utilize Porter's Value Chain model, pinpointing each activity's contribution to value creation. Focus on optimizing each activity. Utilize techniques like Lean Six Sigma for process improvement, identifying bottlenecks, waste reduction, and enhancing overall efficiency. Employing Agile methodologies for project execution can streamline processes and increase adaptability to change, aligning with the value chain's iterative nature. By continually assessing and refining these activities, programs can deliver higher value to stakeholders.

To gain a holistic view and clarify interdependencies, create a visual representation using diagrams, emphasizing the flow of activities and the connections between them. This comprehensive approach facilitates a clearer comprehension of the program's structure and aids in strategic decision-making. Optimize resource allocation and enhance overall efficiency, it is crucial to compare the value to cost ratio within your program. Identify activities with high costs but low value, or vice versa, as these represent potential areas for optimization or reallocation of resources. Additionally, pinpoint bottlenecks in the value chain that impede progress or cause inefficiencies and seek opportunities to streamline redundant activities.

Definitely VCA is a potent tool towards having a clear understanding of the most important contributors towards the achievement of the program goal. Since VCA major goal is to ensure CUSTOMER satisfaction through time, then VCA is a great protector to quality sustainability. Furthermore, since customer retention and enhancement is a measure of product or service success, then business progress through time is assured. VCA is not only useful for assurance of customer satisfaction, it also provides support towards a sustainable control of production costs and continual improvement. This contributes to profitability, the major reason for business existence.

dentify Activities: Break down the program into its main activities—those directly impacting the program's output (like production) and supporting functions (such as HR or procurement). Assess Contribution: Evaluate each activity's impact on the program's value, competitiveness, and efficiency. Identify strengths and weaknesses. Cost-Benefit Analysis: Compare costs against the value added by each activity to prioritize areas for improvement. Using Value Chain Analysis helps programs identify areas for enhancement, optimize resources, and streamline processes to improve overall performance.

Programs can be improved using value chances in a combination of the following ways: ? Identify and breakdown program Activities ? Evaluate how each activity adds value to the overall program goals. ? Identify areas of strength and weakness. ? Assess the overall cost-effectiveness ? Understand how each activity is connected to identify dependencies. ? Compare your program's performance with industry benchmarks or best practices. ? Involve stakeholders in the analysis to gain diverse perspectives and insights. ? Establish feedback loops with all stakeholder. ? Identify skills required for each activity and plan training. ? Assess potential risks at each stage and develop strategies to mitigate them. ? Consider the long-term sustainability.

Value means different things to different audience. we need to identify the right metrics - time / energy / data accuracy / SLAs / Process quality (there are many more) and map these to the respective stakeholders. Individual reports / visualizations may have to be created with a combination of these metrics. In addition, the horizon of analysis is again different for different audiences - intra day / YTD / MTD / WTD etc.. thus Aggregates / variations / averages of these metrics become significant. Finally, the contribution of each variable or X on the final Y needs to be established and the significant Xs need to be called out for action / intervention by the stakeholders

Summary Report: Prepare a concise summary highlighting key findings from the Value Chain Analysis, emphasizing strengths, weaknesses, and improvement areas. Visual Aids: Use diagrams or charts to visually represent the value chain activities and their impact on the program's value proposition and competitiveness. Actionable Recommendations: Present clear recommendations based on the analysis, focusing on areas that can bring significant improvements. Communicating Value Chain Analysis results effectively involves a concise summary, visual aids, and actionable recommendations for stakeholders.

Tailoring communication based on roles is essential: for executives, emphasize high-level insights, cost savings, and competitive advantages without delving into technical jargon. Use clear and concise language to convey the potential benefits. For program managers and staff, offer detailed breakdowns of activities, focusing on bottlenecks and suggesting solutions. Utilize data visualization to simplify complex information. Lastly, when addressing stakeholders and beneficiaries, highlight the direct benefits of improvements using relatable language and concrete examples to ensure a clear understanding of how the changes positively impact them.

Two parameters are important when doing and communicating the benefits of value chain analysis Cost Efforts Needed for bringing value via product or service Communicating the improvement in decreased effort, improved processes, reduced cost - creates an impact.

Evaluate the costs associated with each activity. This includes both direct costs (e.g., production costs) and indirect costs (e.g., administrative expenses). Identify opportunities to optimize costs without compromising the quality and value of the program.

In my view, Value to be looked at both process and product level. We should always look to optimise the constraints in program management to deliver effective solution or product to customer. Beneficiaries will also depend on the type of contract to either optimise the program profit or cost effective solution to customer.

Service Delivery Programs involve mapping the entire service journey, encompassing needs assessment, design, delivery, and customer support. Evaluate the impact of each stage on customer satisfaction and pinpoint opportunities for enhancing efficiency and effectiveness. For Organizational Development Programs, map activities tied to training, change management, performance improvement, and employee engagement. Analyze the contribution of each step to organizational goals and identify areas for boosting morale and productivity.

Identify Program Activities: Recognize the core activities specific to the program, considering production, service delivery, or customer support. Understand Value Proposition: Determine what aspects deliver value to customers or stakeholders—be it quality, cost-effectiveness, or innovation, depending on the program. Map the Value Chain: Visualize the program's activities, distinguishing primary (directly influencing output) and support activities (facilitating primary functions). Applying Value Chain Analysis involves understanding program activities, assessing their impact on value, and tailoring improvements for better performance.

Determine how the identified value-creating activities contribute to your program's competitive advantage. Understand how improvements or innovations in these activities can strengthen your program's position in the market.

The VCA does apply to any process; internal customers, external customers; private industry or public industry, federal agencies, or state, county and city level services. each organization has value they bring to the individuals. So, as long as you're in a position that delivers to an internal or external customer, you can do VCA and see how things could improve for the areas within your control, or how you might be able to influence the changes for items outside of your control.

To use value chain analysis for your program, break down each step of your process, from start to finish. Look at every activity – how does each one add to the final value? This could be anything from initial research to customer support. Ask yourself: Where are we really making a difference? Where's the biggest impact on quality or customer satisfaction? Also, spot the steps that don’t add much value. Maybe there's room to cut or improve them. This analysis helps you focus on what's truly boosting your program's value. It's like sorting through a toolbox, picking out the tools that really get the job done well.

Conducting a value chain analysis prompts you to consider how each aspect of your operations adds or subtracts value from your final product or service. This can help you realise some form of competitive advantage, such as: Cost reduction: Making each activity in the value chain more efficient and therefore less expensive. Product differentiation: Investing more time and resources into activities like research and development, design or marketing, which can help your product stand out.

VCA is one of my favourite tools for depicting how a business transforms inputs to create value for its customer and other primary stakeholders. My other favourite tool which I always start with in understanding the business is The Business Model Canvas which can be integrated with an Operating Model Canvas to enhance VCA. VCA helps any business objectively assess value creating, duplication or overlaps and value destructing activities and optimise and streamline the business to unlock value for all stakeholders. VCA helps a business 1. Identifying cost savings and efficiency improvements along its value chain 2. Evaluating competitive advantage 3. Product development and innovation 4. Supply chain risk management 5. Create customer value

The first and foremost step is to identify the value proposition of the product or the service: is it leveraging cost leadership or differentiation to its customer; then identifying the value creating activities in the form of primary and secondary/supportive activities that need to create the product or services. Next to determine the cost and values of the activities and then identify the competitive advantage through another framework like VRIN analysis.

Nowadays people are discouraged from talking and debating, because the IT dependency (hardwares and softwares). My generation learned that nothing replace an eye-to-eye dialogue