Value Chain




Value Chain
Business provision is ultimately about creating sustainable value, where value is the measure of net benefit (or worth ) gained against cost.

In other words we may say “value is how much a benefit is worth”.
This applies both ways - for the customer and for the business provider
•   Customer’s perception of competitive benefit
     drives market environments.

•   The balance between cost of provision and
     market environments  drives business value.

  For services operating in monopoly situations
                ( e.g. Government provision )
     poor value is reflect by constituent dissatisfaction.
To improve value organizations need to look along the value creation chain
The most effective way to improve value is to decrease waste
This leads to reducing costs while retaining benefits
Waste has two components:

  • Inefficiency
 • Deficiency

Waiting time is an example of inefficiency.
Repair is an example of deficiency.
We may call waste “The Hidden Factory” for waste generally remains undetected while consuming a sizable amount of all the same resources used for the creation of benefit ( value ).

The causes of waste are manifold:
They range from design of "product" & process and inadequate communication
through to incompetence and even negligence.

Waste is apparent in both the physical processes (operational processes)as well as the intangible processes (transactional processes).

Indeed most waist today, in manufacturing and service organizations, occurs in their transactional processes and hidden by the ineptitudes of conventional accounting systems.

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