Value Chain Managementedited 4

MANAGING VALUE CHAIN 1

Critical Reflection on own experience while studying Managing Value Chain

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MANAGING VALUE CHAIN 2

A value chain entails the full range of activities that includes designing, production,

marketing as well as the distribution that businesses have to go through to bring services or

goods from the point of conception to delivery (Assessing and managing the value chain, 2002

11). For firms that do the production of goods, value chain begins with the raw materials that are

utilized in the production of the products and consists of anything else that is added to the raw

material before being sold to the clients. Managing Value Chain, on the other hand, refers to the

process of organizing all of the above activities for proper analysis. The particular goal and

objective of value chain management in ensuring that the individuals in charge of the different

stages of the value chain have a good communication with one another. That is imperative in

ensuring that the products get to the customers hands as fast as possible.

In the process of studying 'Managing Value Chain', I developed a great experience in as

far as the matter at hand is concerned. To begin with, I learned that organizing groups of

activities that are connected creating value by the production of goods or services starting from

the raw materials for the purchase by the customers are vital. Moreover, it is worth noting that

the primary objective of any particular business employing value chain management has to do

with integrating communication that is the key to success of a business or interconnected

business (Harvard business review on managing the value chain, 2000 164). Poor

communication in most of the cases is characterized by business failure. Managing value chain

also increases the level of cooperation between members in the production chain that on the

other hand decreases delivery times. Moreover, it lowers the inventories that increase consumer

satisfaction.

While studying Management of Value Chain, I also learnt that value chain is a

systematic approach used in the examination of the development of competitive advantage. It is

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composed of a series of activities that plays a crucial role in the creation as well as the building

of value. The activities culminate in the entire value that an organization delivers. A general-

purpose value chain that can be utilized by enterprises in the examination of their activities was

proposed by Porter (Harvard business review on managing the value chain, 2000 142). The

value chain also helps in understanding how the various activities are connected. Ways of

performing the activities of the value chain determine the costs and affects the profits. Therefore,

it is a tool that assists the management to get a clear understanding of the sources of value in

organizations.

It is also clear that, with the increased growth of global markets' efficiency, competition

has shifted from taking place between individual businesses to the entire value chains. Thus, the

collaboration that takes place through networks of intelligent e‐business, a competitive edge will

be developed enabling every other participant in the value chain to prevail in addition to growing

(Assessing and managing the value chain, 2002 14). The collaboration calls for the individual

participants adopting simplified as well as standardized solutions that are based on common data

models architectures. Marking time is critical, and thus, participants have no alternative than

foregoing luxuries of customization as well as modification.

Companies that carry out the manufacturing of products create value by the acquisition of

raw materials and then utilizing them in the production of useful commodities. Retailers then

bring together a wide range of products and present them in a convenient way to the customers.

That is at times supported by personal shopper advice or the fitting rooms. In the case of an

insurance company, policies that are offered to the customers are underwritten by the larger re-

insurance companies (Harvard business review on managing the value chain, 2000 167). In this

particular case, the larger policies are packaged in a customer friendly way after which the

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distribution is done to mass audience. The company’s value that is created and captured as well

is referred to as the profit margin. When an organization creates more value, it raises the

chances of the profitability to be achieved. Moreover, providing of more value to the clients

results in an organization’s competitive advantage.

Conclusively, Managing Value Chain is vital in any particular business for the

achievement of the maximum profit. This is because, with increase globalization, a majority of

the businesses are entirely depending on the whole chain for the provision of goods and services

that meets the customer requirement and thus increasing the profit margin. Moreover, having a

clear understanding of an organization on how to create value as well as identifying ways of

adding value is one of the critical elements in the development of a competitive edge (Assessing

and managing the value chain, 2002 14). I n studying Managing Value Chain, I learnt that all the

activities within an organization are meant to add value to the products as well as goods that are

produced by the firm. It is thus imperative to run these activities at the optimum level for the

organization to achieve the highest level of competitive advantage. Running of the activities

efficiently enables the company to obtain a value that is higher than the costs of running the

activities. Therefore, in running any particular business, management of value chain should be

put under consideration.

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Bibliography

Assessing and managing the value chain. 2002. Strategic Direction, 18(2), pp.12-14.

Harvard business review on managing the value chain. 2000. Boston, MA: Harvard Business

School Press.

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