19.3 Managing Operations Utilizing Value Chain Management
The Walmart stores are the largest retailer in the whole world. They also always involved with searching the best ways to manage their value chain by most efficiently and effectively. They deploy many efforts to take over the U.S. shipping services from the entire suppliers in accordance with reducing the cost involvement in transporting goods. Their goal is to tackle the suppliers with best merit and deliver the products to the end customers successfully and Walmart do this with an easy as well as quick manner which helps to reduce the prices of the products in their stores.
As per Walmart’s view in accordance with their size of business and scale, they have the capability to dispatch most of the products extra efficiently and effectively than the manufacturers of the same goods. It is true that managing a business in concept of value chain ground organizing Walmart Stores will not be an easy task. In the present active competitive field surely needs advanced solution from worldwide organizations. Presently some aggressive organizations have inspired to research with a modern business model understanding the needs and fruitful way of determination by the market environment. A concept in this matter will be discussed later. IKEA switched themselves from a tiny Swedish company of mail order furniture into the chief furniture retailers in the world by implementing the concept of value chain management in this industry.
That’s why it can be possible to them to offer well designed and purposeful product to the customers at considerably below prices. Some key traditional tasks taken by the manufacturers as well as retailers have benefitted themselves to do this, assembling the furniture and transport these at home. So, the concept of creation certain novel business model as well as readiness to leave the old techniques as well as process by the company has performed well.
Value Chain Policy:
Exhibit 19-2 defines the 6 important needs of a purposeful value chain approach which are coordination and teamwork, investment of technology, process of organization, dictatorship, employees and lastly organizational culture as well as attitudes.
The collaborative relationships through the participants of chain must exist in case of value chain to reach the goal by fulfilling even exceeding the requirements and desires of customers. An integral and combined chain system is mostly needed to conjugate them and work properly. Sharing the information between each other and introducing the flexibility as far as possible among the participant of the chain an organization can be ale to build coordination as well as collaboration. Such information sharing as well as analysis needs more flexible and open contact among the partners of value chain.
Investment of technology
Without a definite investment in the information expertise the successful value chain management is never possible. From this ground repay the loan may be included with the information technology that can be utilized to reform the value chain and provide a better service for end users. For instance you can consider a food distributor in Houston namely Sysco who Ships more than twenty one point five million tons of manufactured meats, ready meals as well as other food products to deliver in restaurants, sports stadiums and café terries. Sysco is fully depended upon the multifaceted network of software, robotics, databases as well as auto-servicing systems to deliver all their ready products to the appropriate places in time.
A customer and food packaging company namely Pactiv Corporation trust on the three years planning process of forced entry goals and transform it to achieve the target in one year. Hence they implement the needed infrastructure so that they can success to achieve their goal with an easy as well as effective manner. A comprehensive chain system as well as regimented approach to make the development has helped this company very much to grow more and achieve the goal. Value chain management drastically alters the organizational process and they think this is proper way for performing the organizational work.
The old technique is useless when the managers determine to manage or handle situation utilizing value sequence management. When the value is added in the process, the organizational systems must be thoroughly evaluated from starting to ending. They have to reject all non-value oriented activities from the process. Now the question is how can an organization can evaluate the internal knowledge to betterment the supply of materials as well as information and how they can improve the configuration of product to please all customers as well as suppliers?
And finally how they can improve the custom service? Every company should try to clarify all the queries prominently and confidently. For instance when the managers of Deere & Company introduced value sequence management, they need to evaluate the total process thoroughly to determine that the work forces is linked synchronizing and have made a interrelationships among different department of chain management. To realizing the greater value they changed plenty of work processes in each division of the company.
Three crucial terminations can be described about the organizational process:
- Firstly – Due to concrete ties between customers and suppliers, better assumption is mostly needed. The consumer Health Care Group of the Walmart and Pfizer’s decided to collaborate intending to improve the predict of demand information. The contributors enhance the sales of Walmart through the mutual efforts of Walmart and Pfizer and get an outstanding result for the supplier as well as retailer. Consumers also benefitted because of that they got the facility to buy the product at low price as and when they want the same.
- Secondly – Distinct f functions are needed to perform together with other associates related with the value chain management. This teamwork may be extended up to the involvement of employees. Saint Gobain, a plastic company, deputes their own personnel in customers’ locations and allows the employees to work at customers ‘premises.
- Finally – New technique of measurements are required to evaluate the performance of different activities through the value sequence. The managers of the company want to get best picture of the sequence how perfectly this value can be created as well as supplied to the consumers because the aim of value chain management is to meet all requirements of customers successfully and efficiently. During the time of implementation value chain management, Nestle U.S.A. Re-established its metrics scheme to concentrate on one particular set of capacities. For example perfectness of demand assumption along with the p0lan of production, on in-time delivery and achieve the upper limit of customers satisfaction, which made them to locate the problematic regions and take necessary action to resolve the problems as early as possible.
Without strong and dictatorship leadership the winning value chain management is never possible. Managers have to be strictly maintained the company’s all rules and regulations. Managers also implement the rules and every participant from topmost organizational level to lower level will bound to be followed the instructions of managers thoroughly. Managers also definitely try to provide all facilities, supports to the employees and encourage the implementation as well as newly incorporated carry out of value string management.
All managers should try their level best to identify the appropriate meaning of value, how this value can be successfully offered and how perfectly they will apply their efforts in the company. It is sure that without a serious commitment or dictatorship on the leaders of organization a true culture based on all labors are pointed to deliver highest customer value is not possible. It is also most important that manager of the organization will draw an outline about the expectation that will be involved into the value series management that all participants of the company pursuit. Basically all managers start their profession with a dream as well as mission outline of which describe the commitment of the company to locate, capture and implementing the topmost value to the clients. An example can be considered in this respect.
During using the value chain management by the American Standard the CEO detained lots of conferences throughout the U.S. to describe the concept of their commitment in the present competitive market and the need of implementation of better performance relationships with all their value chain associates for serving the requirements of their customers perfectly and promptly. After that manager should describe the individual roles of the employees in value chain management and what they can contribute to the company for the proper growth of company.
However, though clear expectations are not essential to the internal participants, but it is important to the external participants. As an instant the American Standard located the actual needs for distributors and hence they implemented the perfect system which could meet the requirements of all participants. All of the participants including upper level staff of the organization have benefitted for this as well as the partners of American Standard accepted this system happily and all partners eager to do the job with them deploying entire efforts to provide best value to consumers.
Value of employees or human resources:
If the newly employed employees of any organization have any question in respect of their job, they can surely clear those disputes consulting with the management team of the company. The Thermo Fisher Technical Unit is situated in Marietta Ohio who has a team namely hierarchy of Knowledge who is responsible to answer all question of employees. The tree means a notice board having images of employees and they are working in the company for the last so many years. You must understand from already discussed matter that employees are the most essential resources of the organization. An organization cannot produce any product or service without the participant of employees. So, unconditionally it is true that employees take part and play a vital role to the growth of the company and as such they are mostly associated with the value chain management.
Three Key human resource needs for value chain management:-
- Flexible presentation to job outline
- Purposeful hiring system
- Ongoing and regular arrangement of purposeful training.
- Suppleness is the prime point for making the design of job in successive value string management.
In early days the traditional job roles were functional that were included with marketing, accounts, sales as well as customers service which are now not consider as work. In place of those functional roles of the job, the job definitely will be designed based on the work procedures that make as well as offer value to the clients. It involves flexible jobs along with flexible employees. Keeping this concept in their mind the Nordon Corporation’s amenity in Georgia arranged for proper training of their employees to do the job perfectly and profitable way which were uncommon from other companies. In the value chain company the employees are given the job to perform team-wise that followed a successful technique to conduct and complete the given assignment successfully within the schedule time. For those cases where consumer value is needed to successful delivery by collaborative negotiation which may switch as per the customer needs or where the job specification are not stipulated, the flexible ability of employees is most critical. Hence the hiring process of the organization is most essentially designed to locate those workers who can be able to learn as well as adapt the training program easily.
The need of flexibility is also to be incorporated with the value chain organization for usual investment in running as well as ongoing training for employees. By this training, employees of the organization will learn about the information technology, the way of improvement the stream of materials across the chain, identify the task that incorporate value, making fruitful decision quickly and effectively and also improvement of other potential work performances. The managers must monitor and thoroughly check whether the employees are truly adopting this essence of training and implementing the same in jobs perfectly or not. If the manager observe that one or more employees are failed to adopt the training essence then they should takes steps fruitfully.
Organizational society as well as Attitudes
The final need for value chain organization is adopting a related organization culture along with attitudes. You must have a clear idea from above detail discussion of value chain organization that what is organizational culture that supports its perfect application. Sharing, collaboration, aperture, flexibility, trust as well as mutual understanding are involved with this cultural motive which also includes both internal partners and external partners.
Barriers to the value chain administration
The manager must be capable to remove all obstacles that evolved during running the organization to manage the value chain management.
What are organizational Barriers? – For example one of the very challenging companies namely General Cables in Manchester once faced challenges by both managers and staff to maintain its worldwide competitiveness in 23 unlike nationalities who speak 12 different languages including English. To understand those all languages was not possible to the Managers but they succeeded to overcome the problems and they made it possible following the hints through the entire project.
Organizational blockades are most difficult barriers to tackle. As these obstacles may be refused or related to divide information and securities issues the implementation of it in value management is most problematic. Lastly as the value chain management trust mostly on the infrastructure, a considerable information technology, the system security as well as inherent security departments are the factors that have to be incorporated with it.
Reliability and control are the uncooperative culture attitudes which can be defenses to the value chain management. Deficiency of trust as well as excessive trust is both the dangerous issue for value chain management. All participants in a value sequence surely trust one another so that they can take part in the value chain effectively. Honest as well as mutual respect is most essential for the partners of value chain to perform the work successfully. Without trust the participants cannot share the information, they lost their capability and the total system will be inactive. However, too much truest can also create problem in the system of organization. To an organization the proprietary information is very critical in respect of effective as well as efficient functioning along with competitiveness.
For the growth of your organization you have to belief all partners of you who are involved in value chain management wherein the valuable assets of your organization can’t be compromised. Belief is another culture attitude which can create obstacle during collaboration between the organization and external-internal partners which never handles its personal fortune. But lack of control is not the only issue. Beside the intension of collaboration the other essential issues that are incorporated with the value chain management of the organization are right decision making in critical situation like about paper customer value, the amount of value that they need, right distribution channels etc.
Necessary requirements for fruitful implication of value chain management that are needed to partners for showing different capabilities have already been discussed. Though several capabilities such as collaboration and coordination, ability to distribute products among customers, to satisfy both consumers and suppliers by configuring products and capability to educate the external and internal partners are critical task but these are most essential and vital issue that have to be captured and implement all of these issues to run their business successfully. So, these are surely incorporated with value chain management.
The people of an organization are the ultimate obstacles to the successful value chain management. The value chain management cannot be successful without the unconditional commitment and without willingly contribution of their task to the organization. The concept of collaborations as well as cooperation will be valueless in the value chain management when the employees of the organization deny being re-flexible in their job. Beside this the job of value chain management involves huge time as well as energy which have to be offered by the employees of the organization – it is also a hard task. The problem of a massive human resource is the effect of experience deficiency of managers on whom the effectiveness of value chain management is fully depended. Those managers who neglect this issue they never can be succeeded. But, in the present competitive business environment the progressive organizations utilize the benefits of value chain management eliminating all obstacles and they have succeeded to hike the growth of their business very much.