Lecture Six: Outline

1
Lecture Six Outline

• A Shift Towards Processes
• Demand and Supply Chain Processes
• Value Chain Processes and Activities
• Basic Process Decisions Based on Volume and
  Variety
• Adding Value Strategy Options to the Process/
  Choice Decision
• Introducing the Notion of Distributed Assets to
  Value Led Operations Strategy Decisions
• Process Management Extends Beyond Departments
  Within Organisations to Include External
  Organisations
• Value Benefits and Costs (upstream and
  downstream)
• Generic Value Chain Processes
• Process Analysis in a Value Chain
• Process Analysis
• Value Chain Processes and Decisions

2
A Shift Towards Processes

• Walters (2002) shows that a process is the
  end-to-end series of linked, continuous, and
  managed activities (tasks) that contribute to an
  overall desired outcome or result. Eg. Marketing,
  production, procurement, logistics, and services

3
A Shift Towards Processes (contd)

• To be effective, organisations need to work
  together to identify core processes across the
  demand and supply chains

4
A Shift Towards Processes (contd)

• Generic core processes of the value chain include
  design and development, production,
  procurement, marketing and service

5
A Shift Towards Processes (contd)

• Logistics is the support process that provides
  the infrastructure vital to manage the stocks
  and flows of products, materials and components
  and information throughout the value chain

6
Demand and Supply Chain Processes

• Beech (1998) argues for an integration of the
  supply and demand chains The challenge can only
  be met by developing a holistic strategic
  framework that leverages the generation and
  understanding of demand effectiveness with supply
  efficiency

7
Demand and Supply Chain Processes (contd)

• Beech proposes the core processes of the demand
  chain include product development, trade
  marketing, selling , value added distributors,
  category management and store marketing

8
Demand and Supply Chain Processes (contd)

• Integrating processes that synchronise the supply
  and demand chain core processes are planning and
  servicing these ensure that supply and demand do
  in fact integrate and offer benefits such as
  reduced inventory investment, improved return on
  assets and enhances customer satisfaction.

9
Demand and Supply Chain Processes (contd)

• Thinking of the businesses as a number of
  integrated core processes enables management to
  focus on streamlining the processes and
  identifying inter-organisational linkages that
  result in creating more value for less effort

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Value Chain Processes and Activities
Source Adapted from Walters (2002)
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Basic Process Decisions Based on Volume and
Variety
Source Walters (2002)
12
Adding Value Strategy Options to the Process/
Choice Decision
Source Walters (2002)
13
Introducing the Notion of Distributed Assets to
Value Led Operations Strategy Decisions
Source Walters (2002)
14
Process Management Extends Beyond Departments
Within Organisations to Include External
Organisations
Source Walters (2002)
15
Value Benefits and Costs (upstream and downstream)
Source Walters (2002)
16
Generic Value Chain Processes
Source Walters (2002)
17
Process Analysis in a Value Chain
Source Walters (2002)
18
Process Analysis
Source Walters (2002)
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Value Chain Processes and Decisions

• For each stage of the value chain, Walters (2002)
  outlines a number of questions that need to be
  asked.

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Value Chain Processes and Decisions (contd)

• Design and Development
• What are the key design and development processes
  in the value chain?
• Which of these processes are managed by the
  organisation?
• Which are outsourced?
• Are customers involved in the design and
  development processes? If so, which processes?
• Are suppliers involved in design and development
  processes? If so, which processes?

21
Value Chain Processes and Decisions (contd)

• Procurement
• What is the role of procurement in the value
  production process in the value chain?
• Is this a major or minor role?
• Are any of the procurement processes outsourced?

22
Value Chain Processes and Decisions (contd)

• Production
• What are the key production process activities in
  the value chain?
• Which of these activities are undertaken by your
  organisation?
• Where are the other activities located?
• Do customers become involved?
• Do suppliers have any major role in the process
  activities?

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Value Chain Processes and Decisions (contd)

• Marketing
• What is the role of marketing in the value chain?
• What are the key marketing activities?
• Where are these activities undertaken?
• What positioning characteristics are central to
  the value proposition?
• How are these decided and by whom?
• Who in the value chain owns the brand?
• Are intermediaries included in the value chain
  and what are the roles/ processes/ activities
  they undertake?

24
Value Chain Processes and Decisions (contd)

• Service
• What are the key service elements in successful
  value delivery?
• Where are these performed in the value chain?

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Value Chain Processes and Decisions (contd)

• Logistics
• What is the customers involvement in determining
  the importance of the logistics service outputs?
• What are the key logistics activities?
• Who performs these activities?
• Who coordinates the activities?
• How is logistics performance monitored?

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Discussion Questions

• You are charged with the responsibility of
  setting up a process profile for a highly
  specialised organisation with only two customers.
  Which process do you choose? Who owns the
  process? What questions do you ask when designing
  this system?
• This organisation has operations in production,
  logistics and servicing. What area of the value
  chain would you advise be the more appropriate
  for the firm to specialise in? Why? Are there any
  areas of the value chain that the firm should or
  should not be in? Why or why not?

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Discussion Questions (contd)

• You subsequently find that the company is almost
  bankrupt due to customer attrition. What actions
  do you take to ensure that the company doesnt go
  bankrupt?