Wednesday, December 4, 2019
Managing A Value Chain Sales and Production
Question: Discuss about theManaging A Value Chain for Sales and Production. Answer: Introduction According to Ireland, Hoskisson and Hitt (2012: 65), Porter in 1985 introduced the value chain concept and argued that organizations optimize value by managing the flow of sales and production. The author also notes that various benefits can be accrued by adopting the value chain management concepts such as improved profits and revenues as well as customer loyalty. For this reason, the paper analyzes what I have learned about managing a value chain. How My Comprehension of Value Chain Management Transformed By Studying the Subject From the analysis of the activities that characterize the value chain, I realized the role that value chain plays in enhancing customer satisfaction and consequently improved profits and revenues. I also realized that to create value; manufacturing companies must obtain raw materials and utilize them to produce valuable products. Therefore, the profitability of a company greatly depends on the value it creates for its target market (Salzarulo and Jacobs, 2014: 1990). It also depends on how a company connects its value chain activities. The value chain primary activities are those that are directly related to supporting, maintenance, sale and the physical creation of a product. Primary value chain activities include the sales and marketing of the products, offering after sale services and inbound and outbound activities (Morin Jarrell, 2000: 85). Support activities, on the other hand, play a crucial role in primary activities of the value chain. Support activities include technologic al advancements, the management of human resources, the development of infrastructure and procurement (Wilson, 2006: 75). Both support and primary activities form the basis through which companies produces valuable service or product. Overview of Whether What I Have Learned Increases My Awareness Regarding the Significance of Value Chain Management What I have acquired from the subjected has given me a clue on the significance of value chain management. For instance, I know understand that efficient management of the value chain results in greater benefits for the company. Some of the advantages that organizations obtain by managing the value chain include: Reduced Delivery Times Value chain analysis permits manufacturers to strengthen their connection with retailers or wholesalers by delivering their orders in time (Hill Jones, 2010: 60). Retailers and wholesalers also benefit from an excellent value chain because they can actually coordinate their selling and buying activities. Besides, end consumers also benefit from more consistent and faster on-time delivery, especially when goods are moved faster by trade channel partners. Improving Customer Relationships To enhance customer relationships, it is important for organizations to manage their value chain factors successfully. These factors include outbound logistics, operations, and inbound logistics. By effectively managing these factors, the reseller minimizes costs and improves response times for customers (Harrison St. John, 2010: 73). Likewise, to enhance their services, marketing and sales aspects; resellers makes use of rewards or loyalty initiatives to encourage clients to acquire more products and in turn enhance their loyalty towards the company. Optimize Inventory An efficient value chain allows retailers to collaborate with suppliers in an endeavor to integrate the outbound processes of the manufacturer and inbound logistics of the retailer to minimize delivery times. According to Sabri and Shaikh (2010:52), a majority of retailers make use of just-in-time inventory processes to produce more regular and small orders as well as reduce their level of stock. How My Participation in Group Activities Transformed My Knowledge and Perception Regarding Value Chain Management Through group discussions and assignments, I gained significant insights on how the various elements of the value chain work in collaboration to enhance an organization competitive advantage in the industry. I learned that inbound logistics entails all activities related to distributing, storing, and receiving inputs internally. The creation of value using this aspect greatly depends on the relationship between the supplier and the company. Operations, on the other hand, involves all activities that transform inputs into outputs to meet the varying needs of the end consumer whereas outbound logistics allows companies to deliver their service or product to their target audience(Walters Rainbird, 2007: 48). Outbound logistics is defined by things such as the distribution, storage, and collection systems which can either be external or internal to an organization. The service aspect of the value chain entails all activities offered to customers after purchasing a product with the aim o f safeguarding their value. The marketing and sales aspects of the value chain encompass all processes used by the company to persuade customers to purchase products from the company rather from the competitors (Harrison St. John, 2010: 60). However, the manner in which the value of the products is communicated to the client significantly determines the rate at which the company products are purchased. The above elements are considered the primary activities of the value chain, and they require support activities to enhance their effectiveness. Examples of support activities include technological advancements, the management of human resources, the development of infrastructure and procurement management (Harrison St. John, 2010: 61). Through procurement, an organization acquires the needed materials to operate. For instance, through procurement, the organization identifies suppliers whom they negotiate best prices to supply the needed materials. Likewise, the organization through human resource management retains rewards, motivates, trains, hires, and recruits competent staffs who add value to the organization. Infrastructure, on the other hand, includes all the functions and support system that allows a company to maintain its routine operations. Examples of these routine operations include general management, administrative, legal, and accounting functions. The technological de velopment allows the company to protect its knowledge base and at the same time process and manage information. How I Will Utilize the Above Knowledge in My Place of Work From the group discussions and activities, I realized that primary activities of the value chain are considered more important that the support activities. From my analysis, I realized that despite the fact that primary activities play an essential role in directly adding value to the company production process, they should not be considered more crucial than their counterparts (support activities). In the contemporary business environment, innovations or technological improvements in business processes or business models are the drivers of competitive advantage. For this reason, support activities including general management, Research and Development, or informational systems are essential source of product differentiation whereas primary activities enhance a company cost advantage. For this reason, I will consider both primary and support activities in enhancing the company competitiveness in the industry. List of References Harrison, J. S., St. John, C. H. (2010) Foundations in strategic management, Mason, Ohio, South-Western: Cengage Learning. Hill, C. W. L., Jones, G. R. (2010) Strategic management theory: an integrated approach, Boston, MA: Houghton Mifflin. Ireland, R. D., Hoskisson, R. E., Hitt, M. A. (2012)Understanding business strategy: concepts plus, Mason, OH., South-Western: Cengage Learning. Morin, R. A., Jarrell, S. L. (2000) Driving shareholder value: value-building techniques for creating shareholder value, New York: McGraw-Hill. Sabri, E. H., Shaikh, S. N. (2010) Lean and agile value chain management: a guide to the next level of improvement, Ft. Lauderdale, FL: Ross Pub. Salzarulo, P.A, Jacobs, F.R (2014) 'The incremental value of central control in serial supply chains', International Journal of Production Research, vol. 52, no. 7, pp. 1989-2006. Walters, D., Rainbird, M. (2007) Strategic operations management: a value chain approach, Basingstoke: Palgrave Macmillan. Wilson, J. P. (2006). Human resource development: learning training for individuals organizations. London: Kogan Page.
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