There are moments when your business is going to hit the wall – costs getting out of hand, competitors becoming a major nuisance, staff squabbles take your focus and margins are starting to fall. An all too familiar scenario? What can you do?
There is no silver bullet but one tool I always trusted is the old Activity or Value Chain Analysis – a tool often underrated yet it has proven very powerful in my work to date – and it keeps delivering.
Activity/Value Chain Analysis – what is it?
An activity/value chain is a set of interlinked processes – The notion is: each step in the process chain adds a certain amount of value assuming that the input factors produce a higher quality output good.
The analysis simply investigates these interlinked activities/processes within an organisation.
Why and how would you use this tool?
The analysis of in-house processes enables you to pinpoint obstacles of internal interfaces such as waiting and lead times between progress steps or receiving and storing goods.
In order to reduce (usually costly) obstacles and to optimize the process chain, performing a detailed analysis is recommended.
An activity/value chain analysis is particularly suitable as part of a realignment of the internal logistics as this analysis will expose ineffectiveness and inefficiency with brutal clarity.
Why would this help you to control costs and/or be more competitive?
Activity/Value Chain Analysis typically identifies the following:
- Identifies strengths and weaknesses → Enhance strengths, eliminate weaknesses
- Taps unused potential
- Identifies alternative processes or structures
- Reduce throughput times
Furthermore it assists with the:
- Coordination of the departments or business units
- Improved communication between the processes actors
- Clearer definition of roles and responsibilities
Activity Chain Analysis considers the contribution that each individual activity and step within the process chain adds to the total process – subsequently the value it delivers to the customer.
This is Part 1 of the series “When your business hits the wall and what you can do about it!”
Join me tomorrow for Part 2 – ‘How do I carry out an Activity/Value Chain Analysis.’I read enough – please contact me asap!