Part 3 of the series on Activity/Value Chain Analysis – a business tool that works and delivers!
Missed Part 1 – click here
Missed Part 2 – click here
Evaluation of Activity Chain Analysis
Activity chain analysis reveals the strengths and weaknesses of a particular activity. It provides insight where to focus the company’s resources and more importantly it uncovers new opportunities for differentiation and possible cost advantages over the competition.
Is this tool only for big organisations?
No, certainly not. Any size and any type of organisation can engage this tool and receive valuable insights into their current and future activities.
Is this type of Analysis time consuming?
To be honest: it is. Getting the right people together and creating a meaningful analysis does take time. This type of analysis is not a quick fix – however, it is like any other process, if one spends quality time and energy on this, the outcomes are very useful in terms of rectifying current issues and targeting future opportunities that may have not been sighted without this type of analysis.
How difficult is it to allocate the true costs to an Activity?
The cost allocation to activities is usually the hardest part in reaching a meaningful activity or value chain map. There are a number of issues at play: the access to hard cost data may be difficult (this varies between organisation) and there may be considerable debate how to and where to allocate cost.
This is indeed one of the great benefits of the activity chain analysis: it challenges current thinking, generates different viewpoints and delivers surprising results.
How often does one have to carry out this Activity Analysis?
The good thing is, once the hard work is complete it typically only requires regular reviews and some tweaking. However, I would suggest to embed the findings of the analysis into the company’s Dashboard or similar KPI monthly reporting.
This concludes the brief 3-part series on activity/value chain analysis.
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