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 (cont’d) • To be effective, organisations need to work together to identify core processes across the demand and supply chains

4. A Shift Towards Processes (cont’d) • Generic core processes of the value chain include design and development, ‘production’, ‘procurement’, ‘marketing’ and ‘service’

5. A Shift Towards Processes (cont’d) • 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 (cont’d) • 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 (cont’d) • 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 (cont’d) • 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

10. Value Chain Processes and Activities Source: Adapted from Walters (2002)

11. 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)

19. Value Chain Processes and Decisions • For each stage of the value chain, Walters (2002) outlines a number of questions that need to be asked.

20. Value Chain Processes and Decisions (cont’d) 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 (cont’d) 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 (cont’d) 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?

23. Value Chain Processes and Decisions (cont’d) 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 (cont’d) Service • What are the key service elements in successful value delivery? • Where are these performed in the value chain?

25. Value Chain Processes and Decisions (cont’d) 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?

26. 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?

27. Discussion Questions (cont’d) • You subsequently find that the company is almost bankrupt due to customer attrition. What actions do you take to ensure that the company doesn’t go bankrupt?