8 July 2020
Businesses today are seeking to protect supply lines during these uncertain times. Executives are struggling to keep up with new responses to the COVID-19 pandemic.
Even without a global health crisis, there’s a concern for businesses today while evaluating value chain management. New technology is changing how society does business and customers receive and relate to products and services.
So the question for businesses now is how do you adjust to the value chain in today’s world?
In order to keep supplying customers with the same quality as before the COVID-19 pandemic hit, businesses need to adapt their value chain. Identifying new suppliers is key. Kompass can help your business to identify the best suppliers by each product or service that you need to adapt quickly.
Also, the Kompass WW database of B2B companies, along with our unique and deep classification, we’re able to identify potential suppliers for you. This will help you save time searching the internet, trying to find new suppliers.
Keep reading to learn more about how you can adapt your company to get with the times.
Understanding the value chain management concept
Value chain analysis is more important now than ever. Executives want to improve their business processes and find ways to innovate and increase revenue. But what exactly is this concept?
Michael Porter, a Harvard professor, is credited with the term “value chain.” This is the full range of business actions from design, through production, marketing, and distribution. These are the activities a business conducts to bring a product or service from conception to delivery.
For corporations that make goods, their value chain will start with raw materials for production. It also includes everything that leads up to a product ending up in a customer’s hands. Some will use “supply chain” and “value chain” similarly, but the value chain considers a few more actions.
The supply chain management looks at materials that go into a product that is manufactured. It also looks at the process of a product going from the factory to the store. But the value chain considers aspects like design, research, marketing, etc.
Porter emphasized that executives need to understand how their corporation’s value chain works within the industry’s overall value system. Value chain analysis can create change within a business. This includes what it offers, how it connects with other businesses and the market, and customers.
The struggle to adapt to the times
Businesses trying to deal with this global pandemic are not only forced to keep up with the news and any response updates. But they’re also trying to secure raw materials and secure their supply chains. This can be very difficult when vital information isn’t available. It has also created a reactive response by many businesses that are often uncoordinated.
Companies that took the time to map their supply networks before COVID-19 are likely better prepared. By creating this mapping, businesses have better visibility into the supply and value chain structures. Having this information helps to create a more proactive response and focus attention on suppliers or parts that are at risk.
Most businesses still found themselves unprepared when the global pandemic hit. This is likely because it was the first health crisis of this size in our lifetime.
Value chain management and the tech industry
The tech industry has created opportunities to restructure value chains. For some businesses, this directly means creating e-commerce channels and selling directly to customers.
But in order to truly optimize the value chain, each player involved needs to still be considered. This includes the marketing, website creation, etc. behind this type of e-commerce business.
The technology industry has affected other businesses that used to rely on brick and mortar locations. Especially during this time, where people are in quarantine and stores are shut down, it’s important for businesses to adapt. For example, many B2B companies are having employees work from home and are relying solely on virtual connections to generate new business.
Understanding the value supply chain will help businesses to adapt to change. One solution is supply network mapping.
Developing a value chain strategy
The basics of developing a proper value chain strategy are to determine the best combination of channels to reach customers. One question that comes up with this strategy is how is value created?
Some argue that improved efficiency lowers the cost to the customer. This can then create a perception of value. But others believe that improved service is also a valuable aspect of a business. It can become difficult to strategize how to add value to the product while also eliminating non-value adding actions.
Value can also be determined by the market and leads to innovations for businesses. Having a value chain management strategy can lead to a new business model that results in higher revenue.
Now is also the time to create a strategy around diversifying your suppliers. If you’re able to guarantee your supplies and control delivery time, you’ll stay ahead in the market. But this won’t be possible without mapping your suppliers and every stage of the value chain.
The need for supply network mapping
Along with creating a value chain strategy, it’s important for businesses to create a supply mapping network. Supply and value network mapping is important for risk mitigation, but can also require a lot of time and work.
Companies are often still relying on human intelligence from suppliers and personal relationships, rather than supply network mapping. This can be an issue when employees leave or change, and their knowledge is anecdotal.
Building new relationships with suppliers can also take years. This is why the value of supply network mapping outweighs the cost.
Understanding your value chain from raw materials to all the details involved in production, marketing, and sales will save your company from being unprepared. You’ll be able to direct your attention to an at-risk supplier and create an action plan.
Value chain management is important for businesses today
In order to adapt your value chain management to the world and the market today, it’s important to first understand the concept behind it.
The struggle for businesses with the value chain is keeping up with a changing market. This can mean adapting to the technology industry and adapting to a global pandemic.
By focusing on a proper value chain strategy and supply network mapping, businesses can stay ahead of the market. Click here to contact our Kompass experts and learn more about how to adapt your value chain today!