Value Chain  Management Forum  “ Value Chain 101- A Practical Path to Sustainable Profitability” Terry Ackerman
Value Chains Defined <ul><li>“ Value Chains ....  are a network of independent businesses, producers, processors, distribu...
Value Chains Defined <ul><ul><ul><li>…  work together – strategic objectives </li></ul></ul></ul><ul><ul><ul><li>…  share ...
What  is Value Add? <ul><li>“ the worth added to a product during the production or conversion process” </li></ul>Value Ch...
Why Do Companies Need Value Chains?  <ul><ul><ul><li>Companies are no longer self–contained. </li></ul></ul></ul><ul><ul><...
How Do Value Chains Contribute to Your Companies Sustainability? <ul><ul><ul><li>Profitability </li></ul></ul></ul><ul><ul...
Supply Chain  <ul><ul><ul><li>“ Companies in a supply chain often  </li></ul></ul></ul><ul><ul><ul><li>have little or no k...
Value Chain vs Supply Chain Value Chain Management Forum –  Value Chain 101  Characteristic Value Chain Supply Chain Infor...
The Management Challenge <ul><li>The challenge is changing the relationship to collaborative from adversarial because …. <...
The Management Challenge <ul><li>... in a value chain, companies are collaborating, sharing information and engaging in ot...
Managing –  Value Chain vs Supply Chain <ul><ul><ul><li>More time.  </li></ul></ul></ul><ul><ul><ul><li>Collaboration requ...
Pork Industry Value Chain  Value Chain Management Forum –  Value Chain 101
Organic Value Chain Value Chain Management Forum –  Value Chain 101
The Value Network    ` <ul><li>The value chain network extends beyond any one individual company. </li></ul><ul><ul><li>Va...
Why Do Value Chains Fail? <ul><li>Lack of trust. </li></ul><ul><li>Chase Money </li></ul><ul><li>Too ambitious /complex </...
Setting  Up A Value Chain  <ul><ul><li>Find a Champion.  </li></ul></ul><ul><ul><li>Find the right partners. </li></ul></u...
What Are  Your  Company’s Value Creating Activities?  <ul><ul><li>Processing – Outsourcing  </li></ul></ul><ul><ul><li>Man...
Finding the Partners <ul><ul><li>Management Commitment. </li></ul></ul><ul><ul><li>Value Creation Focus – Not Just Price. ...
Why Should Your Company Develop A Value Chain?  <ul><li>Sustainable Competitive Advantage.  </li></ul><ul><ul><ul><ul><ul>...
What’s In It For You? Value Chain Management Forum –  Value Chain 101
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Terry ackerman value chain 101

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Terry ackerman value chain 101

  1. 1. Value Chain Management Forum “ Value Chain 101- A Practical Path to Sustainable Profitability” Terry Ackerman
  2. 2. Value Chains Defined <ul><li>“ Value Chains .... are a network of independent businesses, producers, processors, distributors and retailers who recognize their mutual need for one another and who … </li></ul>Value Chain Management Forum – Value Chain 101
  3. 3. Value Chains Defined <ul><ul><ul><li>… work together – strategic objectives </li></ul></ul></ul><ul><ul><ul><li>… share information and trust. </li></ul></ul></ul><ul><ul><ul><li>… share risks and benefits. </li></ul></ul></ul><ul><ul><ul><li>… invest time, energy and resources. </li></ul></ul></ul><ul><ul><ul><li>… value add their products or services. </li></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  4. 4. What is Value Add? <ul><li>“ the worth added to a product during the production or conversion process” </li></ul>Value Chain Management Forum – Value Chain 101
  5. 5. Why Do Companies Need Value Chains? <ul><ul><ul><li>Companies are no longer self–contained. </li></ul></ul></ul><ul><ul><ul><li>The ability to innovate and compete is directly linked to that of their partners. </li></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  6. 6. How Do Value Chains Contribute to Your Companies Sustainability? <ul><ul><ul><li>Profitability </li></ul></ul></ul><ul><ul><ul><li>Productivity . </li></ul></ul></ul><ul><ul><ul><li>Innovation/Differentiation </li></ul></ul></ul><ul><ul><ul><li>Managerial talent . </li></ul></ul></ul><ul><ul><ul><li>Adaptability </li></ul></ul></ul><ul><ul><ul><li>Risk reduction </li></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  7. 7. Supply Chain <ul><ul><ul><li>“ Companies in a supply chain often </li></ul></ul></ul><ul><ul><ul><li>have little or no knowledge or </li></ul></ul></ul><ul><ul><ul><li>interest in the remaining participants </li></ul></ul></ul><ul><ul><ul><li>in the supply chain. “ </li></ul></ul></ul><ul><ul><ul><li>“ The relationship is often based on a P.O.” </li></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  8. 8. Value Chain vs Supply Chain Value Chain Management Forum – Value Chain 101 Characteristic Value Chain Supply Chain Information Sharing Extensive Limited Trust Trust - key factor Often non-existent Cost Control Focus on value formation Focus on lowest price. Margin Margin sharing Not uncommon Each participant is focused solely on capturing as much margin as possible. New Product Development Often share the risk. Limited interest. Market response Respond quickly to market demand – information sharing. Focus on purchase order.
  9. 9. The Management Challenge <ul><li>The challenge is changing the relationship to collaborative from adversarial because …. </li></ul>Value Chain Management Forum – Value Chain 101
  10. 10. The Management Challenge <ul><li>... in a value chain, companies are collaborating, sharing information and engaging in other activities. </li></ul>Value Chain Management Forum – Value Chain 101
  11. 11. Managing – Value Chain vs Supply Chain <ul><ul><ul><li>More time. </li></ul></ul></ul><ul><ul><ul><li>Collaboration required. </li></ul></ul></ul><ul><ul><ul><li>Build the trust. </li></ul></ul></ul><ul><ul><ul><li>Give up some independence. </li></ul></ul></ul><ul><ul><ul><li>Willing to share information. </li></ul></ul></ul><ul><ul><ul><li>“ Reconfigure” the VC when required. </li></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  12. 12. Pork Industry Value Chain Value Chain Management Forum – Value Chain 101
  13. 13. Organic Value Chain Value Chain Management Forum – Value Chain 101
  14. 14. The Value Network   ` <ul><li>The value chain network extends beyond any one individual company. </li></ul><ul><ul><li>Value Chains of a company’s suppliers (and their suppliers). </li></ul></ul><ul><ul><li>The Company’s Value Chain </li></ul></ul><ul><ul><li>Value Chains of the Company’s Channels of distribution- Up stream </li></ul></ul><ul><ul><li>Value Chains of the Company’s Customers (and the buyers of their products) </li></ul></ul>Value Chain Management Forum – Value Chain 101
  15. 15. Why Do Value Chains Fail? <ul><li>Lack of trust. </li></ul><ul><li>Chase Money </li></ul><ul><li>Too ambitious /complex </li></ul><ul><li>No Champion </li></ul><ul><li>Lack of capability & resources </li></ul><ul><li>Incorrect Partners & ease of dissolution </li></ul><ul><li>Limited information sharing </li></ul><ul><li>Unwilling to give up independence </li></ul><ul><li>Difficulty in building consensus on critical issues. </li></ul><ul><li>Undefined responsibility. </li></ul>Value Chain Management Forum – Value Chain 101
  16. 16. Setting Up A Value Chain <ul><ul><li>Find a Champion. </li></ul></ul><ul><ul><li>Find the right partners. </li></ul></ul><ul><ul><li>Start Small. </li></ul></ul><ul><ul><li>Be Prepared to “Reconfigure .“ </li></ul></ul><ul><ul><li>Management Commitment </li></ul></ul><ul><ul><li>You probably are already in a VC. </li></ul></ul>Value Chain Management Forum – Value Chain 101
  17. 17. What Are Your Company’s Value Creating Activities? <ul><ul><li>Processing – Outsourcing </li></ul></ul><ul><ul><li>Managing Information Flow </li></ul></ul><ul><ul><li>Product Development (Speed to market) </li></ul></ul><ul><ul><li>Purchasing (Raw Materials/Packaging) </li></ul></ul><ul><ul><li>Marketing (Brand Development) </li></ul></ul><ul><ul><li>Customer Service (On time Delivery) </li></ul></ul><ul><ul><li>Information Flow (Internal/External) </li></ul></ul>Value Chain Management Forum – Value Chain 101
  18. 18. Finding the Partners <ul><ul><li>Management Commitment. </li></ul></ul><ul><ul><li>Value Creation Focus – Not Just Price. </li></ul></ul><ul><ul><li>Core Competency – What do they do well. </li></ul></ul><ul><ul><li>Willingness to invest time and energy and resources. </li></ul></ul><ul><ul><li>Can you trust them? </li></ul></ul>Value Chain Management Forum – Value Chain 101
  19. 19. Why Should Your Company Develop A Value Chain? <ul><li>Sustainable Competitive Advantage. </li></ul><ul><ul><ul><ul><ul><li>Reduced Costs. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Increased Profits. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Product Differentiation . </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Reduced Risk. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Product Innovation. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Speed to Market . </li></ul></ul></ul></ul></ul>Value Chain Management Forum – Value Chain 101
  20. 20. What’s In It For You? Value Chain Management Forum – Value Chain 101

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