The way organizational work is done.
Value chain management radically changes organizational processes – that is, the way organizational work is done. Managers must critically evaluate all organizational processes from beginning to end by looking at core competencies – the organization’s unique skills, capabilities and resources to determine where value is being added. Non value adding activities should be eliminated. Questions such as where an internal knowledge be leveraged to improve flow of material and information? How can we better configure our product to satisfy both customers and suppliers? How can the flow of material and information be improved? And how can we improve customer service should be asked for each process? For example, when managers at Asian Paints implemented a value chain management initiative a thorough process evaluation revealed that work processes needed to be reorganized in order to manage the value chain better.
We can identify three important conclusions about how organizational processes must change. First, better demand forecasting is necessary and possible because of closer ties with customers and supplier. For example in an effort to make sure that Listerine was on the store shelves when customers wanted it. Wal-Mart and Warner Lambert’s Consumer Group (now a division of Pfizer Inc) collaborated on improving product demand forecast information. Through their mutual efforts, the partners boosted Wal-Mart’s sales Listerine by $6.5 million. Customers also benefited because they were able to purchase the product when and were they wanted it.
Second, selected functions may need to be done collaboratively with other partners in the value chain. This collaboration may even extend to sharing employees. For instance Saint Gobain Performance Plastics, headquarters in Northboro, Massachusetts places its own employees in customer sites and brings employees of suppliers and customers to work on its premises. Saint Gobain’s CEO says this type of collaboration is essential if an organization wants to go from being a mere component supplier to being a solutions provider.
Finally new measures are needed for evaluating the performance of various activities along the value chain. Because the goal is value chain management is meeting and exceeding customers’ needs and desires managers need to better picture of how well this value is being created and delivered to customers. For instance when Philips India implemented a value chain approach, it redesigned its measurement system to focus on one consistent set of factors measuring the cycle time, including the procurement time, the manufacturing time, and the delivery tem to dealers. This allowed the management to identify problems even more quickly and to take action to resolve them.
The importance of leadership of value chain management is plan and simple – successful value chain management isn’t possible without strong and committed leadership. From top organizational levels to lower levels, must support facilitate and promote he implementation and ongoing practice of value chain management J Michael Hagan CEO of Furon Company describes his role as follows; Value is a mind set that not only has to be driven from the top down, but also from the bottom up. Everyone has to be asking whether a given task adds value, and if it doesn’t why do it. Managers must make a serious commitment to identifying what value is, how that value can best be provided and how successful those effects have been. That type of organizational atmosphere or culture in which all efforts are focused on delivering superb customer value isn’t possible without a serious commitment on the part of the organization’s leaders.
By using medical robots, hospitals are changing the process of delivering patient care. At St Mary’s Hospital in London, England, medical experts interact with patients via a remote control system. Using wireless communications the robots allow doctors to visually examine and communicate with patients from remote locations. The robots are also used for surgical teaching and videoconferencing.