Business Process (Re)engineering

Or do you know whether alternative value chains might take over your business, simply because they create a higher value to your customers? Or maybe they are able to offer the same at a lower price! The value chain analysis is a strategic exercise providing you the answers to these and other business relevant questions.

For a starter, value chains are everywhere and constantly changing, especially since digitalization is enabling durable networking relationships that were simply not possible 10 years ago. Just think of Uber, Airbnb or Amazon. They exist on a local, interregional, and increasingly at a global level. But they also exist at a micro level, such as distribution channel, company, business unit and product level. And they are all influencing the profitability of your business, today tomorrow and in the long run.

The main goal of the value chain analysis is to recognize which activities are the most valuable (i.e. are the source of cost or differentiation advantage) and which ones could be improved.

Originated in the 1980s by Michael Porter, value chain analysis is a conceptual expression of value-added in the form of a value chain. Porter suggested that an organisation is split into 'primary activities' and 'support activities'.

Value chain analysis provide very useful insights of how the links of the chain are knotted together and what level of added value they are creating, as such that the value chain as a whole creates a sound profit margin. In other words, if a value chain runs efficiently the aggregated value should exceed the overall costs while customers are interested to pay a premium for the result.