To maintain effective management, with well-mapped processes and higher quality products and services provided to customers, it is important to have a strategic value chain. This is because it involves the integration of the company’s operations, allowing for a more accurate analysis of consumer perception and, thus, implementing actions capable of making the business more competitive.
With this in mind, we have prepared this article to show the importance of the value chain, its benefits and how to apply it as a way to achieve better results. Enjoy reading!
What is the value chain for?
By applying the value chain, the company can create strategies that will enhance processes by understanding which production stages are capable of adding value to products and services.
In this way, support operations can be restructured and improved, which will have a direct impact on the company’s financial and economic issues. Thus, the business offers more value to the products and services made available to customers, which leads to increased competitiveness, as well as increased profits and profitability.
What processes are part of the value chain?
There are some elements that make up the value chain. See below what they are!
Primary activities
Regardless of the company’s line of business, there are some activities that are considered primary:
- internal logistics: includes the purchase of raw materials , relationships with suppliers, contracting of services and decisive aspects for the creation of value;
- external logistics: these are activities linked to the delivery of products and services to customers;
- operations: involves machines, equipment , packaging, maintenance, testing and everything that is used to transform into the final product;
- marketing and sales: these are the processes used to attract and capture consumers;
- services: these are the tasks that maintain and increase the value of products and services after purchase, also called after-sales.
Support activities
Support processes assist primary processes. Here’s how they work:
- human resources management: recruitment and selection processes, people management, personnel department, training and development;
- infrastructure: characterized by support systems to maintain operations, encompassing legal, accounting , financial, administrative and other management;
- acquisition/purchases: these are operations that meet the company’s resource needs to maintain operations and production, for example, searching for suppliers, purchasing raw materials, among others;
- technological development: this is the process responsible for intervening in primary activities with technology, automation, optimization and other innovative tools
Margin
As mentioned above, the value chain encompasses the primary activities that generate costs and value for the end customer, as well as the support activities that generate business expenses. When the value generated is considerably greater than the costs and expenses, resulting from efficient management, the company will have a good profit margin.
What is the value chain for and what are its benefits?
An effective value chain provides a series of benefits. Below, see what the main ones are!
Increased competitive advantage
Through the value chain, the company can understand exactly where to minimize costs and expenses without impacting the quality of products and services. When processes generate value at a minimum cost, a competitive advantage over competitors emerges. In this scenario, the business gains self-awareness of its own operations.
More effective control of finances
By applying the value chain, the company maintains better control over the costs and expenses of a business. By identifying which are the primary and supporting activities, as well as those linked to each of them, it becomes easier to establish more accurate budgets.
It is also possible to cut costs in such a way that there is a loss in quality, delivery times and relationships with partners and suppliers. In other words, it is a way to help develop budgetary control.
Reduction of unforeseen events
By reducing unnecessary expenses and costs, in addition to increasing the profit margin, it is also possible to keep the business prepared for possible market fluctuations.
For example, let’s assume that an increase in the price of oil drives up fuel prices. By reducing demand for inputs, the delivery company acquires resources and also minimizes its exposure to external factors.
More assertive decisions
With the advancement of technology and digital transformation, many tools can be implemented as a way of collecting and analyzing data, enabling more assertive decision-making based on concrete data.
After all, those who are at the forefront of a value chain need information to define what to do, how, when, where and with whom. In other words, by evaluating the results achieved and other business figures, it is possible to achieve incredible feats in operations.
How to apply the value chain in process management?
To apply the value chain and achieve more efficient process management, it is important to have some strategies in place so that its use is carried out in the most advantageous way possible.
The first step to successfully implementing this activity is to have employees who have the necessary skills to map it correctly. In this case, it is possible to count on partnerships in auditing and consulting services that will perform the function of evaluating the quality of the services provided and identifying the inputs and outputs in the company.
Furthermore, it is important to have a qualified team with appropriate knowledge in process management, adding even more value to the application of the value chain in the business.
These employees will also be able to restructure processes that are not achieving the expected results, enhance processes responsible for generating value, help with strategic planning , and more.
Now that you know what a value chain is, its importance, main benefits and how to implement it, take advantage of the tips presented to apply it in your company. This way, you will achieve increasingly better results and be able to make your business increasingly competitive.