Value Chain Management

Introduction

The goal of this essay is to explain the various functions and strategies of value chain management and discuss how to implement them in a flat screen display business, so as to improve the performance of the operating system which ultimately will increase the efficiency and quality of production thereby helping them gain a competitive advantage over their competitors. Which will result in increased the profits for the business.

Value Chain Management: Development of a set of functional-level strategies that increase the performance of the operating system a company uses to transform inputs into finished goods and services. (George and Jones, 2006:267)

Operating System: The different functional activities an organization combines and uses to acquire inputs, convert inputs to outputs, and dispose of the outputs. (Answers, 2006:1)

Value chain

Refers to the idea that a company is chain of functional activities that transform inputs into an output of goods and services that customer’s value.

 Production function

 Responsible for the creation of a good or service

 Marketing and Sales function

 Increase value customer perceives to be contained in a product

 Service function

 Provide after-sales service and support

 Materials management function

 Controls the movement of physical materials through the value chain

 Information systems function

 Controls the electronic system for managing inventory, tracking sales, pricing products, etc.

(Michael E. Porter, 1985:37-43))

Therefore one must divide the business up into the fore mentioned functions, specifically: creating an efficient and productive process whereby producing the flat-screen displays. Design and come up with a competitive and catchy marketing campaign which promotes the quality of the product and its value for money so as to increase the customers’ perceived opinion of the product. Establish an after sales service department within the company so as to offer consumers after-sales service and support with any problems which may arise with the product. Develop an efficient and simple method in which the physical materials needed to produce the flat-screen displays move along the value chain so as to lower costs and increase overall efficiency, and lastly establish and maintain a electronic system whereby one can efficiently manage the flat-screen inventory, the recording and progress of the sales of the screens and the pricing of the inventory.

Improving Responsiveness to Customers

 Usually customers prefer:

 A lower price to a higher price.

 High-quality products to low-quality products.

 Quick service to slow service (also prefer good after-sale support)

 Many features over few features.

 Products that are; customized or tailored to their specific needs.

(George and Jones, 2006: 271)

Therefore to improve the responsiveness to customers, the company must evaluate the needs and wants of the consumers, this can be done by conducting market research and surveys. Then using this information to design an operating system in which the screens are made to the specifications of the consumers attributes at a high quality and low price.

To produce high quality goods at a low cost the business must strike a balance between costs and the attributes wanted by the consumers.

Improving Quality

The concept of quality applies the products of both manufacturing and service firms

 A firm that provides higher quality than others at the same price is more responsive to customers.

 Higher quality can also lead to better efficiency through lower waste levels and operating costs.

(George and Jones, 2006: 274)