Business Value Chain - Part 2
When a business has an opportunity it can’t resolve on its own, it may now consider a value chain approach. To continue with our food example, by working together, the producer, processor and the retail or food service operator can develop new means of innovation, increase efficiencies and/or differentiate products and services.
The first steps to establishing a value chain are:
1. Determine what the customer wants.
2. Develop capabilities to meet market demand by collaborating with chain partners.
For example, organic milk's market demand in Manitoba.
You will need several meetings to work through this process and to also determine that you have chosen the right partners. Members of the chain need to trust each other which will be developed over time.
The biggest hurdle for value chains are the people and their personalities. It will either be the success or the failure of the chain. When the chain is composed of talented, skilled and committed individuals that communicate well and can combine their efforts, there is huge potential for the chain to succeed. Remember, these are individual enterprises adding value to a product for the end consumer. As a rule, value chain businesses are not owned by or merged with these partners.
Value chains provide greater access to markets, shared costs and risks to the members, rewarding business relationships, cut costs of production and a superior group in the eyes of the consumer. A chain can also address the buy local movement. If a chain can produce, process and deliver to market a product within its own community, there is consumer appeal and support. As well, it keeps more money in the pockets of local producers, processors and consumers. The product is less travelled, not subject to tariffs, duties or surcharges and benefits from a traceability factor for the producer, processor and the consumer.
A strategy needs to be identified for the chain group and all partners need to move ahead as a team. Edge can work with you and your chain links as well in developing a successful value chain.
The first steps to establishing a value chain are:
1. Determine what the customer wants.
2. Develop capabilities to meet market demand by collaborating with chain partners.
For example, organic milk's market demand in Manitoba.
You will need several meetings to work through this process and to also determine that you have chosen the right partners. Members of the chain need to trust each other which will be developed over time.
The biggest hurdle for value chains are the people and their personalities. It will either be the success or the failure of the chain. When the chain is composed of talented, skilled and committed individuals that communicate well and can combine their efforts, there is huge potential for the chain to succeed. Remember, these are individual enterprises adding value to a product for the end consumer. As a rule, value chain businesses are not owned by or merged with these partners.
Value chains provide greater access to markets, shared costs and risks to the members, rewarding business relationships, cut costs of production and a superior group in the eyes of the consumer. A chain can also address the buy local movement. If a chain can produce, process and deliver to market a product within its own community, there is consumer appeal and support. As well, it keeps more money in the pockets of local producers, processors and consumers. The product is less travelled, not subject to tariffs, duties or surcharges and benefits from a traceability factor for the producer, processor and the consumer.
A strategy needs to be identified for the chain group and all partners need to move ahead as a team. Edge can work with you and your chain links as well in developing a successful value chain.
posted by Edge Business Strategies at
3:40 PM
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