Value Chain Clean-up
A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) for the market. The concept comes through business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.[1]
There are many advantages of value chain analysis and clean-up can be seen by breaking product and service activities into smaller pieces in an effort to fully understand the associated costs and areas of differentiation.
Value Chain Clean-up
Each Functional Profitability Analytics – True Cost of Value Chain
✓ Define the cost of each process
✓ Resources & Impacts per Cost Center
✓ Model Impacts of Changes in Costs, Specs, Process, Productivity, Resources, etc.
✓ Drive Margin Opportunities
Profitability Analytics process is now a live system that is continuously used by the team to better understand margin levers. RFM’s now have a clear understanding of their P&L, margin contributions by service line and are utilizing the tool to make critical business decisions that affect their area of operation.