Value Chain Analysis | Do You Have a Competitive Advantage?
VALUE CHAIN ANALYSIS
- Do you have a competitive advantage?
- Has your competitive advantage been recently confirmed?
- When was the last time you performed a benchmarking analysis on benefits that your company can provide?
A Value Chain Analysis is often only conducted when starting a small business; however, it is something that should also be reviewed quarterly. To maintain your competitive advantage for the long term, you must perform your activities more effectively than your competitors. This can be through specific differentiation or in some form of cost advantage.
I find it helpful to analyze my business through a value chain analysis, reviewing each value-creating activity and determining if there is potential to improve and provide additional value. Value chain analysis can be made in both product and service businesses.
As a service provider, I review the sequence of activities leading to client acquisition and retention. The analysis’s objective is to identify and reduce or eliminate activities that incur costs and affect profits that are non-value-adding to a client. Reviewing these activities quarterly ensures a continual focus on added value for clients, and my consultancy retains a competitive advantage over my competitors. It also helps to crystalize the business’s strengths, weaknesses and prioritize areas for addition or improvement.
TOTAL QUALITY MANAGEMENT
When you buy a product or attain a service, you expect high quality, don’t you?
Quality provides your business with a competing edge. In the simplest form, Total Quality Management (TQM) can be characterized by ‘getting it right the first time, and every time.’ The emphasis is on meeting and preferably exceeding customer expectations and requirements at a price that clients/customers are willing to buy.
When I am leading quarterly reviews for clients, in addition to providing insight into the business value chain analysis, Kaisen methodology, and the importance of benchmarking, I spend considerable time talking about quality. To provide a culture of quality in your business, employee involvement is essential at every level and is a continuous effort, not a single-time exercise.
There are multiple steps a business can take to address a culture of quality, and below is a list of four items to consider to get you started:
- A high level of communication and consistency in messaging between all levels in the organization ensures a transparent understanding of quality expectations and goals.
- Customer focus on ensuring clients or customers are satisfied with the quality of the product or service.
- Providing training to ensure quality in all process areas.
- Employee empowerment to make process changes that will improve quality.
BENCHMARKING
Do you want to be the best in your sector?
The activity of benchmarking needs to be on ‘repeat’ in your business, and I encourage this as part of your quarterly review. Benchmarking enables you to compare your business against a similar company and provides insight into your performance. Benchmarking can also identify pitfalls to avoid and factors of success that you may not have previously considered incorporating into your business. Benchmarking is similar to the Kaizen process however is primarily based on external rather than internal analysis.
Follow these steps below:
- Decide on the function or process to be benchmarked in your sector
- Identify company/s that you will benchmark
- Outline measures for the benchmarking process
- Research and analyze information relating to the selected benchmarking measures
- Define areas of improvement
- Implement new processes or practices against revised targets
If you are interested in learning more about the topics above, or how professional development or executive coaching can help support your leadership or your leadership team, please reach out to askme@jennyreilly.com to schedule a convenient time for a complimentary strategy session.
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