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Strengthening Your Value Delivery Network

Strengthening Your Value Delivery Network

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Published by Swapnil Chodanker

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Published by: Swapnil Chodanker on Jun 22, 2012
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10/23/2012

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strengthening your value delivery network
Planning and partnering to build enduring and profitable stakeholder relationships
 It is important to understand how your organisation fits into your existing value delivery network and whatproportion of the relative value-add is captured by each participant
this information will provide valuableinsight into potential integration opportunities.The majority of business organisations are involved in supply chains that involve the production of goods(from materials sourced through a supplier), the subsequent selling of goods either directly to a consumer or
 
to a marketing distributor who services the consumer market. Generally, there are numerous competitor
 
supply chains that are working in parallel and competing to attract the same group of potential consumers(figure 4.1, below).
Definition of Value Delivery Network
 The network of all direct industry participants involved in the production, marketing, delivery, installation
 
and service of your organisation’s goods into specific demographic and geographic markets.
 
The process of adding value
Raw material suppliers, processors, manufacturers, wholesalers, distributors and retailers are all actively
 
involved in the process of converting raw-materials into finished goods, and through the process of converting inputs into outputs each participant adds actual or perceived value to each unit of goods sold.
The benefits of integrating and synchronising your value delivery network
 
 
Extracting a significant commercial benefit from your customers by using competitive advantages
 
that are external to your organisation through partnering with aligned value delivery partners.
 
Increasing the intensity of integration within a value-chain, often leads to the lowering of the unit
 
cost of production through the incremental recovery of overhead costs, often generating free cash
 
flows (FCF’s) available for research (to generate innovation) and technology (to
adapt automation)
core sources of competitive advantage.
 
Alliances between value-chain participants often lead to reduced transaction costs, through
 
eliminating intermediary margins and increasing pricing transparency, providing your organisationwith powerful leverage in supply negotiations.
 
Provides your organisation with real time information to be able to enhance inventory management
 
and employ JIT-manufacturing practices to better match your production (supply) with demand.
Value Delivery Network
 A Value Delivery Network consists of the value chain, its suppliers, distributors and ultimately customers, allof which work together to add value to the customer. Increasingly companies are partnering with members
 
of their supply chain to enhance the performance of the customer value delivery network. The members in the supply chain can use the current sales information they have, to manufacture what is
 
selling, rather than to manufacture based on inaccurate sales forecast .This is known as a quick response
 
system, in which goods are directly pulled by demand, rather than pushed by supply. 
 
It is the quality of the relationships along the processes and in the network that help create customersvalue. The real purpose of marketing management is to facilitate and manage these relationships. The real purpose of marketing management is to facilitate and manage these relationships. In a highlyintegrated network, customer and supplier processes are aligned to those in the organisation, which are
 
critical for achieving successful working relationships along the supply chain. 
A Value Delivery is a company's supply chain and how it partners with specific suppliers anddistributors in the process of producing goods and delivering them to market. It involves usingcompetitive advantages external to the firm (suppliers, distributors, customers)
 
Value Delivery NetworkA value delivery network allows many companies to create customer value that cannot be created by
use of the company’s own value chain. A “Value delivery network,” is made up of the company, suppliers,
distributors, and ultimately the customers who partner with each other to improve the performance of theentire system (Armstrong et al. 52). This type of system interests me because I have always been curious
as to what path a product or service must take in order to be considered a
to a customer.
Generating my interest during one of the case studies during class, Accenture is a company that hasimproved the value delivery network for many companies. Accenture has improved not only the value
 
delivery system for the airline industry, but its own global delivery system with its partner BT. Asreferenced, the value delivery network consists of all the companies within a delivery network workingtogether to reach a common goal of customer perceived value. When businesses within a deliverynetwork partner together, it is their goal to reduce costs, increase performance, and pass the increasedproductivity on to their customers.
Value proposition
It is a promise given to customers for delivering its promised value and a belief from the customer that theright value is experienced. This value proposition is can be related to all the parts of an organization togive customer what is promised. To create sustainable value proposition simply means satisfyingcustomers.
 
It answers one of the most important questions of
why a consumer should buy a product or use aservice from a given organization. This helps customers to make its decision for selecting theright product or service depending upon its value promised.Eg: Company like Tata Motors focuses on its value proposition of providing value for moneyproduct to its customer. Thus most of their statements come in the form of providing the bestservices in its class at lowest possible cost. It targets all the customers who are very priceconscious but wants as many as features possible.
A
value proposition
is a promise of value to be delivered and a belief from the customer of value that will
 
be experienced. A value proposition can apply to an entire organization, or parts thereof, or customeraccounts, or products or services.Creating a value proposition is a part of business strategy. Kaplan and Norton say "Strategy is based on a
 
differentiated customer value proposition. Satisfying customers is the source of sustainable valuecreation."
 
Developing a value proposition is based on a review and analysis of the benefits, costs and value that
 
an organization can deliver to its customers,prospective customers, and other constituentgroups within
 
and outside the organization. It is also a positioning of value, where Value = Benefits - Cost (cost includes risk).
 
Definition of 'Value Proposition'
A business or marketing statement that summarizes why a consumer should buy a product or use aservice. This statement should convince a potential consumer that one particular product or service willadd more value or better solve a problem than other similar offerings.
 
Investopedia explains 'Value Proposition'
Companies use this statement to target customers who will benefit most from using thecompany's products, and this helps maintain an economic moat. The ideal value proposition is conciseand appeals to the customer's strongest decision-making drivers. Companies pay a high pricewhen customers lose sight of the company's value proposition.
Characteristics of Strong Value Propositions
 
You must differentiate your
offer from your competitors’ offers.
 
 
You may match a competitor on every dimension of value except one.
 
You need to excel in at least one element of value.
 
In this way you become the best choice for your optimum customer.
 
There is a difference between the value proposition for your company and yourproduct. You must address both.Crafting a value proposition requires substantial reflection on what is unique about yourcompany and your products and services.
Challenge:
 
If you had just 
10 words
to describe why people should buy from your 
company instead of another’s, what would you communicate? 
 

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