White Paper: Managing the Product Value Chain for the Industrial Manufacturing Industry

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From:Chovee on Flickr

 

How do we constantly capture the attention of our customers with our products?

How do we reduce cost of errors and identify weak links within the supply and demand chains?

Manufacturers constantly battle with the dynamic changes in requirements by their target markets. In an effort to solve these problems this post will look at a white paper by Oracle on using their value chain management models.

The paper started by looking at incorporating Oracle’s Product Lifecycle Management(PLM), Product Data Hub (PDH), and Product Data Quality (PDQ) across the entire manufacturing network.

The paper discussed a couple of challenges manufactures might face when enforcing these improvements, the challenges include:

  • Severe financial pressure due to change in requirements
  • Realtime product innovation constraints due to outsourced processes
  • Maintaining superior customer service through out the product lifecycle.

It all sounds so technical – in essence the Oracle management method creates a whole new dynamic within an organisation.

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Figure 1:Oracle’s Product Lifecycle

The paper then talks about improving profitability by adopting Oracle’s Agile Product Life Cycle Management (APCM), Oracles boasts about how their APCM has been used by over 2,000 companies worldwide. Unlike conventional enterprise methodologies, in APCM customers, suppliers, employees, and inventory define its competitive advantage. APCM allows for a single system of record for the information required to maximize profitability throughout the product lifecycle.

The next phase of the paper looked at the use of Oracle’s Product Data Hub(PDH), this

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Figure 2. Oracle’s PDH.

essentially consolidates all information gathered from various departments of the organisation Figure 2 shows a representation of the PDH.

 

The paper mentioned how the PDH works hand in hand with the Product Data Quality (PDQ). In hindsight PDH consolidates data, which helps with data cleansing i.e increased quality by reducing redundancy, which then allows top executives to share and better govern the organisation due to access to all the consolidated data

In conclusion, the paper discussed and analysed a restructuring of internal value chains using some of Oracle’s development models. The paper concluded by listing some of the benefits achieved by companies when using their Value Chain solutions, with benefits like Increased productivity, better competitive advantage and Improved customer service due to increased knowledge gathered using their Product Data Hub.

Reference:

Oracle. (2011). Oracle White Paper: Managing the Product Value Chain for the Industrial Manufacturing Industry. Available at:http://www.oracle.com/us/industries/industrial-manufacturing/oracle-product-value-chain-wp-405164.pdf [Accessed 22nd June 2016]

 

Webinar :Enterprise Architecture Value Chain

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In previous blogs we looked at the effects of value chain across the supply chain of a business, in this post we will look at the application of value chain within the internal structure of an organisation.

The video below is a webinar by Chris Armstrong on the Enterprise Architecture(EA) value chain of organisations.

“An Enterprise Architecture (EA) is a conceptual blueprint that defines the structure and operation of an organisation.” (Rouse 2007)

He looked at the Enterprise Architecture (EA) from the perspective of stakeholders of an organisation, do they really know how valuable the enterprise system is? And how understandable is the architecture if a system analyst were to explain how everything works?

He proposed a way for all stakeholders to understand and gain the maximum efficiency from the internal value chain of an organisations EA.

He categorised the EA value chain into 4 major activities; they include:

  • UnderstandingScreen Shot 2016-06-21 at 16.21.07
  • Analysing 
  • Deciding
  • Responding

He stated the imperativeness of organisations to follow through with the steps mentioned above in order to deliver on the promise of using an EA

The second aspect of the talk was looking at capabilities of EA, he mentioned that capabilities provide a context for the rest of the architectural activities, which simply translates to the core value of each individual activity.

He also mentioned how most organisations depend on a well known EA standard called “TOGAF”, this however might be too complex for some stakeholders to follow. He therefore proposed a model that helps organisations know what type changes or results they would face at different maturity levels of the organisation.

The final part of the talk was a merger between the capability of processes and the value chain of the enterprise, he proposed capability models that would help support the EA value chain as shown in the list below.

  • Understand => Domain modelling
  • Analysis => Arch Reporting
  • Decide => Arch road mapping and planning
  • Response => Arch governance and life cycle management

In conclusion, he mentioned that value chain and capability models are emerging as best practices, therefore organisations should learn how to internalise those processes.

Future topics by speaker: Agile EA, TOGAF Architecture, Repository Continuous Architecture

Reference:

Armstrong, C. (2014). Enterprise Architecture Value Chain. Available at:https://www.youtube.com/watch?v=8hxFb2Vlh8c  [Accessed: 20th June 2016]

Rouse, M. (2016). Enterprise Architecture. [online] SearchCIO. Available at: http://searchcio.techtarget.com/definition/enterprise-architecture [Accessed 21 Jun. 2016].

Paper:Value Chain As Seen By Small Enterprises

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Small Business Owner

How does a small  business with no serious market influence gain from value chains?  Isn’t value chain something for large corporations to worry about? NO!!

Having a competitive advantage is a major priority for any type/size of business Papulova and Papulova 2006, a theoretical paper by Edakkandi M. R. highlighted on the benefits of adopting value chains by small enterprises, he discussed the procedures and steps small enterprises need to take to fully incorporate sustainable value chains into their business models.

In order to support his premise, he compared 6 major theoretical concepts of value chain, which all dealt with the relationship between businesses, the flow or products or services along the supply chain and the establishment of production chains.

He emphasizes on the need for small business to view value chain as a tool used for integration into the high value market, doing that will enable them identify constraints for their industrial growth. Possible constraints mentioned were:

  • Other Businesses along the value chainVCS_small
  • Communications between business
  • End markets
  • And, the business environment at each level of their value chain

Considering the constraints mentioned above, he stated increasing market relationship along the value chain can significantly increase the effectiveness of small businesses in the global market.

In an effort to further drive his point, he mentioned the reviews of various literatures which collectively identify two major methods of increasing market penetration for small businesses using value chains, they include:

  • Investing on the environment that each stage of the value chain operates (Mobilizing stake holders to engage with governmental and regulatory forces)
  • Business to Business communication and resource sharing.

He concluded by emphasising on the importance of small businesses to integrate into the global value chain, as it greatly increases business competitiveness. He also mentioned that this method of increasing competitiveness for small businesses is an emerging research area. Therefore, he finished by suggesting the creation of business models that will help in market integration for small businesses.

References:

Meethal Reji, Edakkandi. “Value Chains And Small Enterprise Development: Theory And Praxis”. AJIBM 03.01 (2013): 28-35. Available at: http://file.scirp.org/pdf/_2013011710195120.pdf.%5BAccessed:19th June 2016]

Papulova, E. and Papulova, Z., 2006. Competitive strategy and competitive advantages of small and midsized manufacturing enterprises in Slovakia. E-Leader, Slovakia.Available at:http://www.g-casa.com/download/Papulova-CompetitiveStrategy.pdf [Accessed:19th June 2016]

Value Chain

Why bother with value chains?

The concept of value chain was first mentioned by Michael Porter, he defined value chain as the internal processes an organisation embarks on from the design, to the delivery stage to enable it support and increase its product’s value.(Valkila, Haaparanta and Niemi, 2010)

For every business or organisation, knowing exactly what their customers need at every particular period can be seen as finding the holy grail of customer service, even more so when there is competition. Therefore having a competitive advantage is number one priority for any successful business.(Value Chain Analysis for Assessing Competitive Advantage, 1996)

Case Study

Value chain analysis has been found to be a very important business strategic tool for organisations, a case study on Starbucks by Prableen 2014 shows that Starbucks’s Value Chain model helped the company identify areas where it needed to be more innovative, from choosing only the best coffee beans across the globe (which technically is a primary activity), to having WiFi in their stores (which is a supporting activity) to help attract more customers, this allowed them to invest more on the latter activity rather than marketing, which is the conventional way of attracting customers.(Bajpai, 2014)

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Photo By: Ivana M et al.

A comparison between Starbucks and it’s largest competitor; Costa, done by Ivana et al 2014 shows how more customer centric Starbucks are,  they conducted a study in the UK which found that there are more Costa outlets than Starbucks outlets, but Starbucks is still out grossing Costa. The study found many advantages Starbucks had over Costa, but the most relevant to this post is the incorporation of free Wifi in their stores before any of their competitors (Mrđa, Nikić and Baturan, n.d.)

General Applications Of Value Chain

No matter the size of the organisation, the most important factor when dealing with value chain is transparency of each individual stage in the supply chain. For small organisations where all sectors of the supply chain might be run by different companies, the more interconnected the stages of production are, the more value is added to the end product. (Brandt, 1998)

Reference:

Brandt, J. (1998). Beyond the supply chain. Industry Week, [online] p.Page 6. Available at: https://www-nexis-com.salford.idm.oclc.org/results/enhdocview.do?docLinkInd=true&ersKey=23_T24229784766&format=GNBFI&startDocNo=0&resultsUrlKey=0_T24229784768&backKey=20_T24229784769&csi=7995&docNo=10 [Accessed 14 Jun. 2016].

Value Chain Analysis for Assessing Competitive Advantage. (1996). 1st ed. [ebook] Montvale: Institute of Management Accountants, pp.1-33. Available at: http://www.imanet.org/docs/default-source/thought_leadership/management_control_systems/value_chain_analysis_for_assessing_competitive_advantage.pdf?sfvrsn=2 [Accessed 14 Jun. 2016].

Bajpai, P. (2014). Starbucks As An Example Of The Value Chain Model. [online] Investopediac.com. Available at: http://www.investopedia.com/articles/investing/103114/starbucks-example-value-chain-model.asp [Accessed 15 Jun. 2016].

Jurevicius, O. (2013). Value Chain Analysis. [online] http://www.strategicmanagementinsight.com. Available at: https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html [Accessed 15 Jun. 2016].

Valkila, J., Haaparanta, P. and Niemi, N. (2010). Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers. J Bus Ethics, 97(2), pp.257-270. 

Mrđa, I., Nikić, S. and Baturan, S. (n.d.). Costa Coffee vs Starbucks Business IntelligenceAvailable at:http://www.rodenberg.nl/publications/publications/COSTA_COFFEE_vs_STARBUCKS.pdf%5BAccessed 15 Jun. 2016].

A flight into the future with Airbus

“The level of visibility and measurability determines the maximum level of savings in a company”(RFID Journal, 2016)

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Figure 1: Visibility and Measurability

With over 1,100 orders in a year from across the globe, Airbus is one of the largest manufacturers of commercial aircrafts. It is therefore imperative for the company to handle logistics and assembly of their parts in the most efficient and reliable way possible. Airbus Market & Product Briefing – CSMGI (2015)

From the presentation by Carlo Nizam, who is the head of Airbus’s value chain visibility and RFID program,  he mentioned the problem of keeping track of all assets and stocks as a major problem faced by the company, and considering they also depend on their original equipment manufacturers (OEMs) for literally thousands of parts that are needed  at assembly plants around the world, they needed to look into their value chain; this meant having an enterprise resource planning system that will automate and give the whole value chain more visibility which in turn should improve business processes.

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Figure 1: Business Model

To the solve the problems mentioned above, he mentioned RFIDs as the leading technology being used by the company since 2008, this helps the company know exactly what works and what doesn’t work across the value chain in real time. This technology is coupled with their existing Enterprise Resource Planning (ERP) software.

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Figue 2: RFID by Tego Tag

As shown in Figure 1  above, the RFIDs increase the overall visibility of the value chain which allows the company to measure and analyse what needs to be done and come up with better business processes and savings. All this gave rise to standard best practice processes for the company.

The RFIDs are used to automatically capture data and log stocks from various departments, this data is then transmitted to a central system(via the ERP Software) for faster and better decision making. (RFID Journal, 2016)

For a global company like Airbus which statistically had less orders than it’s highest competitor, by using RFIDs within their value chain, they were able to satisfy more customers than their biggest competitors over time, as seen in the Graph 1 below.(Centre for Aviation, 2014)

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Graph 1: Market

From all this, it can be deduced that companies need to invest more on increasing the value of their products through value chain innovations using technology and connected connected systems.

References:

RFID Journal, (2016). RFID Journal LIVE! 2010: Airbus Reveals the Benefits of an Enterprise Approach to RFID. Available at: https://www.youtube.com/watch?v=NqXdX3vrA0g&feature=youtu.be [Accessed 16 Jun. 2016].

Airbus Market & Product Briefing – CSMGI, (2015). Market & Commercial Overview – January 2015. [online] Airbus, pp.1-22. Available at: https://www.airbusgroup.com/dam/assets/airbusgroup/int/en/investor-relations/d [Accessed 16 Jun. 2016].

CALANDREAU, P., KHALIL, J. and Nizam, C. (2011). Radio Frequency Identification (RFID) Airbus business radar. Fast Magazine, [online] (47), pp.25-29. Available at: http://www.airbus.com/fileadmin/media_gallery/files/brochures_publications/FAST_magazine/FAST47_8-rfid.pdf [Accessed 16 Jun. 2016].

Centreforaviation.com. (2014). Boeing, Airbus share honours in 2013 orders/deliveries race – but it’s not about winners and losers | CAPA – Centre for Aviation. [online] Available at: http://centreforaviation.com/analysis/boeing-airbus-share-honours-in-2013-ordersdeliveries-race—but-its-not-about-winners-and-losers-147949 [Accessed 16 Jun. 2016].