Discuss the two types of Value Chain activities – Primary and Support – and how they help create value by finding both “better” and “different” ways of performing these activities (apply your own organizational and/or SSM company experiences)
We have been introduced to many tools and models in this chapter as being useful ways that a company can identify a competitive advantage Carpenter and Sanders (2008) state that through the implementation of a value-chain it can create efficiciences in both resource and capabilities that can be utilized by the company. With this practice in place it can make one firm more competitive than the other even if resources and capabilities are similar. Carpenter and Sanders (2008) describe two value chain activities, primary and support where value adding activities take place. Primary activities include logistics, operations, outbound logistics, marketing, sales, and service. While support activities include human resources, accounting, technology, and procurement. (Carpenter & Sanders, 2008) One great example of a value chain activities is the improvement of information acquisition and communication as it helps supply chain and logistical systems improve their efficiencies as they become able to make judgements and identify areas that can be improved. Systems like, “computer aided product and component design tools, and computer-controlled production equipment – appear to be allowing greater volumes of information to flow through global value chains with less governance.” (Gereffi et al., 2001) While support activities usually consist of the financial accounts payable and receiving, and the purchasing of various resources to ensure that production is not met with any delays. As we have seen with many of the other concepts this chapter it is important for companies to incorporate both the primary and support value chain activities as they then provide a customer with a quality customer service experience and product that they are satisfied with.
In my previous position I was in charge of contact and managing the creation and manufacturing of all aspects of the companies product, and in this area I identified that there was an opportunity to utilize a primary value chain activity and reduce the cost to manufacture the product through automation. The contract manufacturer that was utilized had automated systems that allowed their assembly line to be scalable on how many boards could be produced. Currently we have an average of 200 – 500 boards being created, but the contract manufacturer has the capability of ramping up to 1000 PCBA in a week’s time. We have seen through advancements in technology that “ throughout the 20th century, extensive efforts to develop automated production processes were used by manufacturing companies to radically increase efficiency and sustain a high quality of production.” (Frohm et. al., 2008, n.p.) In choosing this manufacturer we were able to cut down costs of the assemblies, while maintaining efficiency and quality of the finished goods. Looking forward to my present company there is a urgency in the response time that the company has to reach customers, with that in mind we have chosen to utilize new technologies like customer relations management software to improve our internal activities. With the CRM implemented we have seen an increase in competitiveness with other organizations in the same field, along with higher revenues and lower operational costs. (Chen & Popovich, 2003)
Carpenter, M.A. & Sanders, Wm. G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, NJ: Pearson Education.
Chen, I. J., & Popovich, K. (2003). Understanding customer relationship management (CRM) People, process and technology. Business process management journal, 9(5), 672-688.
Frohm, J., Lindström, V., Winroth, M., & Stahre, J. (2008). Levels of automation in manufacturing. Ergonomia.