A value chain is a series of steps that outlines core business activities to produce a simple working model of the business. A value chain analysis is used to provide information about the business and technology sides of the business, describe roles and responsibilities, and identify how the business is doing. It can also be used to show potential improvements, in the form of problems or opportunities.
The overview is a brief description of the different steps in the value chain. It should mention the links in the value chain, and what is done at each link. The description can be used to build consensus on what is included in the activity. It is important to include an overview in a value chain analysis because it can identify if there are links missing.
The business side of the value chain analysis looks at how it adds value to the business, how it could add more value, why it needs to change, and how fast it needs to change. It should include things such as what need the value chain fulfills, and what improvements must be made. It should also include any external reasons for change, such as new regulations. It is important to look at the business side of the value chain because it helps identify what things need to be improved, and how fast.
The technology side describes how technology supports the value chain, and where technology gives value to the business. It should include things like dual-keyed data and stale reports. It is important to look at the technology side of the value chain because it ensures up-to-date information, allowing for proactive management. It can also be used to check what systems need to be included when phasing out old technology.
Roles and responsibilities looks at who works at what level of the value chain. It should mention the people who perform, manage, are responsible for, and are accountable for each link in the value chain. It is important because it documents what the different people have to do to keep the value chain functioning and can be used to determine who needs to be consulted or informed about a change to the value chain. If there is a problem with the value chain in practice, ensuring everyone is completing their steps may solve it.
Key performance indicators, or KPIs, are used to see how well the business is doing at each level of the value chain. KPIs are used to see how efficiently the business is proceeding, and what steps need to be improved.
Improvements are the work requests produced in response to the value chain analysis. They may be problems that need to be fixed, opportunities that can be taken, or any other change that would increase productivity. The value chain analysis is performed to determine where improvements are needed and define new improvement opportunities. Performing regular value chain analyses and implementing the improvements can help businesses become more efficient and more productive.