Four Practical Tips for Mapping Value Chain

Value chain diagram is a visualized tool identifying the main activities associated with a company's service or product line and is often used in corporate strategy in order to identify performance improvement opportunities. Here are basic introduction and some useful tips for mapping value chain:

What does a Value Chain Map do?

Value chain means the full range of activities that are required to bring a product (or a service) from conception through the different phases of production to delivery to final consumers and disposal after use. In the narrow sense, a value chain includes the range of activities performed within a firm to produce a certain output. It clearly indicates the supplier and customer relationship and displays the connection of all the activities that involved with supplying products or service to end customers.

Mapping Value Chain

The main purpose of value chain map is to help leaders obtain a clearer picture of the organization's position within a bigger environment. It is often used in corporate strategy in order to identify performance improvement opportunities.

A value chain map can convey the following information:
1. The structure of the chain, including all the related organizations and the relationship between them.
2. Your organization's position in the structure.
3. The output (product and service) that are delivered from one link to the next in the chain.

4 useful tips for mapping Value Chain:
1. Some organizations notice that the real relation networks are much more complex than what they've thought right after they began to design the value chain. More than one value chains associated with your organization appear at the same time. In order to distinguish different value chains and make your mind clear, you are recommended to draw each chain respectively. If you want to put them all together as a network, it's better to simplify it, eliminate inputs and outputs that are irrelevant.

2. When you finish drawing, you find that there're not many linkages expect for direct suppliers and customers. This may indicate that you only concentrate on part of the value chain which is closely related to you and ignore other factors. If this happens, you need to study and research to broaden your vision and find out all the relevant organizations. You can conduct a survey to find the real end customers of your products (or service).

3. When you create high-level flow modeling, start drawing from the product (or service) you provide to your customer. Through tracking on how products (or service) go to customers, and how products (service) are produced, you can obtain the inputs information of the production process.

4. Make sure all the processes have real value, don't list trivial tasks in the model, which may cause over complexity of the chart.

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