VALUE CHAIN
COLLABORATION PART A
THE POWER OF
VISUALISATION AND
COLLABORATION CAN
RESULT IN A SIGNIFICANT
SHIFT IN COMPETITIVE
ADVANTAGE
VALUE CHAIN
COLLABORATION
PART A
THE POWER OF VISUALISATION AND COLLABORATION CAN RESULT IN A SIGNIFICANT SHIFT IN COMPETITIVE ADVANTAGE
ONCE YOU ARE PART OF A TRULY
CONNECTED VALUE CHAIN, BUILT
ON TRUST, EVERYTHING CHANGES.
ONCE YOU ARE PART OF A TRULY CONNECTED VALUE CHAIN, BUILT ON TRUST, EVERYTHING CHANGES.
In our recent thought leadership piece, we revealed that there are already opportunities in your and your trading partners’ wider value chains that can be unlocked. We also brought in the Value Chain Maturity Model – an approach to understand and improve on the capabilities of your organisation and trading partners in order to leverage opportunities in your wider value chain.
NOW, WE WILL TAKE A MORE IN-DEPTH LOOK
AT THE POWER OF COLLABORATION
USING DATA-DRIVEN INSIGHTS
NOW, WE WILL TAKE A MORE IN-DEPTH LOOK AT THE POWER OF COLLABORATION USING DATA-DRIVEN INSIGHTS
To facilitate focused collaboration, it is key to achieve a common understanding of how the value chain works. This ensures a joint understanding of risks and opportunities and facilitates the identification of the required insights to drive focused collaboration between value chain partners, along with the facts and data which will be required to achieve those insights. The common goal should and must be to avoid different versions of the truth as early on in the process as possible.
As illustrated in the diagram below, value chain partners should be focused on golden data threads which can expose win-win and hidden insights and opportunities. The collaboration process should be ongoing and based on facts and data, rather than the results of one-off projects or initiatives. It is built on trust and embedded in the culture of partner organisations and value chain partners share specific data and incentives to collaborate.
TIER 4 SUPPLIER
Input Cost Dynamics
Yields and Losses
Seed Options
Mechanisation Options
Recycling Options
TIER 3 SUPPLIER
Commodity Price
Dynamics
Variety Options
Primary Processing
Waste Hotspots
Procurement Data
TIER 2 SUPPLIER
Cost of Logistics
Waste Hotspots
Sourcing Regions
Secondary Markets
Procurement Data
TIER 1 SUPPLIER
Order Fill Data
Recipe Configuration
Production Efficiencies
Product Costing
Procurement Data
RETAILER / CONSUMER SERVICES
Sales
Promotions
Market Share
Customer Complaints
Store Waste
Product Design
Figure 1
For example, let’s assume value chain partners agree on the need to review and redesign a current product and category offering and target pricing to an opportunity in the market and to take advantage of shifting market conditions driven by consumer needs for a more cost-effective productive offering. It is key for partners to understand the value chain and cost dynamics of the current offering in order to identify and target selected opportunity spaces and the insights and data required to deliver on it.
IN SHORT, A THREE-STEP PROCESS
APPLIES IN THIS EXAMPLE
DIAGNOSTICS & VALUE CHAIN VISUALISATION
Figure 2
VISUALISATION & OPPORTUNITY
IDENTIFICATION & EXECUTION
As illustrated in Figure 2, the first step in the process is to map the value chain and relationships to drive a common understanding of the relationships and dynamics at play.
In this example, the value chain will consist of 6 Tiers
from Retail Customer to Commodity Cost Drivers:
In this example, the value chain
will consist of 6 Tiers
from Retail Customer
to Commodity Cost Drivers:
THE RETAIL/CUSTOMER LEVEL’S FOCUS IS TO UNDERSTAND THE CURRENT AND TARGETED PRODUCT CATEGORIES IN SCOPE AS WELL AS THE TARGETED CUSTOMER BASE AND PRICE DYNAMICS.
Tier 1’s
focus is on the final production of the packaged product and configuration and to ensure all parties understand dynamics such as the scope of the intended product changes as well as costing and volume assumptions.
Tier 2’s
focus is on the value-adding processes which produce the subcomponents of the product at primary production level such as production of packaging material, substrates or preassembly of components.
Tier 3’s
focus is on the processes which turn commodities into function-specific base materials for further manufacturing.
Tier 4’s
focus is on the characteristics and drivers of basic commodity pricing and sourcing options.
Tier 5’s
focus is on the cost and price drivers of commodities which normally form the basis of the value chain costs.
Mapping and understanding the suitable level of detail from customer to base inputs drives a common understanding of opportunities and risks between value chain partners as the first important step in order to collaborate on the positioning of existing and redesigned or new products.
In our next Insights piece, using this example, we will explore the process of identifying and prioritising opportunities and risks and later on the process of identifying insights and data required to enable joint action plans between value chain partners.
VALUE CHAIN SOLUTIONS IS A FULLY-INTEGRATED CONSUMER GOODS VALUE CHAIN ADVISORY AND SOLUTIONS BUSINESS, OPERATING ACROSS MULTIPLE ENTITIES AND GEOGRAPHIES. WE UNDERSTAND AND DEMYSTIFY COMPLEX VALUE CHAIN DYNAMICS FROM SHELF TO SOURCE AND PARTNER WITH OUR CLIENTS TO INTEGRATE FRAGMENTED DATA AND DRIVE VARIOUS INSIGHTS FROM IT TO FACILITATE STEPWISE IMPROVEMENT IN VALUE CHAIN MATURITY, ALONG WITH ONGOING OPTIMISATION AND COLLABORATION.
