Every business has different activities being conducted every single day. These activities need to happen in order for them to be able to provide their customers with all of the different products and services. Without them, a simple business wouldn’t be able to operate in the way that it should.
However, one needs to determine the importance of each activity to help see if there are some that benefit the business and if there are those that do nothing for it. And that’s why this article is going to teach you how to do a value chain analysis. You can also read sample situation analysis templates.
Remember that the point of doing a value chain analysis is to help you identify your business’s primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation. Basically, it helps you see which activities are the most valuable and which ones can be improved in order for your business to gain a competitive edge. So if you want all of the important activities that are going on in your business to be improved, then you’ll need to assess every single one of them. You can also like poetry analysis templates.
With that in mind, here are the steps that will allow you to do a proper value chain analysis:
The first step is undoubtedly the most important one as you will need to determine all of the different primary and support activities that are taking place within your business. All the activities (from receiving and storing materials to marketing, selling and after-sales support) that are undertaken to produce goods or services need to be identified as well as separated from one another. You can also read sample situation analysis templates.
What you are going to have to do is to understand all of the different operations that are taking place within your business. That way you will easily be able to determine every single activity that’s taking place and categorizing them so that you will have an easier time during your assessment. It should be able to help you how each work is being done so that you can determine the value of each activity. You may also see business needs analysis templates.
So as you’re making the list, make sure that you write down everything in clear detail. Provide the proper descriptions for each activity and also point out where they are all taking place. Again, you want to make it easier for yourself when the time comes for you to assess each and every single one of them. You may also read requirement analysis templates.
The next step is for you to determine just what kind of value each activity brings to you and your business. So what you will need to do is to break down total costs of producing a product or service of each assigned activity. Activity-based costing is used to calculate costs for every single process. You may also read business gap analysis templates.
You want to be able to see which of these activities are the major sources of cost or the ones that are being done in the most inefficient manner. You’ll be able to know which of these are by comparing the benchmarks to that of your competitors. These are the types of activities that you are going to want to address first as they’re the ones that have proven to cost more than your other activities. You may also read customer analysis templates.
This information will help you come up with ways in which you can improve these particular activities so that you can find the most cost-efficient ways to change and improve their processes. You can also like sample organizational analysis templates.
Be sure that you come up with a list of all the activities that should be addressed first, followed by the ones that have proven to be just as important yet cost-efficient. You may also read financial analysis samples.
After you have managed to figure out all of the activities and determine each of their importance and costs, then the next step is for you to figure out what factors affect the costs of each activity. Only by knowing what factors drive the costs, you can figure out the ways in which you can lessen them yet retain the quality of the activities that are being performed. Costs for labor-intensive activities will be driven by work hours, work speed, wage rate, etc. For other types of activities, you will need to figure out what factors determine the amount being spent on them. You may also read customer analysis templates.
The point of doing this is to help you see if you’re not putting too much money into an activity that doesn’t even require it. So for those activities that you have no idea as to what factors determine their cost, you’re going to have to do your research on them. You can always ask someone who has experience in determining what you should only be actually spending on them, or you can also go online to acquire the information there. You can also read hazard analysis templates.
You need to identify which of these activities are linked to one another. The reason for doing this is because you might see that reducing or increasing the cost of one particular activity may affect another in the exact same way. For example, fewer components in the product design may lead to less faulty parts and lower service costs. By identifying all of the links between activities, you can better understand how cost improvements can affect the entire value chain. You may also read free gap analysis.
But take note that there’s the possibility that reducing the cost of one particular activity might increase the cost of another that’s linked to it. This is why it’s very important that you learn what activities are chained to which as it will help you make important decisions. Should you cut the costs of one activity knowing that there will be a slight increase in others? Or perhaps these increases can help these activities in terms of their quality? You may also check bow tie risk analysis templates.
It’s not going to be easy, but so long as you know the links between the different activities, the easier it will be before you decide on the actions that need to be taken. You can also see trend analysis templates.
Once you have managed to identify all of the links between the different activities, the next step is for you to see what opportunities are present in which you are able to reduce the costs. Take note that you only want to reduce the costs of these activities that are chain to other subsequent activities whose costs will also be reduced. You may also like printable project analysis.
So think, what are the factors that you can affect that can help reduce the costs of a particular activity? For example, too high wage rates can be dealt with by increasing production speed, outsourcing jobs to low wage countries or installing more automated processes. You may also like a sample market analysis.
All you need to do is think about what it is that you can reduce that won’t affect the quality of the activity. Do that, and you can ensure that every activity-taking place is one that has value to your business. You can also read sample cost-benefit analysis templates.
In the event that you would like to learn about the other types of analysis that you could possibly do, then all you have to do is to go through our site. It has many different articles that should be able to provide you with the help that you need. Just be sure that you are able to read these articles thoroughly so that you can make the most out of what it is that they have to offer. You may also read job analysis templates.