What role does your value chain play in defining your company’s value assertion? If you're unsure of the answer, don't worry. Most enterprises rarely take the time to analyze their value chain. Simply put, a value assertion is nothing more than a declaration of your company’s value chain; it’s meant to outline your company’s core competencies and explain why your product and service is appreciated by your customers, and how your company brings value to your market.
When thinking of your company's value chain, think of all the things you want your customers to know about your enterprise. Think about what makes your enterprise unique and different from its competition. Your value chain is meant to summarize your company’s expertise in inventory and supply chain management, your efficiencies in operations, your strengths in research and development, your competencies in product management, your customer-centric focus in marketing and sales and finally, your excellence in customer service.
Understanding Your Value Chain
It’s common for companies to outline their value chain by focusing only on their internal strengths. However, how your company manages its vendors goes a long way to defining the value you bring to your market. After all, excellent companies need excellent vendors and partners. Every company is a success because of what it brings to the table, and a large portion of that success includes how a company manages the vendors within its supply chain. This is the first link in your chain. The rest involves summarizing your internal business strengths. The process is simple; outline your value chain and use it to define your company's value assertion.
The Value Chain: Combining Internal and External Business Strengths
- Inventory & Supply Chain: Does your company have any strategic partnerships that help to shorten your product to market lead times? Be sure to expand the analysis of your value chain to include the benefits that come from your company’s inventory and supply chain excellence. Your vendors are an essential aspect of your company's success and they play a vital role in bringing your products to market. Your customers should understand the role played by your most important vendors.
- Operations: When thinking of your strengths in operations, think of all those support roles that help bring your products to market. Think of your after-sales service and customer support. For instance, do you have an enterprise resource planning (ERP) software that allows you to manage operations in real-time? Does your company have an accounting and finance team that is flexible with payment terms and credit? Do you adopt continuous improvement strategies that help to reduce error rates? When thinking about your company’s operations, think of those internal functions that allow you to better service your customers.
- Research & Development: Your customers must come to understand your company’s capabilities in product innovation, your continued investment in research and development and your endless pursuit to improve all aspects of your company’s product offering. An example might include a company that has a rapid prototyping program, one that devotes internal manufacturing resources solely to engineering in order to speed up product development and introduction. Or, perhaps your company invests more in research and development than what is considered standard practice within your industry. Both are differentiating factors that can help you define your company's value.
- Product Management: Successful product management means different things to different companies. In the case of value-added resellers (VARS) and distributors, it involves managing vendors and strategic partners. In terms of manufacturers, it often involves managing vendors, partners and overseeing multiple production work cells. You must define the value your product managers bring to the table. Focus on your business model and what your product managers do to make your company a success.
- Marketing & Sales: A company’s marketing and sales aren’t only tasked with business development. They are ultimately tasked with defining the requirements of the company’s customers. Market research plays a role here. However, having “feet on the ground” is what distinguishes a company’s ability to provide its customers with what they need. If your company excels in sales, then define how you excel by explaining your company's approach to sales.
- Customer Service: Your customer service strengths play an important role in your company’s value assertion. For instance, what powers does your customer service department have in order to better deal with customer related issues? In this case, focus on how your company’s operations help in servicing your customer base. You may have instituted a corrective action process in order to identify issues and find solutions. Your customers must know that their concerns are dealt with long after their immediate issues have been resolved. It's about correcting the problem now and doing whatever is needed to avoid it from happening again in the future.
Do Your Employees Understand Your Company's Value Assertion?
Most companies ignore their value assertion. In fact, in a number of cases, there’s a disconnect between how a business owner views his or her company’s value, and how the company’s employees see that value. For instance, I once worked with a small manufacturer whose engineering knowledge and design capabilities were above reproach. Unfortunately, the company's customers never fully understood this value, unless they were fortunate enough to speak directly with the owner.
When the owner took customers around on a tour of the company, he made it a point to define the company’s value chain and he used it to outline his company's value assertion. He explained the company’s strengths in inventory and supply chain management by outlining the company’s strategic partnerships, and the pivotal role those partnerships played in bringing the company’s products to market. He explained his company’s product prototyping program and how this program devoted manufacturing resources in order to speed up product design. He talked about how the company's operations were structured around managing customer needs in real-time. While the owner understood his company’s value chain, his employees and business development team did not. Nobody had ever taken the time to outline the company’s value chain and what role it played in defining the company's value assertion.
The purpose isn't to talk about your value assertion ad nauseam. Instead, you use your value assertion to address your customer's concerns. You use it to ask leading questions, ones that allow you to expand on the value you bring to your market. When salespeople understand this value, they are in a much better position to define that value to customers.
Understand what your company brings to your market. Understand why your company is different and what allows it to be successful. Outline your company's value chain and use it to come up with your company's value assertion. Finally, make sure all employees understand your value assertion. Once they do, they'll be in a much better position to define what makes your company so unique.
To read more about this topic, please go to: Your Supply Chain is the First Link in Your Value Chain
Sample Customer Scorecard Excel Sheet: Grading Your Customer’s Value
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