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Free Example of Value Chain Management Essay

Organizations use value chains as a method to examine the impact of competitive advantage. Value chains are made up of activities that create and build value in each step of the process. The chain concludes with the total value delivered by an organization (Chan, Kwan & Wong, p. 123-125, 2005). Conversely, a supply chain is the network of logistics or supply network that is used by an organization. Steps in the process include planning, implementing, and controlling the flow of goods or services both efficiently and effectively. Included in the supply network are internal and external suppliers that are responsible for moving products or services from the suppliers to the final customer. Supply chain movement begins with raw materials and evolves into a finished product delivered to the end customer. Supply chains and value chains are inherently linked together. Supply chain is simply a series of combined links.


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If an organization only focuses on one specific link its only option is to take a reactive approach to problem solving as opposed to a proactive approach (Chan, Kwan & Wong, p. 123-125, 2005). However, if the organization focuses on links in other parts of the chain, it can increase and improve reaction time when problems surface and at the same time also become proactive. An organization needs to understand what its customers' want and how they are using the final product (Summers, p. 214-231, 2008). They should also help their suppliers to understand their customers' needs as well. This helps an organization get to the root of the customers' desires and creating relationships with them. This allows the company to become more proactive in handling issues, preventing wasteful actions and procedures, and increasing the reaction time in the supply chain. All of these steps provide value to a supply chain and help the organization to be more competitive in the marketplace.

Quality Management

An organization must have good quality models and standards in order to survive in this competitive market (Summers, p. 214-231, 2008). Continuous improvement and quality initiatives help as a quality management model to compete in todayís market. The following paper will discuss various models of quality management in context of value chain, why I am recommending continuous quality improvement to my organization.

There are many quality models so organization needs to choose that one which fulfils the organizationís need. Quality models concentrate on the improvement of all functional areas of the organization (Chan, Kwan & Wong, p. 123-125, 2005). In addition, the quality models will help my organization evaluate and analyze its processes and identify root problems and opportunities for improvement. Some of the possible models are:

Continuous Quality Improvement (CQI): A nonstop collaborative effort to identify and remove root causes of problems and constantly look for areas of improvement (Chan, Kwan & Wong, p. 123-125, 2005).

International Organization for Standards (ISO): These commercial standards for quality management are used internationally help document the quality systems elements to be implemented (Kemp, p. 26-34, 2006).

Value chain analysis: Analyzes and describes an organizationís activities or functions and evaluates its value (Banfield, p. 32-34, 1999). The organization must find a way to eliminate functions that do not add value.

Six Sigma: Uses a statistical approach to reduce process output variation and ultimately only tolerating +/-3 sigma from a control chartís centerline in an organizationís processes (Kemp, p. 26-34, 2006).

Theory of Constraints (TOC): Focuses on finding the constraint limiting an organization and relaxing the constraint to improve the overall organization (Summers, p. 214-231, 2008).

Just In Time (JIT): Minimizes product and supply inventories by ordering/producing as needed. Based on eliminating waste, JIT reduces cost of maintaining excess inventory (Goetsch & Davis, p. 321-328, 2006).

Continuous Quality Improvement

Unlike the other quality models previously mentioned, CQI does not abruptly end after the model is complete. CQI is a ďmanagement approach to improving and maintaining quality that emphasizes internally driven and relatively continuous assessments of potential causes of quality defect, followed by action aimer either at avoiding decrease in quality or else correcting it at an early stageĒ (Kemp, p. 26-34, 2006). The concept of CQI focuses on the constant evaluation of an organizationís processes, stressing that there is always room for improvement.

I firmly believe that CQI is the best quality model for my organization. CQI will be the most effective quality model as it involves all employees to be committed to a never ending cycle of improvement. It also is an excellent opportunity for team building, ownership, and employee empowerment. CQI also directs an organizationís attention towards improving the process, as opposed to pinpointing its employees as root causes (Goetsch & Davis, p. 321-328, 2006). This model will offer the best value and efficiency because the focus is on improving overall customer quality on a continuous basis, rather than handling an individual problem or dealing with customer or employee individually. By increasing the overall quality of my organization through constant process analysis and monitoring, quality problems or defects may be minimized or eliminated before the problem grows. The implementation of CQI requires little financial resources since the effort is initiated by individuals who are already employed within the organization.

Possible Obstacles and Challenges

As with any changes that are made in an organization, there is always a chance that the change may face obstacles, such as resistance among employees. Other obstacles that the organization may face are noncompliance, lack of participation and/or commitment from employees, or miscommunication or misunderstanding of the program (Goetsch & Davis, p. 321-328, 2006). In order to minimize or eliminate the possibility of these obstacles, it is critical that the organizationís management make a thorough presentation of the need and benefits of implementing a CQI program. The presentation should include specific training, open communication among all employees, and the necessary resources for employees to understand the program and how it will be implemented. It is also important to keep employees informed of the processes needed to implement the CQI program as well as standards and incentives for compliance. Inadequate participation can be handled by implementing new process from upper management to lower team members and empowering team members to make decisions. This may not remove all lack of participation but lessen the effect of non-participation.

Implementation of CQI

The implementation of CQI program into the organizationís current strategic plan will require that the organizationís mission and goals are in line with the process. Once that is considered, the organizationís processes must be analyzed thoroughly in order to identify goals are areas of improvement. Process mapping and data collection is a key factor in the initiation of CQI. Mapping a specific process will allow the organization to breakdown a process through a detailed illustration and review of all the steps in the process, from start to finish, including all the inputs and outputs (Chan, Kwan & Wong, p. 123-125, 2005).

Data collection will involve the identification of the relevant elements that need to be measured, focusing on the pertinent information that is to be collected, and selecting the appropriate data collection tool that is most applicable to the process and data. Data collection is vital as it will determine whether the quality initiative yield positive results. It will also identify where the process is suffering, the cause of the problem in the process, as well as the frequency of the problem. Through the collection of data, the organization will have a clearer picture on how to address the problem and how to present it to all employees.

Once the presentation has been made, CQI will require a collaborative effort among all involved employees, lead by management, to develop a set of goals and objectives to address the quality issue. Brainstorming and proper training is a good way to empower employees, give them ownership throughout the process, as well as develop their commitment to the CQI program. It will also be necessary to reevaluate the quality initiative during and after the process as it will give the insight view of success of my organizationís effort on CQI (Summers, p. 214-231, 2008). In order to gain most efficient result, reevaluation must take place to update the strategies.

Comprehensive research and data collection procedure is required in CQI model. In that way CQI model encourage interaction between all employees. This procedure improves the procedure for solving problem and builds trust among them. Data collection and analysis determines the possible results before implementation of CQI program. Continuous Quality Improvement model enables organization to monitor and evaluate the process to determine if the process needs to be altered.

Value Chain in Modern Business

ďConverting supply chains into value chains are a powerful strategy. Supply chains consist of weak bonds and can be broken easily by a new supplier. Value chains are made of strong bonds and are harder to break. Price alone is insufficient to break the supply chain. Every supplier is an investment of time and money to build the relationship and strive for continuous process improvement.Ē (Goetsch & Davis, p. 321-328, 2006) When modern organizations operate on a global level, the value chain and supply chain are then referred to as global value chain and global supply chain management. Managing supply and value chains across multiple nations is much more complex and difficult as compared to domestic value and supply chains. Not only does the physical distance create complexities, but other factors such as cultural differences, varying working ethics, and infrastructure also create problems in global supply chain management.

In my organization, both supply and value chains are used. In the management of the supply chain in a business of my organization, opportunities are identified to become more productive, efficient and responsive, therefore it create or maximize value for the consumers. Value chains as well as supply chain, both are very significant in the business of car manufacturing (Banfield, p. 32-34, 1999). Improving supply chain network helps Toyota to reduce per car cost. For example, it would improve the communication between engineers, mechanics, painters, designers and another supporting staffs of Toyota.

To continue increasing revenue, profits or reducing costs and to remain competitive, Toyota needs to maintain good and efficient value and supply chains. Meeting the customersí needs is critical to ensuring their satisfaction and gaining their repeat business. Once an organization grows from domestic operations to global operations, even more scrutiny needs to be placed on the global supply chain with value constantly being in the forefront of all decisions being made. A strong value chain leads to greater customer satisfaction and increased sales and revenues (Summers, p. 214-231, 2008). These are all factors critical to the success of any organization.


While my organization has several quality models and methods to choose from, the CQI method has proven to be the most effective. The CQI method will help my organization through in-depth procedures to identify the area for improvement and initiate the quality improvement process while incorporating it into the current strategic plan. Lastly, as a collaborative effort, CQI incorporates all employees, including management, which epitomizes the quality management philosophy.

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