A value chain consists of the sequences of activities performed by numerous participants that enable you to offer value to the end consumer. It’s vital to understand your value chain. Where do you fit? Who is upstream and downstream? Which areas of value are necessary but not filled? Where can we optimise to enhance the value?
This is a simple activity when your business consists of a single value chain. The considerations change in complexity. You have a provider whose primary business is too expensive in the market. You source this in from higher up the chain at a cheaper rate. This makes sense.
They also provide you with another unsustainable niche service. What you didn’t know it=s that it was cross-subsidised by the primary activity you don’t use. They either close or increase the costs of the ‘non-core’ service.
Complex value-chains contain intricate cause and effect relationships that are hard to decipher until we force them. By then it might be too late.
Our value chains deserve more attention. They hold within them secrets to the promised land and keys to Pandora.
A value chain is not an expense. It’s an enabler.