Value chains are often referred to as value chain analysis and is a popular business management practice that was first developed by Michael Porter in 1985. He detailed this management style in his best-selling book Competitive Advantage: Creating and Sustaining Superior Performance. This method has companies create a detailed value chain for their specific needs and has the product or service flow through each stage of the chain. As it passes through each chain of the company, the product or service is able to gain value, increasing the product or service’s worth. This value chain is overseen by a value chain manager.
A value chain manager is one who oversees the value chain and ensures that progress is being made at each stage on the value chain. The value chain begins with the raw material coming into the company and works through the entire internal process until the goods or services are complete and sold to the customer. The value chain manager works to address any of the problems that arise as the product or service works through the value chain. These problems can consist of distribution problems, logistics analyst, information or inventory management. The issues generally fall into three levels of management including strategic, tactical and operational.
Strategic level issues that a value chain manager would need to deal with are making the right choices for suppliers and distributors. This also involves using a logistics analyst to determine who the target customer is and the best location for the product or service to be made or sold. This often comes into play most often during the early stages of the value chain. The decisions of where, when, and how to distribute the company’s goods are determined at this level of management.
Tactical level issues for a value chain manager include negotiating appropriate contracts that will be best for the company. A logistics data analysis is used to determine how much inventory to purchase, how to store inventory, and transportation needs. Proper analysis of inventory date can be very cost-effective for the company. A proper tactical team can provide the company with a successful and efficient product that is produced by cost-effective and efficient means.
Operational level issues usually have a value chain manager dealing with the day-to-day operations of the company and ensuring schedules are planned and implemented. This team primarily deals with the internal workings of the company to ensure that the product is being made in the most productive and efficient manner possible. They create the schedules and plan for the future production of the goods. The operational level is an intricate part of the value chart and the place where the company has the largest amount of control in making changes when necessary.