Managing the Value Chain

Great read. A collection of articles on supply chain management by Harvard professors which have appeared in the Harvard Business Review magazine. The authors present insight into the various activities which form part of supply chain and how companies have improved over the same making the value chain more competitive and efficient. Since it is collection of articles , the book need not be read in a sequential manner. It covers topics of Modularity in design, Trust power in relationships, finding the right supply chain for a particular product, concept of Value constellation and lean production to lean enterprise ( the last one seems to me far too fetched seeing the pace of globalization ...wonder if any consortium of companies will achieve it...though this can be an ideal model for all). All articles are associated with studies done by professors on various global companies like P&G, Walmart, Caterpillar, Chrysler( now Diamler Chrysler), Li & Fung, Apollo, Sun Microsystems etc.

Some Notes:

1. Modularity in design boosts the rate of innovation but heightens the degree of uncertainty in design process.

2.Typical cost distribution in new product development in automotive industry:

Engineering and R&D -15-20%

Tools- 40-45%

Facilities-25-30%

Pre production and Launch- 5-10%

3. Trust between 2 companies- they beleive that each is interested in other's welfare and that neither will act without first considering the actions impact on the other.

Honesty & dependability do not always promote trust.

4. Things to take notice of for devising an effective supply chain:

- product life cycle

-demand predictability

-product variety

-market standard for lead times and service

5. Functions of a supply chain

a) Physical- includes converting raw material into parts and eventually into finished goods and transport all from one point in the supply chain to the next.

b) Market mediation- ensuring that the variety of products reaching the marketplace matches what consumers want to buy.

6.Do not design and manufacture something and then think about distribution instead consider it as a critical part of value equation.

7.Companies that survive and thrive are the ones that looked beyond their immediate boundaries to the social and business system in which they are enmeshed and discover new ways to reconfigure those systems in order to reinvent value for their customers.

8. In today's environment 2 asset matter for value: Knowledge( of companies competencies) & relationship( with customers)