VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS

&&&&

BENCHMARKINGBENCHMARKINGBENCHMARKINGBENCHMARKING

PRESENTED BYSHRABANI NAYAKDILLIP KHUNTIA

VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS

� It describes all the activities that make up It describes all the activities that make up It describes all the activities that make up It describes all the activities that make up

the economic performance & capabilities the economic performance & capabilities the economic performance & capabilities the economic performance & capabilities

of the firm.of the firm.of the firm.of the firm.

� Propounded by Michael PorterPropounded by Michael PorterPropounded by Michael PorterPropounded by Michael Porter� Propounded by Michael PorterPropounded by Michael PorterPropounded by Michael PorterPropounded by Michael Porter

ACTIVITIES IN VALUE CHAIN ACTIVITIES IN VALUE CHAIN ACTIVITIES IN VALUE CHAIN ACTIVITIES IN VALUE CHAIN

ANALYSISANALYSISANALYSISANALYSIS

• PRIMARYPRIMARYPRIMARYPRIMARY:

Activities directly involved in transfer ofraw materials into consumer benefits

• SUPPORT: SUPPORT: SUPPORT: SUPPORT:

Activities that provide support to theeffective performance of the primaryactivities in the value chain.

PRIMARY ACTIVITIESPRIMARY ACTIVITIESPRIMARY ACTIVITIESPRIMARY ACTIVITIES

• Inbound logistics

• Operations

• Outbound logistics• Outbound logistics

• Marketing and sales

• Service

SUPPORT ACTIVITIESSUPPORT ACTIVITIESSUPPORT ACTIVITIESSUPPORT ACTIVITIES

• ProcurementProcurementProcurementProcurement

• HR ManagementHR ManagementHR ManagementHR Management

• TechnologyTechnologyTechnologyTechnology

DevelopmentDevelopmentDevelopmentDevelopment

• Firm infrastructureFirm infrastructureFirm infrastructureFirm infrastructure

VALUE CHAINVALUE CHAINVALUE CHAINVALUE CHAIN

The Value Chain System

Supplier Firm Channel Buyer

….

Supplier

Value

Chain

Firm

Value

Chain

Channel

Value

Chain

Buyer

Value

Chain

ADVANTAGES

� Value creation

� Identifying weak points

� Tool for strategic planning

� Secure Competitive advantage� Secure Competitive advantage

D LL COMPUTERSD LL COMPUTERSD LL COMPUTERSD LL COMPUTERS

� Founded by Michael Dell in 1984

� The concept: Selling computersdirectly to customers

� Designed and built the first computers of its own design

� One of the first computercompanies to send technician to homes to service computers

VALUE CHAIN ANALYSIS OF DELLVALUE CHAIN ANALYSIS OF DELLVALUE CHAIN ANALYSIS OF DELLVALUE CHAIN ANALYSIS OF DELL

• JIT manufacturing approach to reduce cost

• Direct selling removes intermediaries

• Low inventory is signature of Dell business model

• Brands its Service Agreements at five levels for its

customers

• Lower prices, bonus products & shipping facilities

provided to customers

PIZZA HUTPIZZA HUTPIZZA HUTPIZZA HUT

• Flagship brand of Yum Restaurants Inc.

• Started in the year 1958

• World’s largest pizza chain : 13000 outlets in 91

countries

• Entered India in 1996

• Known for Quality, Innovation & Category • Known for Quality, Innovation & Category

leadership

VALUE CHAIN OF PIZZA HUT

• Follows C.H.A.M.P.S norms for value creation.Follows C.H.A.M.P.S norms for value creation.Follows C.H.A.M.P.S norms for value creation.Follows C.H.A.M.P.S norms for value creation.

• Economies of scaleEconomies of scaleEconomies of scaleEconomies of scale

• MorzellaMorzellaMorzellaMorzella cheese imported from Spain & Australiacheese imported from Spain & Australiacheese imported from Spain & Australiacheese imported from Spain & Australia

• Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.• Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.Outlets maintain inventory stock for only 3 days.

• HP solutionsHP solutionsHP solutionsHP solutions

• Partnership with brands like Nestle & Coca cola.Partnership with brands like Nestle & Coca cola.Partnership with brands like Nestle & Coca cola.Partnership with brands like Nestle & Coca cola.

• Provides Jain menus & Magic meals Provides Jain menus & Magic meals Provides Jain menus & Magic meals Provides Jain menus & Magic meals

• Pizza Hut call centerPizza Hut call centerPizza Hut call centerPizza Hut call center

BENCHMARKING

It is the process of comparing one's business

processes and performance metrics to

industry bests and or best practices from

other industries.other industries.

NEED FOR BENCHMARKINGNEED FOR BENCHMARKINGNEED FOR BENCHMARKINGNEED FOR BENCHMARKING

� Competitive pressure

� Response to market trends

� Maximising key drivers

� Motivational tool

� Realistic tool� Realistic tool

TYPES OF BENCHMARKING

� Product Benchmarking

� Competitive Benchmarking

� Process Benchmarking

� Strategic Benchmarking

� Global Benchmarking

� Financial benchmarking

� Investor’s perspective Benchmarking

� Internal Benchmarking

� External Benchmarking

� Best practice Benchmarking

PROCESS OF BENCHMARKINGPROCESS OF BENCHMARKINGPROCESS OF BENCHMARKINGPROCESS OF BENCHMARKING

ACTION

MATURITY

PLANNING

ANALYSIS

INTEGRATION

BENEFITSBENEFITSBENEFITSBENEFITS

� It helps overcome “Paradigm Blindness”

� Opens to new methods, ideas and tools to

improve effectiveness.

� It helps crack through resistance to change.

� Prevents companies from being industry led.� Prevents companies from being industry led.

Benchmarking of Xerox Corporation

� Photocopier Machine Producer

� 1970’s, severe erosion of its market by cheaper

Japanese model of Photocopier.

� Benchmarking of that product by Xerox.

� 1981, From L.L. Bean, warehousing.�

� From Drug Wholesaler: Better Electronic Order

between Stores and Distribution Centre.

• From Electrical Components Manufacturer:Automatic, in-line weighing, barcode labelingand Scanning of Packages.

• From American Express: Billing and CollectionProcedure.

• A Competitive Benchmark with Canon• A Competitive Benchmark with Canonproduced a new Cylinder for a CopierPhotoreceptor.

• Xerox Benchmarks - Fuji Xerox (Japan)