Value Chain Models – The BPM Diamond Cut

The present business and IT ecosystem reached a certain level of intelligence that pushes companies and organizations to become true masters of processes in order to make their way to the top.

Besides a company’s business strategy and models, the value chain model is the main tool for achieving competitive advantage. A value chain model defines the ways in which the strategies of the company are implemented through a set of activities. Value chain models, compared to business models, are looking over the way in which the company meets the needs of its customers and prospective customers, while business models mainly refer to internal strategies, tasks, objectives.  However, despite these differences, the relationship between business and value chain models is tight and should be in perfect balance – the company’s money and resources should sustain in the same amount the value generated for outside consumption (clients) as well as the internal costs and tasks.

The importance of a value chain model is best described as being the set of stages a product should go through in order to gain added value which in the end would generate profit for the company. The best example would be the activity of a diamond cutter, who adds a huge cost to the end result by applying tasks which seem simple and not so expensive when you look at them in a more granular scale.

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When it comes to actually taking action and implementing the value chain models inside a company, BPM needs to do the job! BPM is about optimization, efficiency, collaboration, automation. But this means nothing unless you take a step back and look at the higher purpose – Achieving the company’s Goal by setting up objectives and implementing strategies supported by value chain models. BPM stands as main building block for the Goal and Value Chain Models are the ones who drive the transition from processes to goals.

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The Value Chain Group, an organization specialized in defining business frameworks, has introduced the term of Business Process Transformation Framework (BPTF). This framework is actually a library of business processes, value chain models and methods on how to achieve successful transformations in high-performance enterprises.

Existing BPM solutions address this aspect of value chain models by delivering a more business wise enterprise overview which helps business and process analysts to think big and model with a vision. Specifically, you have the ability of setting up goals, objectives and strategies, design value chain models and link BPM processes in this big landscape. This is the future of doing BPM in the right way!

 

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By Roxana-Maria Petculet @ Oracle | June 27, 2014

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