Does your business stand out from the crowd? What value do you give to your customers? To seize new opportunities, you should define initiatives that will facilitate innovation. Today, digital transformation is one of the most effective ways to reinvent your business. However, this process requires a unique approach to manage all the necessary changes successfully. Value chain mapping can meet this challenge.

What’s value chain mapping and do you need it?

Any business is competing with others. To gain a competitive edge, each company looks for various chances. They are developing dozens of documents with strategies of “how”, “where”, “when”, “what”, and so on. Only a few companies add to that list “why”. Those who understand why they actually need changes, use IT services strategically. Thus, they ask professional analysts to create a visual map of their business value chain. 

The objective of a value chain analysis is to increase the value of your products or services. It is intended to determine your customers’ needs, production, distribution, marketing, and after-sales service. Value chain mapping is a two-step process. First, specialists create a current chain. Then, they provide you with a more effective flow for your services of products. 

How can your business gain a competitive advantage?

Based on the finding of a value chain mapping, you’ll get a clear vision of how you can improve your business activities to become more competitive on the market. Let’s focus on the major ways you can do this according to Porter’s generic strategy.

Michael Porter's Value Chain Mapping

Cost leadership strategy

This strategy implies that a company has to become a lower-cost producer by increasing its efficiency and lowering their operating costs. People searching for a better deal will likely buy the same products or services for a lower price. As a result, companies can get a wider audience and become the cost leaders in a particular industry. 

Differentiation strategy

This strategy implies that a company has to create such a product or service that will be distinguished from similar products or services on the market by unique characteristics, features, quality, pricing. This approach requires investment for research & development and for marketing. However, ROI is worth it. 

Focus strategy 

This strategy implies that a company starts developing products or providing services in a narrowly defined market segment. According to the focus marketing approach, companies have to provide better services or sell products of higher quality than their competitors do. 

Who needs value chain analysis? Where to find the right analysts?

Companies who want to find new ways to boost their productivity and profit, and become leaders in their market usually seek help from value chain professionals. Usually, the primary users of the value chain mapping tools include project managers, business analysts, administrators. 

The analysis of the value chain comes closer to digital transformation since the outcomes of the mapping usually show that a business needs to restart digitally. Thus, you will actually need to contact a software development company. Having doubts you need the mapping? Here is a checklist to understand if this is the right solution for your company right now. 

Does my business need value chain mapping? 

Here are 10 cases when you can safely say that you need it:

  1. You feel that you waste your time. Thus, you have to define the business activities which will be useful to your company.
  2. Your brand awareness is weak and you need to improve it.
  3. You often lose new business opportunities and feel that your business needs to be more responsive to various changes and risks.
  4. You want to reduce costs for production and lower the price offerings for your customers to become a cost leader in the market.
  5. Your employees are not as productive as you wish them to be. 
  6. Customers want to get products or services of higher quality.
  7. You would like to automate your production and operational activities.
  8. There’s a strong need to differentiate from competitors and provide unique services or produce unique goods.
  9. You feel stressed because all your business activities are like a mess.
  10. You don’t see any new opportunities for your business development. 

Digital transformation for manufacturing companies. Read how others do this!

Digital transformation as an effective way to gain a competitive advantage

Value chain analysis drives digital innovation. The results of the analysis bring the understanding that your business needs something more than merely new offerings. Usually, value chain mapping leads to rapid innovation, new user experience, implementation of new technologies like Big Data tools, IoT, artificial intelligence. Putting it all together, we have digital transformation. 

Being one of the key ways towards competitive advantage, digitalization helps companies build powerful strategies to gain the objectives identified in the value chain mapping. For example, your company is operating in e-commerce. Mapping results show that you need to improve data analytics to better understand customer behavior. You will be recommended to implement some Big Data tools like predictive analysis software.  

Read how banks transform digitally in our latest article.

Steps to conduct value chain analysis

Are you planning to reinvent your operations and use value chain mapping? Here’s how it works.

Value Chain Analysis

1. Identify primary and support activities

According to Porter’s model, business activities are divided into primary and support. Primary activities include inbound logistics, outbound logistics, operations, marketing and sales, services. Supporting activities include company infrastructure, human resources management, technology development, and procurement. An in-depth analysis of these functions provides a basis for identifying new cost policy and/or differentiation capabilities.  

2. Define the value of your business to customers

Within mapping, specialists define what value each activity brings to your clients. They compare and contrast your activities to the objectives of your business and define if those coincide. Once the mapping is done, you will understand how labor-intensive your business activities are. As a result, you will be able to define the best ways for improvements.  

3. Make up a list of opportunities 

Once the stakeholders have the results of value chain mapping, they can clearly understand their strengths and weaknesses. Analysts provide a list of opportunities and recommendations on how to seize those opportunities. First, minor changes are taken into account. Next, bigger improvements are implemented to gain goals. 

How to apply value chain mapping

Applying properly the findings of value chain analysis is important for successful business development. Lower cost and differentiation are not the only things you can offer to your customers. Digital transformation confirms this. Developing a personalized approach to customers, improving user experience, or offering innovative functionalities can be as important as cost. Digital improvements can drive customer loyalty and create a strong marketing position for your business.  

How Can DICEUS Help You? 

In the context of digital transformation, DICEUS offers the following services to its customers:

  • Value chain mapping
  • Business and IT gap analysis
  • Software audit
  • Legacy migration
  • Application development

The process of complete digitalization is time- and effort-consuming. It starts with the identification of improvements that can be applied to your business. As a result of different types of analyses, we can recommend you the best-suited solution, either legacy migration or new software solution development. For example, you have a legacy platform and would like to improve its performance. We can offer you either the migration to microservices or the new platform development from scratch.