Value Chain Strategy#
The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement.
Management of these activities and linkages between these activities is a source of competitive advantage. Value Chain strategy involves end-to-end, "Extended Enterprise" planning of supply and distribution strategy. The objective of value chain strategy is to design an upstream and downstream supply chain that provides the right balance of flexibility and cost-efficiency while meeting the requirements of the marketplace.
- What is the best end-to-end value chain that meets business objectives of lowest total costs,
utilization and customer service levels?
- What is the best sourcing, manufacturing and distribution strategy?
- What supply and capacity policies should be in place to ensure the required flexibility?
- What should be the inventory policy and positions at different nodes in the value chain?
- What is the carbon footprint of our existing or potential value chains?
- What if some of the underlying assumptions are modified - test of robustness?
SimFlex Value Chain Strategy Solution#
SimFlex Value Chain strategy solution focuses on the primary activities of the value chain. SimFlex models and analyzes the current operating conditions and performance of the existing and potential value chain. This can discover major gaps and helps determine and prioritize improvement initiatives and frame potential what-if scenarios. What-if scenarios can reflect different procurement options, alternative manufacturing locations and go-to-market strategies, or a combination of various initiatives to improve the business performance.
SimFlex has complete end-to-end value chain modeling capabilities, from sub-tier suppliers to the end customers, encompassing multiple companies, facilities, currencies and products down to individual SKU and product line level. Real-world phenomena like product life-cycles, fluctuating demand and forecast inaccuracies, price erosion, surcharge trends, lead time variations, tax, duties and currency exchange rate fluctuations can also be considered. SimFlex contains customizable reports and scorecards, offering both a top-level view and in-depth analysis of multi-dimensional metrics covering cost, finance, inventories, capacity utilization, and customer service. Companies can also test how "green" their supply chain is, as SimFlex calculates the amount of "Green House Gas" (GHG) emissions associated with production and transportation of goods.