Logistical value chain might just seem like a random business term, but it could be the answer to your business’s financial problems. By first looking at ‘value chain’ you will better understand where the logistics element fits in.
What is a Value Chain
A value chain is a way in which a business adds value throughout its processes. A business is made up of many different processes and depending on how large the business actually is, you will find more processes. These processes can often become difficult to manage. When they aren’t managed efficiently, it creates small shortcomings. These shortcomings might not be present in every process, but if you aren’t considering every area of your business, you are most likely not running it to its full potential.
By incorporating a value chain in your business, you will generate value at all levels of your business. This value then transfers up to the chain and can be utilized in different sections. Think of it this way, by creating value in production – maybe by improving staff efficiency through morale-boosting activities – you are able to generate more out of the business than you previously were.
Logistical Value Chain
The logistical value chain is incorporating value chain into the logistics area of your business. We already know that every section of your business can benefit from increased value creation, so why not focus on an area that is the lifeblood of any business – logistics.
If a business does not have their logistics running smoothly, they will run into issues with production, with customer relations, and ultimately with profits. Instead of having to worry about when your suppliers are going to deliver the raw materials and if your customers are going to get their product on time, you can implement a logistical value chain.
There are many ways to go about doing it and it will be unique to your situation. Some things might create value for you, while others won’t. It is important to understand your business and its relationship with both its suppliers, customers, and any intermediaries involved.
Outsourcing logistics is common practice for many businesses, but this puts your efficiency in their hands. In order to best utilize a logistics company, you should make sure you have a strong relationship with them so that your business is handled correctly.
Every area of your business can benefit from improvement. The biggest failure of a business is thinking they have nowhere to improve. One New Zealand company, Prosan Ltd, sells hand dryers and soap dispensers to large commercial outlets, businesses, and even domestic residences. One of their focuses is value creation and they promote their products as a means to create value in an area of your business that you might never have even thought of – basic hygiene. They even have a value creation calculator which can tell you an estimated amount that you will save – that’s good marketing.
No matter your business, value creation should be a priority. Take your time and find the right way to manage your business.