Article 
Why Is Value Chain Mapping Vital to Business Performance?

Value chain mapping involves reviewing, defining and documenting the steps that get your product or service from design to market.

When you map your organization’s value chain, you can establish a clear picture of the delivery cycle of your product or service. You can uncover profound insights that protect your business, drive growth and fortify your brand position.

Few companies acknowledge delivery in the context of a value chain. Instead, they focus on the product or service as the solution. As a result, the lack of visibility across the internal delivery process invites many potential implications such as:

• Lost revenue
• A weakened brand presence
• Impacted relationships with existing clients
• An inability to meet market demand
• Compromised product or service quality
• Reduced market share

To demonstrate how value mapping can both prevent and rectify these issues, here are three real-world scenarios in which companies were able to unearth vital information, take action and improve business performance.

Scenario 1 – A Lighting Manufacturer

A lighting manufacturer engaged us to consult on brand strategy. We performed a detailed assessment not only of its brand but also its business and operational processes. 

Mapping the Value Chain

During the value mapping process we learned that when a field technician headed to a jobsite, he or she would call the customer before arriving at the jobsite to provide a guarantee on the estimated time of arrival

Once the technician arrived, he or she would inspect the site before any installation or maintenance work began. And any work carried out was performed outside of regular business hours, which would ensure the customer’s operation wasn’t interrupted.

Upon completing the job, the technician would clean and reorganize the site area, leaving it in better condition than at the time of inspection. And the customer would not be billed until the company received confirmation that the affected area had improved.

This scenario might seem like a routine service. But when the manufacturer started to calculate the significance of calling ahead, working outside of business hours, cleaning and improving the site area, it turned out this entire process saved the customer a lot of money.

At the same time, we also discovered that the company would test every single fixture to ensure it worked before leaving the warehouse.

The Result

By breaking down the value chain from ordering and fabrication to shipping and installation, we were able to identify several critical steps that many providers skipped, charged for or simply couldn’t offer. Once the value chain was converted into a graphic it became a powerful sales tool.

Consequently, the mid-market manufacturer was able to offer iron-clad guarantees – from service excellence to remarkable levels of compliance. As a result, the company could differentiate itself in a commoditized market and acquire more business from manufacturing behemoths.

Scenario 2 – A Computer Remanufacturer

A computer remanufacturer operating in the after-market sales sector had engaged us to assess and help differentiate its brand.

Mapping the Value Chain

Buying after-market product in bulk comes with inherent risks. Some items might come in damaged or not functioning at all, like returned products that never make it back onto the shelf.

The value mapping process uncovered a key differentiator. To ensure inventory wasn’t compromised, the remanufacturer would check every item that came from the truck.

First, it would match the model, serial number and date of assembly, then examine the actual condition for any defects, scratches and so on. This allowed the warehouse to accurately itemize the product and its current state for sales teams before offering products back to the market.

Once an item was ordered, it would be checked again to ensure that, after sitting for months, it still worked and matched all the specifications of the promised sale.

Once all of the inventory passed inspection, the remanufacturer would ship the items to its customers, and installers would subsequently perform one more quality assurance field test. This level of quality control was unheard of in this industry. A triple-check policy was at play.

Many after-market companies buy and ship bulk technology products to customers without taking the time to inspect every item in inventory. Worse still, they will ship the wrong or broken product, sometimes intentionally, to buy time for them to find the correct or working product.

These delays are rampant in the industry, leading to costly customer downtime and repetitive IT installations. But the triple-check policy meant the remanufacturer could create differentiation through new warranty processes.

The Result

By documenting its procedures, the remanufacturer pivoted its brand position toward a more competitive angle in commoditized after-market sales.

The value chain separated the company from bad practices, increased win ratios and allowed for five-to-seven-point margin increases in an otherwise manufacturer- and distributor-commoditized market.

Scenario 3 – An IT Services Firm

During a rebranding project for a professional IT services company, we analyzed and documented each business process and discovered customer service gaps.

Mapping the Value Chain

When an IT technician headed to a jobsite, he or she would perform the task for the customer, return to the office and send the bill. On the surface, this seems to be a straightforward process much like the example of the lighting manufacturer.

Further examination revealed that often the customer or a management layer was not aware of the technician’s arrival ahead of the appointment. Nor the fact that a piece of equipment was malfunctioning and many service tickets were sent in from the field level. This inadvertently frustrated the customer as a result.

If the technician had given notice they were coming, the customer would’ve had ample time to consolidate several outstanding issues in one visit. This also contributed to surprise billing to management or slow payments while they questioned and validated the service. And had management known the technician was coming, they would have taken the time to talk strategically about the account, future needs and plans.

The Result

By mapping the value chain, the IT services company was able to drastically reduce the customer attrition rate while increasing the volume of business from their current customer base. The company was also able to:

• Reduce the number of client trips and work orders while scaling project billing through consolidation
• Improve efficiency in the way technicians were deployed
• Reduce the number of outstanding bills and time taken to receive payment
• Increase price points for the same level of IT services that customers previously paid for

Not only did value chain mapping help reinforce bottom-line stability but it also positioned the company for sale at a premium well above the market price. At the time of acquisition by a larger competitor, the IT services company had grown rapidly and enhanced the value of its business.

A Straightforward Evaluation Makes a Big Difference

In all three scenarios, each company was able to make substantial business improvements due to high impact value chain mapping. And it wasn’t an arduous task that required an extraordinary amount of time or money to perform.

Value chain mapping is a scalable activity that plays an instrumental role in the way your company operates and does business. By documenting every process and hand-over stage across your delivery setup, you can control pricing discussions, improve operational efficiency and stay ahead of the competition.

In our next article, we’ll explain how you can map your value chain effectively. In the meantime, check out our recent piece that demonstrates what the true business value of branding looks like.