Value Chain Management - Assignment Example

Value chain management Introduction Value chain management (VCM) is delineated as the incorporation of all resources beginning with the vendor’s vendor. Value chain management incorporates materials, information, facilities, labour and logistics amongst others into a capacity managed and time responsive solution which minimizes wastes and maximizes financial resources (McGuffog, 2009). This means that effective and efficient value chain management maximizes the customer’s value. Value chain management developed after managers came to the realization that time responsiveness was not merely the major ingredient in the satisfaction of clients. The supply chain connects the links amongst upstream suppliers, manufacturers and downstream distributors had also a resource-efficiency component and cost element associated with them (Hai, 2010). This awareness created the requirement and importance of value chain management and it includes the management of the entire connections of supply chain in the most effective manner. In some cases, it encompasses the elimination of components of the supply chain; for instance, the emergence of Web marketing has eliminated the requirement for retail outlets. A good example is Amazon.com which has eliminated the requirement of physical ‘mortar and bricks’ retail locations (McGuffog, 2009). Atomic Dog Publishing is another example which has assisted in cutting out the components of supply chain. This is a text book company that offers textbooks for students online every semester. This has helped in eliminating intermediaries between customers and text development; meaning that Atomic Dog has been able to manage its value chain via disintermediation by cutting out the requirement for college bookstores. Value chain management incorporates various aspects among them quality management (Pfeifer, 2002). In this paper we will focus on quality management and explain how the aspect is influenced by a customer and a business process perspective. Furthermore, the paper will show where in a standard value chain quality management is expected to be seen. Customer and business process perspective on Quality management A business process is a collection of linked structured activities that produces a particular product or service for specific customers (Bounds et al., 1995). A business process perspective on the other hand encompasses the identification of processes by the managers which are most essential for attaining the objectives of the shareholders, customers and the organization as a whole (Bounds et al., 1995). Typically, organizations develop their goals and objectives for this perspective after the measures and objectives for the customer and financial perspectives have been formulated. Customer process perspective on the other hand entails how the customers view the firm and it involves various aspects encompassing customer satisfaction, customer service, customer retention, and availability of new markets and new products (Kaplan and Norton, 1996). It is apparent that customer and business process perspectives have great influence on quality management. In other words, the activities carried out by the businesses and the customers determine greatly the level of quality management. Within most business sectors, the notion quality management has particular definition. This specific meaning does not intend to guarantee good quality but rather to make certain that products or services are consistent. Quality management encompasses four key elements including quality control, control planning, quality improvement and quality assurance (Kenneth, 2005). Quality management focuses both on service or product quality and the means in which this is attained. Thus, it is true saying that quality management makes use of quality control and assurance procedures together with products and services to attain more reliable quality. Quality management is defined as the integration of quality in all the phases of the organization (Pfeifer, 2002). Quality is considered a vital factor especially in the contemporary society which is characterized by increased competition. Organizations need to set themselves apart in order to remain competitive in the market. In this case, in a business process perspective, provision of better quality products and services is one of the major factors of gaining a competitive advantage and ensuring customer satisfaction. This can only be attained if the organizations activities are in line with the employees and customers needs. By ensuring employee involvement, focusing on customers, ensuring good leadership and management, and ensuring a continuous process improvement, business has been able to influence their levels of quality management. From the customer’s perspective, quality is an external orientation whereas from the employee’s perspective, quality is an internal orientation (Gitlow et al., 2004). Internal orientation centers at measuring various characteristics of the product or service, whereas external orientation centers on the clients in two ways including: quality comprises of the ability to satisfy needs and wants; and quality is fitness for use (Pfeifer, 2002). In this case, customers have highly influenced quality management in a number of ways. For instance, it is true that quality is the first and major factor that customers put into consideration while making decisions to buy a product or service. Many customers usually make comparisons of similar products offered by various companies in order to purchase the most quality product in spite of their prices. Taking an example with the mobile phone industry which includes various companies such as Nokia, Samsung, and Motorola amongst others, most people purchase Samsung and Nokia although they are highly priced. The reason behind this is that the products are deemed to be of high quality, they are durable, have good feature, and besides they are reliable. This is turn has influenced quality management in that most business organizations are working hard to produce products or offer services which will be pleasant in the eyes of the consumers. Pleasant here means that the products will be able to satisfy the needs and wants of the customers and at the same time they are fit for use. Total quality management Total quality management (TQM) is an integrative management philosophy for constantly improving the quality of processes and products (Hradesky, 1995). Total quality management necessitates that the quality of products and processes is the responsibility of all individuals who take part in the production and consumption of such services and products provided by the company. This means that total quality management capitalizes on the participation of various people including the management, suppliers, the personnel, and the clients, as this will assist in meeting or surpassing the expectations of customers. Cua et al., (2001) classified the most common practices of total quality management and they encompass process management, cross-functional product design, customer involvement, supplier quality management, committed leadership, information and feedback, cross-functional training, strategic planning, and employee involvement. Total quality management is based on three principles which encompass customer focus, continuous process improvement and total involvement (Pike and Barnes, 1994). Total quality management is a management technique aiming at long-term achievement through adequate satisfaction of customers and this calls for all organizational members to take part in improving services and products, processes and the working culture of the organization (Hradesky, 1995). Increasingly, almost all organizations in Europe perceive that Total Quality Management is an approach of managing activities with an aim of gaining effectiveness, efficiency, and competitive advantage thus, guaranteeing long time achievement for instance meeting the needs and requirements of their employees, customers, stakeholders, financiers, and the entire community (Bounds et al., 1995). As a result, the formulation and implementation of total quality management programmes may attain considerable benefits for instance, greater satisfaction, reduced costs, and amplified efficiency, all resulting to superior business outcomes. Customer focus It is true that organizations rely on their clients and as a result, they should be aware of both the present and future needs of their customers. Furthermore, such organizations should meet the requirements of their customers and attempt to surpass customers’ expectations. An organization is deemed to have achieved customer focus when all persons in such an organization are aware of both the external and internal customers and besides, client needs should be met in order to make certain that both the external and internal customers are efficiently satisfied (Kaplan and Norton, 1996). Businesses perceive that one of the factors of enhancing quality management is by laying their focus on their customers. This is due to the fact that focusing on customers will assist the organizations in understanding the needs and wants of such customers which as a result will enable companies to offer quality products thus satisfy their customers efficiently. Offering quality products is one of the elements of quality management. The key benefits of customer focus to the organization encompass the following: Enhanced client loyalty resulting to repeat business; amplified efficiency in the employment of the company’s resources to improve customer satisfaction; amplified market share and revenue obtained via fast and flexible reactions to market opportunities (Kaplan and Norton, 1996). Besides, the application of the principle of customer focus generally results to: making certain that organizations objectives are linked to the needs and expectations of the customers; researching and understating the expectations and needs of the client; proper communication of the needs and expectations of the clients in the organization; systematically managing the relationships of the customers; measuring client satisfaction and taking actions on the outcomes; and making certain that a balanced approach between customer satisfaction and other parties including employees, owners, financiers, supplier, and the society in general is met (Kaplan and Norton, 1996). Continuous process improvement Continual improvement of a company’s overall performance is deemed as one of the major quality objectives of such a company. Performance improvement is characterized by customer satisfaction meaning that the products or services offered by such a company are good enough to satisfy the customers (Bounds et al., 1995). It is apparent that customers are the core of every company which implies that for the success of any organization is determined by the level of customer satisfaction. The more the customers feel satisfied the high probability that such customers will return to purchase the company’s products and this is referred to as customer retention. Some of the benefits of continual process improvement encompass: performance advantage via enhanced organizational abilities, alignment of advancement actions at different levels of a company’s strategic intent, and flexibility to respond speedily to opportunities (Bounds et al., 1995). Moreover, the application of the continual improvement principle normally results to: the recognition and acknowledgement of improvements, creation of goals and objectives to guide for continual improvement, providing individuals with training in the techniques and instruments of continual improvement, ensuring continual improvement of services and products, systems and processes, a goal for all persons in the organization, and making use of a reliable organization-wide procedure to continual improvement of a company’s performance (Cue et al., 2001). Involvement of people Involvement of people is deemed to be the most significant principles of quality management in the different steps of the process of improvement (Pike and Barnes, 1994). The employees and other persons within the organizations are perceived to be the fuel which drives the company, and solid personnel depends mainly on involvement; form the staffs who carry out the strategies to the top management who ensure that goals and objectives are set in order to make certain that processes are correctly implemented (Cua et al., 2001). In this way, it is true that quality management depends on the involvement of persons for the eventual success in all strategies and processes. Evidently, individuals at all stages of a company are the spirit of such an organization. Their complete involvement allows their capabilities to be employed for the benefit of the company. Some of the key benefits of involving people in the organization include: motivated, dedicated, and involved persons within the organization, creativity and innovation in furthering the objectives of the organization, individual accountability of their performance, and persons who are eager in participating and contributing to continual improvement (Kaplan and Norton, 1996). Typically, the application of the principle of the involvement of individuals results to: individuals openly discussing their issues and problems, sharing of knowledge and experience amongst individuals, individuals actively seeking chances to improve their knowledge, competence, and experience; persons understanding the significance of their role and contribution in the organization, individuals assessing their performance against their individual objectives and goals; persons classifying constraints linked to their performance; and individuals accepting ownership of predicaments and their role in solving the same. Involvement of people assists in quality management in various ways. It is apparent that individuals play a major role across all facets of quality management procedures, with every individual’s role playing an essential part (Kenneth, 2005). The ways in which people involvement influence quality management encompass the following: Taking ownership and responsibility with an aim of resolving obstacles. It is apparent that every individual within the company takes complete ownership of their responsibilities and roles. As a result, this ensures a more efficient process of problem resolution across the board. Individuals seeking ways in which they can be able to make advancements, enhance knowledge, competencies and experiences. Evidently, every individual within the company should be given the opportunity to be proactive through finding ways which assist in improvement. Furthermore, every individual should have the opportunity to enhance their personal experiences and skills to help the organization in attaining its objectives and results. People are able to share experiences and knowledge easily in groups. All persons within the company have the right to share their experiences, skills and knowledge in groups. This assists in facilitating a more efficient organization due to the fact that the groups and departments within the organization are strengthened, and this aids quality management by making certain that departments are capable of operating smoothly and more efficiently. People within the organization should focus on creating value for clients. They have the role and responsibility of adding value for their clients in all organizational levels and departments. Such persons involved in the organization encompassing the client relations personnel, sales staff, entry level personnel or the management is necessitated to generate value for the clients in any manner in which they are able to. All individuals within the company should take part in promoting the goals of the organization innovatively. Innovation plays a major responsibility in finding novel ways in which the organizational goals and objectives can be furthered and this ensures return on investment for all the involved persons and especially the organization in general. Involvement of people helps them in getting satisfaction from the work done. Certainly, individuals who are finding their work satisfying and rewarding are highly expected to involve themselves in all phases of improvement due to the fact that they have a vested concern in the same. This implies that the personnel should have the capacity of finding ways of tackling any issues they have with their tasks or workloads. Furthermore, the involvement of persons aids in improving the representation of the company to the clients, the local communities and the entire public. Certainly, all persons in the company necessitates advancing the representation of the company to its stakeholders, beginning with the clienteles, to the local communities and finally to its audiences. Making individuals fervent and proud to be involved in the company and its diverse processes is the final component which determines how individuals are able to sway improvement. This will make certain that such persons have a specific interest in quality management and in so doing, inspiring them to adhere to the procedures of quality management. (Pike and Barnes, 1994) Efforts to achieve these principles In order to achieve these principles, organizations have focused on various factors among them commitment of the top management, employee involvement, training and development, reward and recognition and measurement. Employee involvement is defined as a procedure in which the employees are empowered to take part in decision making and in other improvements activities suitable to their levels in the company. Managers have been greatly influenced by McGregor’s theory which brought upon the notion of participative managerial style (Kaplan and Norton, 1996). This is turn has brought about various forms of employee involvement and they encompass special activities for instance, quality of work life programs (QWLP); and job design approaches. Research has verified that organizations are differentiated from each other not by the service establishments, the products, secret ingredients or the process used; as these can eventually be duplicated, but by the people (Kaplan and Norton, 1996). Japan has recognized this aspect and it is one of the major reasons why the country has been a success in the globe of markets. Businesses here place great value on the integration of individuals with company objectives, processes and equipments. This has brought about quality management and it can be revealed in employee responsiveness, assurance, and empathy in organizations which are some of the factors of service quality. An example of an organization in which employee involvement is considered a vital factor in influencing quality management is at Samsung Electronic a subsidiary of Samsung Group a South Korean global conglomerate headquartered in Seoul, South Korea. The company produces a wide range of products including mobile phones, refrigerators, televisions, LCDs, cameras and other electronics. In fact, it was ranked the world’s biggest IT Company by revenue in the year 2010 (Khanna, 2011). Samsung enjoys a monopoly in South Korea and has a greater influence on the economy, politics, media and culture and it has been referred by many companies globally as a role model for success. 20 years ago, Samsung, a highly integrated business system that was successful in its home market couldn’t secure its future in the international market (Khanna, 2011). Thus, in a company focused on constant development process, Samsung established a focus on innovation. The company introduced strangers from outside the homogenous Japanese culture into the company. The new employees largely from the western culture could not speak or understand the company’s culture but were able to bring in new ideas into the development and enhancement of Samsung’s products. This saw even young people being at higher positions than their elders contrary to the previous trends in dominant Japanese culture. Chairman Lee Kun-Hee, despite foreseeing the challenges that faced opening Samsung to new ideas and culture, changed only what needed to be changed. This saw the company become the second profitable manufacturer after Toyota by 2004 (Khanna, 2011). Samsung management by Lee has seen the company have a different perspective in management. Employees have been taken to exchange training programs to the West and from the West to Japan. The mixing of the two cultures and the involvement of the employees in the company’s processes has made it a global leader in electronics and information technology (Khanna, 2011). Employee involvement starts with a modification in management attitude and a consideration that most individuals are proud of their work, wishes to do their work effectively, wants responsibility and has valuable and essential ideas to share. This as a result creates a motivated employee who identifies himself with the organization, does his work efficiently in order to adequately satisfy the customers with better service and product offering. In fact, the first and major factor that customer considers before making a purchase is quality whether it is a product or a service. Research has actually proven that although important, price is not a major factor considered while making decisions to purchase as customers prefer good quality products in spite of their prices. Where quality management should be addressed in a standard value chain A value chain is a chain of activities for a company that operates in a certain industry (Hai, 2010). The suitable level for constructing a value chain is the business unit. Generally, products go through various activities and at each level the product get some value (McGuffog, 2009). The various requirements of a value chain include modifications in company processes, collaboration and coordination, committed leaders and managers, investment in information technology, flexible and adaptable jobs, a supportive company attitudes and culture, and capable employees. Efficient integration of these requirements into the value chain will ensure that the products generated are of total value as each requirement will add extra value to the product. In a standard value chain, quality management should be addressed in all stages including the production stages, distribution stages and the retail stages (Gitlow et al., 2004). However, much emphasis should be put at the production of the product as this stage is what determines the quality of product produced by the employees. Certainly, managers should ensure that employees are well motivated, involved in the company processes and recognized as this will increase their morale to produce better quality products and offer better services to the customers which as a result will render much satisfaction to the customers. In a service industry, ensuring quality management will result to efficient customer service, efficient employees who are reliable, responsive, empathetic, and who shows courtesy to the customers. This results to the need of quality management in retail shops and distribution centers. Customers need a reason to return to the shop again to make a purchase and this will only be achieved if such customers are served appropriately. This is referred to customer retention and organizations which are able to retain their customers also have a high probability of attracting new ones as customers act as marketers. Conclusion It is apparent that quality management is an integral part of any organization. Quality management which is defined as the integration of quality in all facets of the organization encompasses such elements as quality control, control planning, quality improvement and quality assurance (Kenneth, 2005). Quality management focuses both on service or product quality and the means in which this is attained. From the customer’s perspective, quality is an external orientation whereas from the employee’s perspective, quality is an internal orientation (Pfeifer, 2002). Internal orientation centers at measuring various characteristics of the product or service, whereas external orientation centers on the clients in two ways including: quality comprises of the ability to satisfy needs and wants; and quality is fitness for use (Pfeifer, 2002) Most business organizations perceive that Quality Management is an approach of managing activities with an aim of gaining effectiveness, efficiency, and competitive advantage thus, guaranteeing long time achievement for instance meeting the needs and requirements of their employees, customers, stakeholders, financiers, and the entire community. In this case, companies should integrate quality management in all stages be it production, distribution or retail as this will result to better customer satisfaction followed by the company’s success. References Bounds, G; Dobbins, G and Fowler, O 1995. Management: A Total Quality Perspective, International Thomson Publishing, Ohio. Cua, K. O., K. E. McKone, and R. G. 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Total Quality Management in Action, Chapman and Hall, London. Read More