In p>985, Professor Michael Porter of Harvard Business School put forward the concept of value chain for the first time in his book Competitive Advantage, pointing out that it is a description of a series of operational activities to increase the practicality or value of an enterprise's products or services, which mainly includes three parts: internal value chain, competitor value chain and industry value chain.
industry value chain analysis means that enterprises should look at their relationship with suppliers and distributors from the perspective of industry and look for ways to reduce costs by using industry value chain.
the analysis of industry value chain can not only make enterprises know their position in the industry value chain, but also the threat posed by the integration degree of other enterprises in the same industry value chain, and also enable enterprises to explore and use the industry value chain to achieve the purpose of reducing costs. This industry value chain is also called vertical connection, which represents the relationship between enterprises and their upstream and downstream in the industry value chain. Improving the connection with suppliers can reduce the production cost of the enterprise and usually benefit both the supply and demand sides. For example, TCL's acquisition of Thomson's color TV business in France reduced the cost of overseas sales, and made its products recognized by local consumers to a greater extent, thus enhancing the international competitiveness of its products. This is the application of forward integration of value chain.
according to the traditional cost management methods, in the procurement stage, most enterprises adopt economic batch method, shopping around and bidding for suppliers. The same is true of the relationship between enterprises and distributors. Both of them focus on how to maximize their own profits, and their cooperative relationship is maintained only by contracts. In this way, powerful companies can naturally make weak companies make concessions, so as to achieve their own goals. Once the market relationship changes and weak companies become stronger, they will in turn force their partners to make profits. This phenomenon is very obvious in the retail industry. With the rapid growth of supermarkets such as Wal-Mart and Carrefour, manufacturers began to compete fiercely for shelves, so various shelf fees and stacking fees began to appear, and retailers may also force manufacturers to participate in their promotion plans.
At present, this phenomenon is very common, especially in our country. At present, enterprises mainly put the concept of cost reduction on the internal value chain of enterprises and adopt standard cost control method to reduce production costs. Only a few enterprises, such as Handan Iron and Steel Company, really attach importance to the management of industry value chain.
Dr. Zhang Jijiao of China Academy of Social Sciences put forward the importance and application of process reengineering and ERP in the book "Value Chain Management", but it only emphasized the core competitiveness within the enterprise and did not involve the industry value chain. This brought great profits to China enterprises at that time. However, in the current market environment, there is less room for reducing the internal costs of enterprises, and the costs between enterprises should be managed and reduced. At the same time, suppliers or distributors with close ties will also provide corresponding suggestions to help enterprises reduce their internal costs. The following article will take a typical manufacturing enterprise as an example to explain the application of value chain management in today's industry.
second, the application of industry value chain management
(a) the premise of industry value chain management-the change of concept
for manufacturing enterprises, the price of materials and services provided by suppliers determines the procurement cost of enterprises, and the purchase price of dealers determines the selling price of enterprises. The traditional idea is to reduce the purchasing cost and increase the selling price as much as possible in order to maximize their own profits. Managing production with this concept will inevitably lead to "zero-sum transaction". The new concepts needed in the new period and new environment are as follows:
The communication with suppliers is not to pursue the lowest purchase price and increase their own profits, but to pursue shorter production cycle, stronger market adaptability, higher product quality and higher inventory turnover rate.
instead of selling more goods to distributors, enterprises should find ways to increase the quantity of goods sold to customers through distributors and maximize the profits of the two companies.