How do consumers respond to promotions on fresh meat

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Value Chain Management The Pursuit of
Sustainable Competitive Advantage Andrew
FearneProfessor of food marketing supply
chain management Kent Business School,
University of Kentand Adelaide Thinker in
Residence
PIRSA Fisheries Workshop March 5th, 2008
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Contents

• The Goal
• Value Chain Management
• What is it?
• How do we do it?
• Tools and techniques
• Discussion

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The Goal
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The Goal

• Allocation and utilisation of resources in a
  manner that is hard to contest and even harder to
  replicate
• Add more value (process effectiveness)
• At lower cost (process efficiency)
• Faster than the competition (responsiveness)
• Responsibly (CSR)
• Economic
• Environmental
• Ethical/Social

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Sustainable competitive advantage?
Value Propositions (as perceived by consumers)
?
?
Service Excellence
Innovation Excellence
Asset Utilisation (Competitors)
Asset Utilisation (Yours)
Cost differential
?
Operational Excellence
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What is value?
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The more relevant you are the less dependent you
are on execution
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Value Chain Management
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Value chain management

• The integration of key business processes from
  end user through original suppliers that provides
  products, services and information that add value
  for customers
• (Global Supply Chain Forum, 2002)
• Ohio State University 3M, Cemex-Mexico,
  Coca-Cola USA, Colgate Palmolive Company,
  FletcherChallenge, Ford Motor, Company, Hewlett
  Packard, International Paper, Limited Logistics
  Services, Lucent Technologies, Maersk Sealand,
  Taylor Made-adidas Golf Company, Wendys
  International Inc., Whirlpool Corporation

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Value Chain Management What is it?

• Collaboration within and between businesses in
  the value chain, the purpose of which is to
  improve the competitiveness of the value chain as
  a whole
• Development of new (value added)
  products/services for distinct customers and
  targeted consumer segments
• What we do output
• Process improvement for existing
  products/services beyond organisational
  boundaries
• How we do it input
• Much easier to talk about than achieve

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VCM how do we do it?
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VCM fundamental enablers

• Strategic alignment
• Drives resource allocation and process
  integration
• Value chain visibility
• Information flow (extends the line of sight)

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Value chain visibility
Demand
Demand
Demand
Time
Time
Time
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VCM fundamental enablers

• Strategic alignment
• Drives resource allocation and process
  integration
• Value chain visibility
• Information flow (extends the line of sight)
• Relationships
• Inter-personal (inter and intra-organisational)
• Communication (strategic and operational)
• Trust and commitment (asset specificity)
• Consumer insight
• Value propositions and value chain design

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Value Chain Analysis
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Value Chain Analysis

• Scope for improvement everywhere but often hard
  to see (particularly when nobody is looking!)
• Need to find ways to draw the attention of
  different stakeholders to the opportunities for
  improvement at different stages in the supply
  chain
• Value chain analysis can be an effective way to
  extend the line of sight
• Analytical tool
• Communication tool
• Catalyst for change
• Seeing the whole

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Value Chain Analysis

• Multi-dimensional diagnosis of the current state
• Material flow (what?)
• categorisation of activities (in the eyes of the
  consumer)
• wasteful, necessary, value adding
• Information flow (how?)
• basis for decision-making (strategic
  operational)
• Relationships (why?)
• Trust, commitment, communication (within and
  between organisations)
• Identification of improvement projects (future
  state)
• Implementation is a collective responsibility and
  the benefits must be shared
• Silo solutions will always be sub-optimal and
  will not deliver sustainable competitive advantage

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Example
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Contractors
3rd Party Logistics
Agronomists
Field Service
Simplot HQ Marketing, Logistics, NPD
Material Flow W Waste N Necessary but non
Value-adding V Value-adding
Information Flow Weak . . . . . .
Partial Strong
Balance of Information Flow Equal Unequal Uni-dire
ctional
Relationship Strength Red Weak Orange
Basic Green Strong
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Contractors
3rd Party Logistics
Agronomists
Field Service
Simplot HQ Marketing, Logistics, NPD
Relationship Strength Red Weak Orange
Basic Green Strong
Material Flow W Waste N Necessary but non
Value-adding V Value-adding
Information Flow Weak . . . . . .
Partial Strong
Balance of Information Flow Equal Unequal Uni-dire
ctional
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Contractors
3rd Party Logistics
Agronomists
Field Service
Simplot HQ Marketing, Logistics, NPD
Relationship Strength Red Weak Orange
Basic Green Strong
Material Flow W Waste N Necessary but non
Value-adding V Value-adding
Information Flow Weak . . . . . .
Partial Strong
Balance of Information Flow Equal Unequal Uni-dire
ctional
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• Any Questions?

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Exercise
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Identifying key issues in fish value chains

• Break out groups
• Five areas for discussion (10mins each)
• Material flow (inconsistent practices,
  bottlenecks, stocks, utilisation of equipment)
• Information flow (what, when, where, how much)
• Relationships (contracts, communication, trust,
  understanding, commitment)
• What role for Govt? (facilitation,
  infrastructure, training)
• Any other issues?