The value of your product is produced in your supply chain

value chain

The Value Chain blog post was originally posted in Jakamo Official Blog on 1 November 2017.

Value chains are complex in nowadays’ networked business ecosystems. 60-80 % of the company’s costs can easily come from materials, components, assemblies, systems and services bought from external suppliers.

It’s often forgotten that it’s the same with knowledge. More and more know-how is outside the company. Many processes have been outsourced already long ago and the company’s internal understanding e.g. about the latest manufacturing technologies, materials and ways of working is lacking.

Therefore, it is definitely not enough anymore to involve only own employees to development and continuous improvement (CI), such as product and process improvement, and DFMA (design for manufacture and assembly) activities. Company’s own people know the final products’ customer requirements, but suppliers know the details of products and services they are delivering much deeper.

It is time to start thinking about the whole value chain instead of internal operations only. In this way, it is possible to achieve great benefits in costs, quality and lead-times. This is actually not even difficult. It’s about creating cross-company multi-disciplinary teams between you and your suppliers, agreeing on the ways of working and utilizing a tool to manage this whole process.

In near future companies in the manufacturing industry need to decide how to manage ideas, development activities and projects digitally in their most relevant supplier relationships and value chain.