Q 639. What are the differences between Value Chain Analysis and Process Mapping? Provide examples of their usage.

 

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Value Chain Analysis describe and analyze all the activities from the start of production to finish product. It is identifying how each process brings value to the product that will contribute to the company's advantage.
 

Example: In a cellphone manufacturing company, value chain are the activities like product sourcing, production of mobile phones, distribution, marketing, sales to after sales service. Through value chain analysis companies will pinpoint areas on efficiency improvement, waste reduction so that the business can produce the most value for the least possible cost.

 

Process Mapping is to visually and analyzing workflows and processes. Tools used such as flow chart and workflow diagram. It provides details view of the individual steps in the process flow.

Example: Cellphone manufacturing company used VSM to visualizes the process steps. This will identify if the company is meeting the customer needs.  Through process mapping, you can break down each and analyze each step, identifying value added and non-value-added activities as well as areas of improvement.

 

Value Chain Analysis and Process Mapping are both valuable in identifying areas for improvement and optimizing business operations.

Value Chain analysis and process mapping are tools used in organization to analyze, identify and improve processes.

 

Value chain analysis focus on value added step involved in a journey of a process. These activities are the core activities involved in the production, sales, marketing, product support or service of the specific process.

 

Process Map emphasizes on detailed process steps of a process and further it gives the detailed visualization of the process steps, bottle necks and areas which can be improved.

 

The process map is looks like a flowchart of the process which provides the detailed steps of where the process starts and where it ends by connecting each step of the process.

 

In summary, Value chain provides a high-level view or a helicopter view of the value creation process, while process map brings out detailed view into each step of the process.

Value chain analysis:

It is a business management strategy involves the activities of the business from primary level to the final level along with supporting activities. Value chain analysis helps organisations to understand and evaluate the positive and negative aspects of cost efficiency.Primary activities include creating, producing a product, delivering a product or service.Supporting activities helps to enhance the efficiency of primary activities.By analysing each and every step in the value added chain an organisation can find out the differentiation in the profits earned, can identify areas of cost reduction, process enhancement.
 

Example for Value Chain Analysis:

1.Considering a pharmaceutical industry manufacturing Active Pharmaceutical Ingredients.

2.Lets differentiate primary and support activities here.

3.Primary activities would include product technology, manufacturing,Packing, marketing,distribution of product.

4.Where as support activities include researching and developing the technology,procurement of raw materials,providing storage facilities,Human Resources,Maintaining safe working environment.

Process Mapping:
It is a visual representation of the process.It includes the steps and activities involved in a business process of organisation.It helps an organisation to understand,analyse and improve the process if required.

Example for Process Mapping:Taking same example from Value chain analysis of manufacturing an API.

1.Starting with marketing of the product.

2.Audit by the customer in the manufacturing sites.

3.Order from the customer.

4.Procurement of raw materials.

5.Storing the raw materials in warehouses as per the required storage conditions.

6.Issuing the materials to production for producing API.

7.Packing of the final product with shipping information.

8.Delivering the final product to the customer.

9.Getting feedback from the customer on the overall experience.

 

By mapping out each and every step in the process we can identify bottlenecks,area of improvements,drawbacks.

Value chain Analysis concept has been developed by Michael Porter. 

• When a product moves from one department to another, its value increases.
• Using the concept of value chain analysis, the business can be divided into Value adding and non- value adding activities.
• VCA includes both qualitative and quantitative approaches.
• To conduct a value chain analysis, businesses need to split the chain into 2 levels- Primary activities and Supporting activities.
• Primary activities include inbound/outbound, operations, sales, and marketing services.
• Supporting activities include R &D, technology development, HR management etc.

Example: 1

Value chain Analysis for a Hotel:

Primary Activities	Supporting Activities
Site Selection and construction	Accounting
Reservations	Hiring and training
Operation of hotel properties	Advertising; building a brand and reputation
Managing of hotel location	General administration

 

Process Mapping:

 

Process mapping allows the team to represent the process associated with their problem in such a way that others find it easier to understand and make the job of defining current process easier

· It also helps people to understand where the waste exists in the process and where the process.

has been poorly defined.

Process maps can be analyzed for:

o Time-per-event (reducing cycle time)

o Process repeats (preventing rework)

o Duplication of effort (identifying and eliminating duplicated tasks)

o Unnecessary tasks (eliminating tasks that are in the process for no apparent reason)

Value chain analysis is a process that can strategically increase profit margins and provide competitive advantages for company and purpose of value chain analysis is to give clear path towards profitability of company by determining best strategies within the current market.

Process mapping is a planning and management tool that describes the workflow and Purpose of process mapping is to improve the efficiency. It gives insight of process for improvement by identifying bottleneck and delays.

 

 

Differences between Value chain analysis (VCA) and Process mapping

Sr No.	Value Chain Analysis	Process Mapping
1	VCA helps to improve profit.	Process mapping helps improve efficiency.
2	VCA helps understand market competition.	Process Mapping help understand process.
3	VCA is used to standardize and optimize the process.	Process mapping can be used for improvement of process.
4	VCA is focused on cost.	Process mapping is focused on process, quality improvement.
5	VCA is a decision support tool for making strategy.	Process mapping is a management tool that describes workflow.
6	VCA described through set of chevrons which represents activities of an organization.	Process mapping is represented most with flow chart.

 

 

Value chain Analysis usages: -

-        To establish better vendor management.

-        To reduce cost and delivery time.

-        To optimize inventory.

-        To standardize and optimize the process.

-        To be competitive in market.

 

 

Process mapping usages: -

-        To Understand the process.

-        To analyze improvement of process.

-        To Plan project.

-        To solve problem and make decisions.

-        To create project design.

-        To understand process from start to end.

I am pleased to announce that Grace Tang's response is the winner among responses to this question. I wish to thank everyone who has contributed thoughtfully. 

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