The Value Chain Group
The Value Chain Group (VCG) is a consortium of organizations that collaborate to develop methodologies and approaches that facilitate the successful alignment of business and IT strategies, architecture, design, execution, monitoring, and management of processes.
The VCG's mission is to facilitate excellence in value chain performance. The group achieves this by leading the creation, promotion, and maintenance of a unified, widely adopted, open-standard business process framework and related reference models for value chain management.
One of the key models within the VCG is the Value Reference Model (VRM), which serves as the common language for business semantics, providing normalized business semantics. The benefits of using VRM are manifold:
- Analysis and understanding of customer-facing BI processes: VRM helps to dissect and comprehend the processes that interact directly with customers, fostering a deeper understanding of customer interactions and the creation of customer value.
- Detailed substantiation for business rules: The model provides a foundation for business rules, enabling stakeholders to understand the reasoning behind these rules and their practical implications.
- Feasibility testing and impact assessment of changes: By using VRM, businesses can assess the potential effects of proposed changes, helping them make informed decisions regarding process adjustments.
- Validation of business rules: VRM enables the validation of business rules, ensuring that these rules are effective and applicable in the context of the business.
- Enhanced support for collaborations: The common business semantics language provided by VRM enables better coordination and collaboration among different stakeholders in the value chain.
The Evolution of Value Chain Concepts
The concepts of value chains, value streams, and value nets have gained attention in business process change dialogues. These terms have evolved over time, and their meanings have become somewhat blurred. This article aims to discuss the evolution and current usage of these terms, providing much-needed clarity for the professionals involved in the VCG and beyond.
The term value chain was first coined by Michael Porter in his 1985 book Competitive Advantage. Porter defined a value chain as "the full range of activities that a firm performs in order to design, produce, market, deliver, and support its product." The value chain is a useful tool for understanding how a company creates value for its customers and for identifying opportunities for improvement.
The term value stream was first used by James Womack and Daniel Jones in their 1996 book Lean Thinking. A value stream is "the set of all the activities involved in the creation of a product or service, from the acquisition of raw materials to the delivery of the final product to the customer." The value stream is a more detailed view of the value chain, and it can be used to identify waste and inefficiencies in a process.
The term value net was first used by John Hagel and Marc Singer in their 2000 book Net Gain. A value net is "a network of value-creating activities that spans multiple companies." The value net is a way of understanding how companies create value together, and it can be used to identify opportunities for collaboration and partnership.
The concepts of value chains, value streams, and value nets are all important for understanding and improving business processes. By providing a common language and framework for understanding these concepts, the VCG's VRM plays a significant role in enabling businesses to optimize their strategies, architecture, and design for maximum value delivery. Ensuring a clear understanding of these terms, therefore, is not just beneficial but necessary for anyone involved in the realm of value chain management.