You not Uber, actually you should reduce the enterprise’s value chain

note: hunting cloud Internet tools gradually penetrate and combine with the traditional industry, a large number of companies involved in reconstructing value chain link to peek at the new business opportunities. However, the practice of most enterprises are simple imitation, often talk about the shift up the value chain, but promote the industry of value chain is really suitable for you and your business? Bradley from gets Staats and David m. Upton puts forward a new Angle of view, two people think reduce the value chain is the part of the enterprise should do.

the following content from the heavens and the earth will rudder to compile, zhuhai (WeChat ID: techgogogo)

today a lot of the top of the enterprise, regardless of whether they are engaged in manufacturing, is engaged in the software services, or engaged in consultation industry, and even the health care industry, once when it comes to how to bring more profits for the enterprise, often in a sentence is: “we need to increase our value chain”. This statement is at first glance it sounds quite reasonable: let the enterprise do the higher value, in order to gain higher profits. Like before I compiled an article, “billions of dollars of levels of” unicorn “enterprise is how to develop” mentioned in the Uber:

to extend enterprise function, the passengers and drivers the interaction about the price and other business spun off, completely to the passengers and drivers for processing, thus greatly reduce the marginal cost, and their attention to their own platform services of higher value.

but, isn’t it shift up the value chain of this practice is suitable for for each company? I’m not convinced.

I think these should look before you leap: executive should not conformity to blindly accept the popularization of this point of view, but should have their own independent thinking. Under the earnest analysis to the somebody else who didn’t go with the flow to shift up the value chain, it is by reducing the value chain and the success of the company, have a look to his place.

overall, reduce the practice of the value chain will sometimes bring you some of the following benefits:

? Let your company to work more efficiently

? Create more opportunities to

? Provide greater operational space

? In case of a crocodile as

? Let your reputation standing in a moral high ground on

below we analyze these benefits, item by item.

promote efficiency

as companies for their own operation pattern and has more and more in-depth understanding of the supply chain, companies sometimes can appreciate them instead the “low value” (low value) of the suppliers. An obvious example is in California Morning Start the enterprise, the enterprise can be said to be making tomato sauce in the world the best of the industry.

in the past, it will tomato transportation to factories for processing in California and the tomatoes into a tomato sauce. Then they began to find the factory efficiency is too low, it should be improved, in order to enhance the value of the value chain processing chain, such as the increase of tomato heat decomposition and cooling technology and improving the process of the ketchup packaging delivery, etc.

unfortunately, factory up in value but not rise but lower earnings. Morning Star executives found that the problem of bottleneck turned out to be, at least in large part, because they are tomato suppliers – those farmers planted tomatoes “low value”. These farmers have not because factory improved efficiency and good to plan of tomato sowing and harvest, so can’t provide enough tomato to the Morning Star. Still have a kind of what is more, for some farmers was involved in a lot of impurities in the tomato to hear. As a result, the factory efficiency improves, but the number of tomato supply did not increase, increase in the number of impurities is tomato, tomato paste is down, the quality of eventually lead to corporate earnings are down.

so Morning Start decided that farmers began to invest himself organized system of tomato planting and harvest to meet demand, rather than completely in order to improve the value chain to the supply of tomatoes. Morning Start end to control the whole tomato to finish the production of end-to-end, started to get huge gains.

create opportunities

besides can improve efficiency, reduce the method of value chain can also bring you a new way of growth opportunities. Or take the Morning Star for giant ketchup industry as an example, systematically the farmers grow their own organization of another benefit is that it is in addition to planting tomatoes, can grow to other plants. So that, in the end, the company will have the opportunity to provide except ketchup products to let the customer get pleasantly surprised, to develop more market opportunities.

another example is to the practice of India on the other side of the IT companies, such as the TCS, Cognizant,, Infosys and Wipro. In tradition, they are through the pursuit to provide customers more stable mature and highly profitable services to enhance the value chain. So they may be will be, to provide technical support for the mainframe and claims process as well as other services, outsourcing to professional service supplier, outside to try this way to enhance the whole value chain.

however, if these companies not to ascend the value chain, but to reduce the value chain, the effect will again? Internal integration of some resource in their company to make adjustments, and technical support and customer comments – to the customer’s needs and complaints were collected for more comprehensive tracking, such results should be more obvious. Because you are either through the control to the whole process for sales to the customer more other business opportunities, but also can more easily grasp the user’s needs and pain points in order to better in the future improvement and development of new products.

larger work space

lower value chain can also make you more empty look. Here, the fashion industry is a good example. In the late 20th century, the practice of most fashion retailers are in fashion design, then fashion outsourced production cost is very low, such as factory in Asia. This means that the lead time (lead time – refers to the interval time from order to delivery) will need more than 9 months. Eventually lead to the consequence is that retailers in this quarter’s fashion hasn’t sold out, you need to in a hurry for the next quarter of fashion design and order.

we see in 88 countries around the world have chain Zara is what to do, Zara Spain’s Inditex group (stock code ITX) owned by a subsidiary. Zara has its own garment factories, so it can from the production of fashion ideas, to fashion production come out, just need a couple of weeks. So it does not need to guess next quarter blowing what is fashion, because it can completely before knowing the trend in a very short time will fashion to produce, and that is why it can provide many fashion in different quarter every year in secret.

in case of a crocodile as

we new competitors from where? Actually tend to be from us in the same industry in the low-end market oriented or accept your outsourcing firms, they have been girding ready to look for opportunities for you to carry on the counter attack. Once they learned to make a product skills like you, they can to improve their own value chain, their food and clothing parents is given once a fatal blow to you. On a personal computer, bicycle, software and services, as well as the music instruments and other industries are similar tragedy happened.

in order to prevent a repeat, so maybe we should have some reservations, and should not be blind to outsourcing, or is likely to help you do the outsourcing company, in turn, the second day will be your competitor, why keep him?

stood on the moral high ground

now many company’s supply chain are complex, complex to these enterprises are often not clear which play which. That would make you hard to make sure that you provide the customer is really high quality products, for example you may not know you purchase back from Bangladesh chittagong steel is dismantled from a wrecked ship, you also can’t guarantee you whether outsourcing partners in Asia is a sweatshop, more do not know you to Japan’s neighbours (taboo, who I guess) supplier with the product is created inside of “dirty” cotton.

this is not to say that we have to do to accomplish these things, but, at least we should look for those without a moral issue public praise good.record partner. Headquarters in Cambodia, for example, gives Pactics ultra-fine fiber products of the company, they will dare to guarantee provided by the product to the customer the whole production process is not in violation of the human morality. Their approach is hands-on, if when busy don’t come true to outsource, they are outsourcing company very in-depth investigation.

starbucks is very similar, as everybody knows, it developed a coffee and planting agriculture fair practice guidelines (CAFE), with their suppliers should meet the condition of complete guide, and also provides the third party supervision to ensure that suppliers have earnestly implement and meet these terms. It is this tactic has been guarding the gold paint brand and good reputation of the company.

so, reduce your value chain may look like a very stupid and crazy ideas. But maybe it is you can bring your customers more value, to expand your business, maintain unbeaten golden body most smart!