THE ROAD TO THE VALUE-MANAGED ENTERPRISE:

As supply chain efforts have matured around the world, a clear distinction has
appeared. Businesses that embrace the inherent concepts are opening a serious
gap over less able competitors. They do so by using advanced techniques �
primarily adopting external collaboration and the use of technology enablers
across linked organizations � to focus not only on cost improvement but
revenue enhancement. The distinction that can be developed has been used by
such leaders as Wal-Mart, Procter & Gamble, Toyota, Intel, Dell, Cisco Systems,
Tesco, and Nike, to open up commanding leads in their industries. These
organizations and others are moving rapidly toward what becomes a valuemanaged
enterprise and a dominant position in an industry, while many of their
competitors remain bogged down in the early levels of their supply chain
progression.
The leaders have nurtured the advantages offered by moving their supply
chains into a position of having superior capabilities, gained through greater
access to knowledge across what becomes an intelligent value chain network.
The difference for these businesses can be a doubling of earnings per share. The
laggards and followers tend to keep their focus on internal improvement only,
particularly the never-ending quest for lower costs of operations. While we
accept that this cost orientation will hardly cease to exist, the contemporary
view holds that there must be an equal and pervasive effort directed at distinguishing
the firm in the eyes of the most important customers and end consumers
so that new and profitable revenues are generated. Moreover, there must be a
methodology in place to track the claimed improvements to the profit and loss
statement, and there should be documented benefits for those members of the
network that assist in the improvement process.
To facilitate our presentation and to establish a framework for understanding
how a business can make progress toward the desired position with a supply chain
effort and within an industry, we will use a familiar maturity model as a guide for
the discussion. The purpose is to introduce the concept of supply chain optimization
and how companies can approach their desired status and to apply a five-level
progression model to explain the route to advanced business performance while
calibrating the results. From this beginning position, we will present the processenabled
matrix, to explain how a firm can add the most benefits from improving
the process steps in the intelligent value network. More importantly, we will
describe how to trace the improvements to financial advantage � for the firm
involved and its business allies. In later chapters, a simulation technique will also
be discussed, so the interested firm can experiment with the techniques described
without incurring undue risk. Throughout the text, actual case examples will be
used to give the concepts a flavor of reality.