Business Advice

Focussing On Adding Value

10/09/09

By Brian Chernett

VAT is a chore that most businesses in the European Union (EU) have in common. When sitting down with your VAT, it is worth remembering that its name - Value Added Tax - implies a truth of business. We are all here to add some value to and with our product or service.

All businesses have processes. In most business processes, some steps have been carefully designed and some have just happened as the business changed its approach or as people came and went. Even where the process was designed from end to end, if time...

...has passed, it is likely to have elements of redundancy within it.

Professor Michael Porter, of the Harvard Business School is credited with the development of Value Chain Analysis (VCA) set out in his 1985 best-selling business book - Competitive Advantage: Creating and Sustaining Superior Performance.

Value Chain Analysis, at a simple level, involves the examination of your business process flows to see which steps add value and which don't. Adding value may have nothing to do how much the step costs to perform but may simply be a key transformation. Once those steps are identified, the rest, which add no value, can be reviewed and assessed. Some will be necessary to the end result, in which case they might be improved, outsourced, automated or combined with other steps and some others will be surplus to an effective process and can be removed.

The aim of the analysis is to make the business better, not just in efficiency (doing things right) but also in effectiveness (doing the right things) and to sharpen the delivery. The Customer is the judge of the effectiveness and value of the process. If the customer doesn't see the value, there... continued on page two >

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