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Chain Gang

Chain Gang

Give a bunch of people a chain and they have two basic options: they can move massive weights by pulling it in a common direction or they can wear themselves out playing tug of war. In value chain management, the name of the game is cooperation

A chain is a fine thing to have around the place: it's strong and it's flexible, and if all the links are sound a group of people pulling on one can together move mountains. But chains can also serve self-defeating purposes: the same people choosing to grab opposite ends and start a tug of war will achieve little other than mutual exhaustion.

So when Directories Australia linked with a number of partners on a project aimed at enhancing its value chain, one of the more serious challenges it had to address was a clash of cultures that saw one player pulling on the wrong end of the chain. Indeed the recalcitrant project participant was so clearly tugging against the others that Directories Australia eventually had to resolve the issue by removing it from the decision-making process.

Managing director Paul McNamara says the problem highlights the risks associated with working with other parties on value chain integration initiatives.

"You get to a point where you're having to learn to trust a business quite implicitly because you're going to let go of a few of the things you've tried to do internally to another company," McNamara says. "One of the groups that was going to be involved in the project proper was of a different culture, and maybe not looking in the same direction that a few of the other businesses were. I think as time went on it became obvious - I think to them, as well as to the other partners - that they probably weren't an appropriate contributor."

With that difficult party gone, the project has taken the printer of government directories detailing Who's Who in Government from a paper-based product to a paper and/or electronic product. The project tested modern relationship marketing techniques for promoting digital printing solutions to content creators. It eliminated errors in the customer database, has created a new directory product potentially capable of doubling profit by year two, and created a customer relationship management (CRM) plan with the first campaign's expected response worth more than $500,000 in terms of the lifetime value of the subscribers created. Other important benefits are following.

The outcome is a solution McNamara says is "very good", although given the chance to do it all over again he'd cut fewer corners and spend more time on some areas.

No Corp Is an Island

Value chain management (VCM) has to do with integration, collaboration and synchronisation, with a focus on inter-organisational activities, rather than internal systems and processes. Where supply chain management deals with integrating the supply chain functions across the enterprise, value chain management is all about collaborating with both vendors and customers. Value chain integration (VCI) lets organisations coordinate and unify their approach to resolving industry-level issues. It can also help member companies define a balanced set of supplier priorities, develop industry-unique solutions and improve communications throughout the supply chain.

Rich Vancil, chief marketing officer for US supply chain company Tilion, says: "The winners of the next big phase of corporate productivity will be companies that are able to dynamically collect, internalise and share information that comes from the outward-facing functions of the business. This means collecting demand-side information in real time and cycling that into supply chain decisions. It means providing customers with the highest level of service based on the real-time visibility from the supply side of the business. Companies that can do that in a way that is fast and open - yet are protective of their proprietary information - will win."

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More about ACTAgribuysGartnerIDC AustraliaIslandISRSun MicrosystemsTilionTransportationUnifyUniversity of QueenslandUniversity of Queensland

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