VALUE CHAIN

Value Chain

Value Chain

The main activities of the value chain consist of inbound logistics, operations, outbound logistics, marketing and sales, and service. Successful organizations are able to mesh these activities together thus creating effective and efficient processes in the end-to-end process of the value chain. Two concepts that organizations can implement and use to their advantage are ISO 9000 and Six Sigma. Gaining the required certifications allow organizations to have their management team focus on the impacts to the business in areas such as globalization and outsourcing. Implementing both ISO 9000 and Six Sigma will give the business a greater competitive advantage in the global community and against their competitors. These steps help in identifying the core competencies of the organization and in reducing costs and improving quality along the value chain. Additionally, organizations can also improve focus on non-value added activities and remove them from activities within the organization.

In taking the steps to reduce costs and improve quality, many organizations are taking the steps towards implementing Six Sigma. The concept behind Six Sigma is to take a disciplined, data-driven approach and use methodology to eliminate defects in any given process. Six standard deviations exist between the mean and nearest specification limit. The concept can be implemented in any type of organization from manufacturing to transactional to service (Green J 2008 15).

The primary purpose of Six Sigma is the implementation of measurement-based strategies that focus on improving processes and reducing variances in those processes. How this is achieved is through the use of two Six Sigma sub-methodologies: DMAIC and DMADV (Green J 2008). DMAIC represents the process of defining, measuring, analyzing, improving, and controlling a given process. DMAIC helps to identify the processes that are not meeting the specific measurements and looks for how to make improvements. The DMADV represents the process of defining, measuring, analyzing, designing, and verifying to develop new processes or products at specific quality levels ((Green J 2008).

A distinct difference between Six Sigma and other systems that focus on quality management is the direct link to financial impact on an organization. Financial benefits of potential process improvement projects are quantified and used to help select and prioritize process improvement projects (Waxer, 2008 69-71). After moving beyond the define and measure phase, the financial benefits can then be evaluated in the analyze phase to determine if the cost of improvements will be attainable and benefited by the ...