The process of value creation is sustained by support processes and resource availability. Every organisation needs to build proactive support systems and utilise resources efficiently to ensure continuity in the value chain.
Browse through any company website, leaf through any corporate brochure or listen to a CEO talk of his organisation's philosophy, and chances are that one epithet will greet you time and again — "value-driven enterprise".
In a business environment that celebrates competition, success belongs to those who can provide maximum value to its stakeholders. Creating and maintaining value that is superior to the competition is indeed a complex affair, given the demands of operating in the knowledge economy.
In the traditional manufacturing economy, value was considered a function of factors directly involved in production. All other processes were regarded overheads. Today, every process and function in the organisation is a business partner, and needs to contribute to competitive advantage. Here is how the Malcolm Baldridge Award for Performance Excellence, which has included support processes and operational planning among its criteria, views it:
"Support process design requirements depend significantly on internal requirements, and they must be coordinated and integrated to ensure efficient and effective linkage and performance."
Industry best practices
Dhirubhai Ambani, one of India's biggest business icons, believed that "cost centres" virtually had no place in business — every business unit or function had to be a profit centre. His vision is embodied in the success of Jamnagar Farms — a venture that was initially started to improve the environs of the Reliance refinery. Today, it is a profit-making subsidiary, which owns Asia's largest mango orchard.
Reliance Industries' refinery at Jamnagar is the world's first fully-integrated petrochemicals complex of its kind. Given the inherent threats in petroleum processing, RIL has installed state-of-the-art security and disaster recovery systems at the complex.
The refinery is equipped with electronic fences, CCTVs, data protection devices and smart card systems. The entire data is secured as a back-up at a centre in Hyderabad, to ensure continuity in case of a disaster. This focus on business continuity enabled the refinery to control the damage and resume its operations within just two days after a major fire erupted in one of its secondary units recently.
Denmark has one of the world's best healthcare systems. The Danish National Board of Health was faced with the challenge of maximising services provided by healthcare institutions without any additional budget allocation.
Since 2000, the board has been following the ABC methodology to ensure that government funds flow to those hospitals providing high quality and cost-effective services. The venture is supported by information systems that trace real-time financial and operational data of every healthcare institution in the country.
Whirlpool identified the need to enhance productivity and maintain margins for gaining competitive advantage. It needed a system that would adapt the organisation's strategy to changes in market conditions. Whirlpool used the services of IBM to create an IT solution that provides real-time finance and procurement information. The company has reduced overall costs by 5%.
It may be a truism to say that in the current business landscape, no competitive advantage lasts for ever. Firms should strive to exploit their current resources and simultaneously build new competencies that can lead to competitive advantage in the future.
Suresh Lulla is the managing director of Qimpro Consultants, founder of the BestPrax Club, and chairman of the IMC Quality Awards Committee. In 2005, he was awarded the Distinguished Alumnus Award by the Indian Institute of Technology, Bombay, in recognition of his outstanding achievements in Management Consultancy.